The Omega Diagnostics Group Plc (LON: ODX) share price plunged up to 37% after confirming that it was considering raising cash from the markets via a share placement in the future.
The company was responding to rumours that it was considering such a move, which attracted a harsh reaction from investors.
The diagnostics company recently announced the departure of its former CEO Colin King on 19 January 2022 with immediate effect. Also, it revealed that Bill Rhodes, a non-executive director, would step down from his role at the end of February.
Omega Diagnostics promoted Jag Grewal to the CEO role replacing King. Grewal is the current managing director of the company’s health and nutrition division. He has been with the company since 2011 and seems like an obvious choice for the company.
At the time, the company assured investors that it had a cash balance of over £2.5 million with a £2 million overdraft facility.
Investors were pleased to hear that Omega did not have any immediate need to raise capital. However, shortly after the announcement, rumours started circulating that the company was looking to raise additional capital from the markets.
Today’s confirmation extended Omega’s losses for the year to 70.2%, yet we are still in January, which makes me wonder where we will be as the year progresses.
Omega shares have lost over 70.2% of their value in four short weeks, and the company’s management is thinking of diluting existing shareholders much more via a new capital raise.
As an investor, I would stay away from the company until we get a sign that the situation is getting better. Meanwhile, better investment targets within the London Stock Exchange could generate better returns and protect investors capital.
*This is not investment advice. Always do your due diligence before making investment decisions.
Omega Diagnostics share price.
Omega Diagnostics share price fell 37.14% to trade at 6.60p, falling from Friday’s closing price of 10.50p.
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