11th Feb 2022 11:31
(Alliance News) - Omega Diagnostics Group PLC on Friday announced that it had begun a GBP7.0 million fundraise as well as sold its manufacturing business in Alva, Scotland.
The medical diagnostics company, which is also based in Alva, announced it had raised GBP5.0 million via a placing of 100.0 million at 5 pence each, bought by new institutional investors and wealth managers.
It proposes to raise an additional GBP2.0 million with an open offer of 40.6 million shares at the same price, which is a 31% discount to its closing mid-market price of 7.25p on Thursday.
Omega's shares were down 22% to 5.68p on Friday morning in London.
The net proceeds of the fundraise are expected to be between GBP4.6 million to GBP6.6 million. They will be put towards driving growth in its Health & Nutrition business, and finance the relocation of CD4 to new manufacturing facility in Ely, Cambridgeshire. It will also support a transition to a sub-contract manufacturing model for Covid-19 tests.
CD4 refers to the Vivisect CD4 advanced disease test for HIV.
"This fundraise delivers the additional capital for Omega to drive growth in our Health & Nutrition division. At the conclusion of our planned strategic review of CD4, the funding provides us with the potential opportunity to relocate our CD4 production to our new Ely site and improve operational efficiencies," said Chief Executive Officer Jag Grewal.
Omega also separately announced it has agreed to sell its manufacturing facility in Alva for GBP1 million to Accubio Ltd, a wholly-owned subsidiary of Zhejiang Orient Gene Biotech Co Ltd. The facility will continue to produce its advanced disease tests and Covid-19 tests for a transitionary period until December.
The sale is conditional on approval from the landlord, and the Department of Business, Energy and Industrial Strategy not issuing a public interest intervention notice.
Back in February 2021, Omega won a contract with the DHSC to provide manufacturing capacity for Covid-19 antigen tests, but this failed to progress to licensing a third-party test technology transfer to its Alva facility. The lack of demand and high costs incurred by the facility meant it generated a loss of GBP4.9 million in the nine months to December 31.
"We had previously highlighted our need to re-size our Covid LFT manufacturing capacity and it is hugely disappointing that having acted in good faith to establish UK manufacturing for Government-issued Covid tests, we find that these tests are, in the main, sourced from China instead," Grewal said.
The sale represents a move to resizing Covid-test manufacturing capacity, and improving operations to reduce costs. All staff and non-government-funded equipment will also be transferred in the sale.
"The sale will significantly reduce the group's fixed cost base and eliminate a number of potential future liabilities, whilst generating funds for further investment and growth," Grewal added.
By Elizabeth Winter; [email protected]
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