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Nanogen Hopes to Raise $20M in Convertible Debt to Fatten Working Capital

NEW YORK (GenomeWeb News) — Nanogen today said it hopes to raise $20 million in a registered offering unsecured senior convertible notes and warrants to institutional investors.
The transaction, which is expected to fund today, will be overseen by Seven Hills Partners. The investors were not disclosed, though in a statement Nanogen CEO Howard Birndorf called them “solid” and “familiar with both our market place and our long term prospects.”
Nanogen will use the cash for working capital and general corporate purposes, or, according to Birndorf, it will provide the company with a “vehicle for long-term continued investment,” and will allow it to “focus on our core objectives of managing the business and improving our EBITDA performance.”
The three-year notes, or debt, will pay investors 6.25 percent in interest each year, and subject to certain conditions, Nanogen may elect to make those payments in either cash or stock
The notes will also provide investors with the right to convert principal into registered shares of Nanogen common stock at $1.27 per share, a 12-percent premium over the closing bid price of Nanogen's stock on Aug. 24.
After 24 months Nanogen will have the right to force conversion of the notes into shares of common stock, depending on the performance of the stock.
As for the warrants, the investors initially received options to buy around 11 million shares of common stock for $1.14 apiece for a term of five years, which may be replaced with additional warrants if the initial options are exercised.