The Clackmannanshire firm has signed a conditional sale and purchase agreement with Accubio, a wholly-owned subsidiary of Zhejiang Orient Gene Biotech, for the Alva operation, for a cash consideration of £1 million.
Omega, which will look to relocate some production to a new plant under construction in Ely, Cambridgeshire, said losses have largely been incurred as a result of a dispute with the UK Department of Health and Social Care (DHSC) over the licensing of its Covid-19 anitgen test kits.
The manufacturing business is being sold as a going concern with 109 full-time employees based in Alva transferring across with the business, with no resultant redundancies, Omega noted.
The sale agreement also covers the sale of certain fixed assets, including plant and equipment, excluding government-funded equipment on site, as well as the assignment of the lease for the Alva facility.
The firm told investors: “As a result of the DHSC not progressing the contract to the Phase 2 manufacturing stage, Omega was left with insufficient demand for production volume and a manufacturing cost-base in Alva that was accordingly not sustainable. The Alva site generated a £4.9m loss in the nine months to December 31, 2021.
“As part of the Alva exit plan, Omega is facilitating discussions with several manufacturing partners who may be willing to purchase the government-funded equipment from the DHSC.”
The company also confirmed that it has raised £5m via a placing and subscription of 100 million shares at 4p each to new institutional investors and a number of wealth managers at an issue price of 5p. It proposes to raise up to an additional £2m through an open share offer to qualifying shareholders.
Chief executive Jag Grewal said: “Today's news is the first stage of a planned strategy to deliver on our stated objectives to see an increase in revenue across the group and to reduce losses.
“We had previously highlighted our need to re-size our Covid LFT [lateral flow test] 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.
“The deal with Orient Gene allows the historical Alva site, which has been producing diagnostics products since September 2003, to continue to thrive, and importantly provides greater job security for the 109 employees who will be transferring to Accubio.
“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.”
He added: “The focus of the Omega team is on delivering significant growth in the profitable health and nutrition division, determining the best way to deliver shareholder value from our CD4 product, which is now building momentum, and executing on a sub-contract production model for Covid-19.”
The firm manufactures and distributes in-vitro diagnostic products for use in hospitals, clinics, laboratories and healthcare practitioners in some 75 countries.