Omega Diagnostics has announced plans to raise up to £7.25m in a share issue to help the sale of its HIV testing business.
The testing business, which is moving out of its Alva base, hopes to use the part of the money raised to initially fund the CD4 HIV testing business before it is sold to provide additional working capital.
It has so far raised £2m via a placing of just under 50 million shares at 4 pence each, with 90 million warrants for institutional investors at the same price.
Following its divestment of its Clackmannanshire site in March, the cash costs of operating the CD4 business under its transitional service agreement (TSA) with acquiring firm Accubio have significantly reduced.
However, the company conceded that its cash funding requirement remains approximately at £300,000 per month.
The board is prepared to continue to fund the CD4 business in the short term, but the TSA requires the whole Alva site to be returned to Accubio by 31 December 2022 at the latest.
It added that it expects the technical transfer of its product into a new facility from the acquirer to be completed in early summer.
Last year, Covid-19 revenues led to it Omega making round £2.6m. However, following the company’s decision to cease supporting Covid products it remains in dispute with the Department of Health and Social Care over cancellation of an order for test kits - and it has still to receive a response to the latest correspondence sent on 8 February 2022.
Jag Grewal, chief executive at Omega, said: “Following the outcome of the general meeting in March, the board reflected on the ongoing strategy and explored alternative options to fund future growth.
“In this process we concluded that the best opportunity to deliver shareholder value lies with a clear focus on our Health & Nutrition division, where we believe we have substantial opportunities in both China and the US.
“We have already confirmed that ongoing Covid income is expected to be minimal and, having considered strategic options for CD4 and the funding available to realise that opportunity, we have made the decision to divest the CD4 business and have begun the process of seeking an acquirer for it.”
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