LONDON (Alliance News) - Obtala Ltd on Thursday said it has raised GBP2 million to make investments aimed at improving margins at its facilities in Gabon.
The forestry and timber firm has raised the funds through a subscription agreement with existing investor Lombard Odier Asset Management, part of the Swiss private bank.
Obtala, which in October said it plans to change name to Woodbois Ltd, is issuing 32 million new shares at 6.25 pence to Lombard Odier. Following that, the investor will hold 19% of Obtala's shares.
Shares were 1.5% lower on Thursday at a price of 6.40 pence each.
The funds will be used by Obtala to upgrade two heavy-duty vertical bandsaws, as well as install a plywood manufacturing line with the veneer factory.
"The company is today on a much stronger footing than at any time in its history, with a clear strategy and understanding of its operations and the market in which it operates," said Obtala.
"The opportunity now exists to invest in business lines in which we can excel, and in markets in which we have deep understanding, thereby materially improving operational and financial results."
Chief Executive Paul Dolan said: "Analysis of our recovery and production data for 2018 combined with comprehensive research into the most up to date equipment on the market suggest that the investment in two new bandsaws will improve recovery rates by up to 20%, with an expected corresponding impact on gross profit margins.
"We expect the delivery and installation of the two new bandsaws to take place within the third quarter of 2019."
"The introduction of a plywood line within our new veneer factory will also serve to enhance margins, since composite veneer sheets can be created and incorporated within plywood boards from material that is currently sold at a discount to standard sized veneer sheets. Serving the fast-growing market for construction plywood in Africa is a natural extension to our business," he added.