Nanogen, Inc. (Nasdaq: NGEN), developer of in vitro diagnostic products, today announced that it has received permission to investigate alternatives to its announced merger with the Elitech Group.
Nanogen requested and Elitech agreed to waive the restrictions in the Share Exchange Agreement related to Nanogen's right to investigate alternatives because Nanogen and Elitech believe it is unlikely that closing conditions to the merger contemplated by the Share Exchange Agreement will be met by March 31, 2009. In consideration of the waiver, Nanogen agreed to waive Elitech's obligations to prepare the audited and unaudited financial statements to be included in Nanogen's SEC filings for stockholder approval. Instead, Elitech agrees to use reasonable commercial efforts to prepare such financial statements and may suspend or terminate such preparation if it deems it commercially reasonable to do so. Accordingly, in addition to working to complete the announced merger with Elitech, Nanogen will also actively explore alternatives including but not limited to a restructured transaction with Elitech, a transaction with a different entity, a sale of assets or a significant equity infusion.
Nanogen and Elitech believe it is unlikely that Nanogen will have obtained stockholder approval or that, given the current financial market conditions, the companies will have arranged for working capital financing by March 31, 2009, both of which are closing conditions to the merger contemplated by the Share Exchange Agreement. If the merger is not closed by March 31, 2009, each of Nanogen and Elitech have the right to terminate the Share Exchange Agreement. In order for Nanogen to solicit the approval of its stockholders, Elitech must prepare and provide to Nanogen for inclusion in its SEC filings certain financial statements. Elitech has not completed the required financial statements and the timing for completing these financial statements is uncertain. In addition, under the terms of convertible notes issued by Nanogen in 2007 and 2008, the failure of Nanogen to commence solicitation of stockholder approval by February 1, 2009 will reinstate Nanogen's obligations to make certain interest and redemption payments, which are currently deferred.