Omega Diagnostics has unveiled plans to sell its headquarters in Clackmannanshire as it steps back from the Covid test manufactuirng business that has taken the firm's shares on a rollercoaster ride for the past two years.
The Scottish firm has agreed to sell its diagnostic test kit manufacturing business and facility in Alva for £1 million to Accubio, a wholly-owned subsidiary of Chinese firm Zhejiang Orient Gene Biotech. Its core health and nutrition division will transfer to a new purpose-built facility in Ely, Cambridgeshire.
The manufacturing business is being sold as a going concern, with approximately 109 full-time employees transferring across with the business.
The news was released this morning as Omega also announced that it has raised gross proceeds of £5m via a placing and subscription of 100,000,000 new ordinary shares to new institutional investors and a number of wealth managers at an issue price of 5p each.
READ MORE: Omega shares slump further as company mulls fresh fundraising
The company is also proposing to raise up to an additional £2m by the issue of up to 40,596,089 new ordinary shares to existing investors. The issue price represents a discount of approximately 31 per cent to yesterday's closing mid-market price of 7.25p.
The news comes less than a day after Omega confirmed it was considering a £7m fundraising that hinged upon “certain other corporate actions” being explored by the company.
Responding to online speculation, the test kit manufacturer confirmed on Thursday that it had conditional investor support for an equity fundraising that would include a share placing to raise approximately £5m, with an accompanying open offer to raise up to a further £2m.
The news further eroded the company’s share price, which has lost more than 90 per cent of its value this past year as Omega has suffered from the unravelling of a major contract to produce Covid testing kits for the UK Government. The AIM-listed stock closed yesterday’s trading 2.65p lower at 7.25p, a decline of nearly 27%, and was down to 5.6p as of mid-day today.
READ MORE: ‘No surprise’ as battered Omega share price prompts CEO’s exit
Led by Jag Grewal following last month’s departure of chief executive Colin King, the company has been in discussions with the Department of Health and Social Care (DHSC) about equipment and financial support provided after it was confirmed in March of last year that Omega would be one of three UK companies to produce tests on behalf of the government. That contract, worth up to £374m, lapsed in November after the government failed to name which test design it wanted.
The Alva-headquartered company was then hit in December with a government demand for the return of a £2.5m pre-production payment given to help ramp up manufacturing capacity during the initial phase of the contract. Omega has said that based on the legal advice it has received, it does not believe it is liable to return the money.
The dispute has stoked concern among the company’s predominantly retail shareholder base that it could be facing a funding crisis. Announcing Mr King’s departure on January 19, Omega played down such worries noting that there was “no short-term need to raise additional capital”.
In a statement less than two weeks later Omega said it was considering tapping up investors for additional cash, but continued to iterate there was no “immediate need” to do so.
Omega said yesterday there is no certainty whether the £7m fundraising will go ahead, and a further announcement will be made “in due course as is necessary”.
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