Nanogen in default on convertible notes; holders want $29 million

By Devika Patel

Knoxville, Tenn., March 30 - Nanogen, Inc. received default notices on its 6.25% senior convertible notes, its senior secured convertible notes, its 9.75% senior secured convertible notes and its senior secured convertible bridge notes, according to an 8-K filed Monday with the Securities and Exchange Commission.

The defaults were due to the company's failure to make certain principal and interest payments. Its last payment was in June.

The interest and installment payments, along with penalties and late charges, were deferred so long as the company satisfied certain milestones in relation to its planned merger with Financiére Elitech SAS.

The company did not satisfy these milestones, which caused the deferred payments to become immediately due, and Nanogen's failure to pay these debts caused the default.

As a result of the default, the holders may require the company to redeem each of the notes in full in cash at a price calculated by a specified formula.

The redemption amount requested by the holders is approximately $29 million.

If this amount is not paid within five business days of the notices, the $29 million will accrue interest at 15% per annum from the due date until it is paid in full.

In addition, the notes are secured by substantially all of the company's assets; the holders may elect to foreclose on these assets.

San Diego-based Nanogen specializes in developing advanced diagnostic products.

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