LONDON (Alliance News) - Scapa Group PLC on Monday said Chief Executive Heejae Chae has agreed not to step down, and the company is continuing to pursue rights and remedies against Convatec Inc.
Shares in healthcare firm Scapa were up 15% at 187.80 pence in morning trade.
Chae's departure was announced on May 21, alongside the firm's annual results, and he had agreed to remain with with the company to ensure a smooth transition but will instead remain permanently.
"The board is delighted that Heejae has agreed to continue as group chief executive. The board remains committed to its strategy and believes it has the right capabilities and management to fully deliver its growth priorities and we will not be distracted by the recent claims published by ConvaTec, which we will robustly contest."
ConvaTec Inc is a subsidiary of medical products and technologies company ConvaTec Group PLC. Late on Friday, Scapa received notice from ConvaTec that it was terminating its master supply agreement with Scapa Tapes North America LLC. The agreement is a binding commitment for a minimum of USD30 million of revenue per year.
Scapa said it has taken steps to mitigate the damage caused by the contract loss. Assuming no further mitigating actions are taken, Scapa estimated revenue exposure in its 2020 financial year to be around GBP28.0 million. Profit exposure for 2020 financial year, which ends March 31, is approximately GBP13.0 million, including harm to other facilities supplying materials for ContaTec products in Knoxville, Tennessee.
Scapa does not believe ConvaTec had "any legitimate grounds to terminate the master supply agreement" and intends to "vigorously challenge and defend its rights".