Shares of Greater Manchester-based healthcare and industrial adhesives firm Scapa Group fell 47% on Monday after it said a contract worth $30 million a year had been terminated.

AIM-listed Scapa said it has instructed external legal counsel and “will strongly contest and defend” its rights.

In a stock exchange statement, Scapa said: “Scapa Group plc announces that on Friday 31 May after the market closed, Scapa received notice from ConvaTec Inc. that it was terminating the Master Supply Agreement (MSA) with Scapa Tapes North America LLC …

“… accompanying the notice was an action for a declaratory judgment concerning the MSA filed by ConvaTec in federal court in New Jersey.

“Neither the company nor Scapa Tapes North America LLC accept that ConvaTec has any grounds to terminate the five year supply agreement in respect of which a three year term remains, nor to pursue its declaratory judgment claim. 

“The company and Scapa Tapes North America LLC have instructed external legal counsel and will strongly contest and defend their rights under the MSA and in response to the New Jersey action in which it will assert and pursue all appropriate rights and remedies.  

“The MSA provides for a binding contractual commitment for a minimum circa. US$30m of revenue per annum. 

“The company is assessing the potential profit implications and will issue a further update accordingly.”

Last month, Scapa shares fell about 15% amid news that CEO Heejae Chae is to step down.

Scapa last month also unveiled results for the year to March 31 showing its revenue crossed the £300 million revenue milestone for the first time.