Nanogen to issue 9.75% convertibles in exchange for 6.25% convertibles

By Jennifer Chiou

New York, March 14 - Nanogen, Inc. entered into an agreement on Thursday with holders of its 6.25% senior convertible notes due 2010, under which it will issue $15.5 million of 9.75% senior secured convertible notes due Aug. 27, 2010 in exchange for $12.92 million of its 6.25% notes, according to an 8-K filing with the Securities and Exchange Commission.

Also on March 13, Nanogen entered into a consent agreement with each holder regarding a potential sale of certain royalties, effective upon closing of the exchange.

The 9.75% notes are convertible initially into an aggregate of 22,784,653 shares of Nanogen stock at an initial conversion price of $0.6803 per share.

Following the exchange, the company said that $7 million of 6.25% notes will remain outstanding.

Upon closing of the exchange, slated for March 20, the conversion price of remaining 6.25% notes and the exercise prices of certain warrants issued to the holders in August 2007 will be adjusted to $0.6803.

In addition, Nanogen said it agrees to pay holders certain tax gross up payment and legal fees resulting from the offer.

For the 9.75% notes, upon and during the occurrence of an event of default, the interest rate will increase to 12% per year.

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

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