Nanogen, Inc. (Pink Sheets: NGEN), developer of molecular and rapid diagnostic products, today announced that it has executed an asset purchase agreement with The Elitech Group ("Elitech"), a privately held diagnostics company, to acquire substantially all of the assets of Nanogen. As part of the sale, Nanogen filed a voluntary petition under chapter 11 of title 11 of the United States Code in the Bankruptcy Court for the District of Delaware, including a motion seeking bankruptcy court approval of the sale, subject to a court-supervised auction pursuant to Section 363 of the Bankruptcy Code and designating Elitech as the stalking horse bidder. The auction bidding procedures, if approved, would require interested parties to submit higher and better binding offers to acquire all of the Company's assets within approximately 30 days, and, assuming any qualified overbids are submitted, an auction would be held within approximately one week of the bid deadline.
The filing does not affect the operations of Nanogen Advanced Diagnostics, Srl (NAD), the Company’s European affiliate located in Milan, Italy, or NAD’s creditors and lenders as NAD is not a party to the Company’s bankruptcy filing. Under the asset purchase agreement, Elitech will acquire ownership of NAD.
Nanogen has agreed to sell substantially all of its assets to Elitech for a purchase price of $25.7 million. The sale is subject to customary closing conditions, approval of the Bankruptcy Court and the auction process in which the Company will seek competing bids to achieve the highest price possible for the assets. The Company will continue to manage and operate its businesses and assets during the pendency of the sales process, subject to the supervision of the Bankruptcy Court.
In conjunction with the filing, Nanogen is seeking customary authority from the Bankruptcy Court that will enable it to continue operations and deliver products to customers in the ordinary course of business and without interruption. The requested approvals include requests for the authority to make wage and salary payments, continue various benefits for employees, and honor basic terms of business for its customers. In addition, Nanogen expects to honor its obligations to its vendors and other business partners for goods and services received after the bankruptcy filing.
On January 21, 2009, Nanogen announced that it would seek alternatives to the previously announced share exchange agreement with Elitech. Despite extensive and thorough efforts by the Company and its advisors, the Company was unable to secure sufficient working capital or alternative corporate transactions to enable the Company to service its debt obligations and fund its operations. The Company’s management believes that filing for relief under Chapter 11 and the proposed sale of its businesses are in the best interest of the Company, as well as its partners, vendors, customers and creditors.
The Company will not have sufficient proceeds to permit distributions of cash or other property to its holders of common stock unless the Company succeeds in selling its assets for an amount significantly in excess of the amount contemplated by the asset purchase agreement with Elitech.