Nanogen arranges $5 million for merger, shares decline; Sacre-Coeur wraps C$4.13 million placement

By Devika Patel

Knoxville, Tenn., Aug. 15 - Nanogen, Inc. plans a $5 million private placement of senior secured convertible bridge notes, a deal which will help the company with its planned combination with private French diagnostics company the Elitech Group.

Shares of San Diego-based Nanogen (Nasdaq: NGEN) fell 15.93%, or 7 cents, after Friday's announcement, closing at $0.37.

Separately, Sacre-Coeur Minerals, Ltd. concluded a C$4.13 million private placement after the close Thursday, which comes on the heels of a sale of units the company completed earlier this week.

The company plans to use the proceeds to develop its Kartuni project, the Million Mountain project and Northwest Gold Project.

Nanogen negotiates $5 million

Nanogen hopes to sell $5 million of its senior secured convertible bridge notes to its current investors to raise interim funding to tide the company over until it completes its planned merger with the Elitech Group.

The developer of molecular and rapid in-vitro diagnostic products will sell the notes in a deal slated to settle Friday.

The notes carry a 20% coupon and mature on May 15, 2009. They are convertible into 12,594,458 shares at an initial conversion price of $0.397 per share.

Interest is payable quarterly in arrears beginning on Sept. 30.

The notes may mature earlier if the company completes a change-of-control event, which is almost certain given Friday's announcement.

The combination is structured as a tax-free stock-for-stock exchange of shares of Nanogen common stock for all of the Elitech capital stock and is a reverse acquisition of Nanogen by the Elitech Group.

The combination is expected to create a global provider of products to the molecular, point-of-care, clinical chemistry and microbiology diagnostics markets with expected first-year revenues of more than $150 million and positive EBITDA.

The new company will continue to be listed on Nasdaq. Its name has not yet been determined.

"The combination with Elitech will accelerate the transition of Nanogen into a global, profitable diagnostics company with the critical mass needed to bring our leading molecular and point-of-care technologies to customers worldwide," Nanogen chairman and chief executive officer Howard Birndorf said in a press release. "I believe the resulting combination will create value for our shareholders, customers and employees."

Sacre-Coeur settles C$4.13 million

Vancouver, B.C.-based Sacre-Coeur Minerals said it completed a C$4.13 million non-brokered private placement of stock after the close on Thursday.

The company sold 2.75 million common shares at C$1.50 apiece and will use the proceeds from the deal to drill on its projects.

"We are very excited about the acceleration of our projects in Guyana," chief executive Irwin Olian said in a news release. "We are now drilling two different highly prospective zones at our new Northwest Gold Project, with early results expected soon from the initial holes.

"In addition, we have identified seven new zones characterized by expansive surface anomalous gold at Million Mountain, where drilling now has moved to the second zone," Olian said.

"Finally, we are preparing for the commencement soon of core drilling at our third major project, Kartuni. In all, we will have four core drills operating on three major gold projects within a few weeks."

Olian said the current private placement provides the company with the funding needed to ramp up the Kartuni project and accelerate development of the Million Mountain and Northwest projects.

The mineral exploration company's shares (TSX Venture: SCM) were unchanged Friday, closing at C$1.47.

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