Shareholders have dealt Omega Diagnostics a bloody nose by rejecting plans for a heavily discounted fundraising to pave the way for its exit from Covid test kit manufacturing in Scotland.
Results from the vote on the special resolution came just hours after Omega confirmed it had completed the £1 million sale of its headquarters in Alva, Clackmannanshire, to Accubio, a wholly-owned subsidiary of Zhejiang Orient Gene Biotech. Accubio will take over Omega’s Covid test manufacturing operations with 109 employees transferring over to the new owners.
Potentially worth up to £7 million, the fundraising would have shored up Omega’s balance sheet as it relocates to a purpose-built facility in Ely, Cambridgeshire.
READ MORE: Omega investors fail to rally for open offer fundraising
Focused on products for assessing food sensitivities, Omega’s health and nutrition subsidiary has been based in Ely since the company’s acquisition of Cambridge Nutritional Sciences in 2007. The facility was refurbished following an £11m fundraising by Omega in June 2020.
Omega said on February 11 that it was planning to raise £5m via a placing and subscription of 100 million new ordinary shares at 5p each, a 49 per cent discount to its closing price of 9.9p on February 9. Those shares were destined for new institutional investors.
To accommodate its existing shareholder base of predominantly retail investors – who have seen the value of their holdings collapse this past year – Omega said they would also have the chance to purchase shares via an open offer at the discounted price of 5p. However, applications were received for just 23.5% of the open shares on offer, taking the total gross proceeds of the combined fundraising to £5.48m versus the upper limit of £7m.
READ MORE: Investors pour their scorn on Omega
Omega’s share price rebounded on news that the fundraising will not go ahead, closing yesterday’s trading more than 24% higher at 5.5p. Chief executive Jag Grewal, who took over from Colin King in January, said the company will now need to reassess its growth strategy.
“The board is encouraged that resolution one, increasing the directors’ authority to allot shares, was approved by shareholders and notes the view of some retail shareholders with regards to resolution two and their pre-emption rights,” he said in a statement. “Accordingly, the fundraise will not proceed and the company will look at other strategic and funding options.”
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