HydroGen gets $2 million life-saving loan; Sacre-Coeur wraps its third August private placement

By Devika Patel

Knoxville, Tenn., Aug. 29 - HydroGen Corp. avoided the risk of having to shut down its operations by arranging a $2 million loan that will fund the business as it seeks long-term financing.

The deal, which was announced after the close Thursday, had been negotiated with Samsung C&T Corp. and Federated Kaufmann Fund on Aug. 22.

Separately, Sacre-Coeur Minerals Ltd. also revealed plans for a C$2 million placement of units after the close on Thursday and settled the deal Friday.

The company's chief executive believes that this financing should be more than enough to cover Sacre-Coeur Minerals' financing needs.

The company settled two additional private placements earlier this month: A C$3.63 million sale of units that settled on Aug. 8 and a C$4.13 million private placement of shares that was completed on Aug. 14.

HydroGen raises funds

After revealing its second-quarter results on Aug. 19, HydroGen immediately settled a $2 million loan with Samsung C&T Corp. and Federated Kaufmann Fund on Aug. 22. The cash-starved company needs the financing to keep its operations afloat.

In the Aug. 19 report, HydroGen said its cash and cash equivalents as of June 30, 2008 were $700,000, compared to a balance of $8.1 million as of Dec. 31, 2007. The report stated that the Cleveland-based company needed additional capital, or it would be forced to cease operations and liquidate its assets.

So the loan, which was announced after the close Thursday, is essentially a stopgap measure to help keep HydroGen in business until it obtains long-term financing in the form of an equity investment or an acquisition.

Proceeds will be used for working capital, including operation of the company's commercial demonstration power plant at ASHTA Chemicals, Inc.

"We are encouraged that Samsung, our strategic partner, and Federated Kaufmann, a valued shareholder, have teamed to provide the company with this critical bridge financing," HydroGen chief executive officer John Freeh said in a press release. "This financing will enable us to continue with our commercial demonstration activities at ASHTA Chemicals, retain key staff who will be required to ensure continuity of our operations and attempt to complete a sale or other form of financing of the company."

"Although we have significantly reduced our workforce and burn rate, we have continued to make operational progress," Freeh continued.

The 12% loan matures on Dec. 15, 2008 but may be extended to Feb. 1, 2009. It is secured by substantially all of the assets of the company and its subsidiary, HydroGen, LLC.

A first tranche of $1 million was released to the subsidiary on the settlement date, Aug. 22. A second tranche of $1 million will be released to the subsidiary on Sept. 30, provided that certain milestones are achieved.

Samsung and Federated Kaufmann also each received a warrant for 400,000 common shares, exercisable in two equal amounts with each tranche of the loan.

HydroGen develops multi-megawatt fuel cell systems. The company's shares (Nasdaq: HYDG) dropped 6.19%, about 1 cent, to close at 0.1501 Friday.

Sacre-Coeur plans one more

Sacre-Coeur Minerals concluded its third private placement in August, raising C$1.55 million, which the company says should be enough to meet its financial needs.

On Aug. 8, the company sold 2.5 million units at C$1.45 apiece for C$3.63 million; it sold 2.75 million common shares at C$1.50 per share for C$4.13 million on Aug. 14, making the total raised this month C$9.3 million.

In this third non-brokered deal, which priced after the close Thursday and settled Friday afternoon, the mineral exploration company sold 1 million units at C$1.55 apiece.

Each unit consists of one common share and one half-share warrant. Each whole warrant is exercisable at C$1.75 for two years.

Proceeds will be used to explore the company's properties located in Guyana.

"This private placement concludes all anticipated financing for the foreseeable future," chief executive officer Irwin Olian said in a release Thursday. "As a result of this last placement, the company will be well funded with a total cash on hand of C$9.3 million. The company is not contemplating doing any more private placements in the near future."

After the deal was completed, Olian said the company was pleased with the show of support from investors.

"We are gratified for the continued support of our strong investor base, even in this rather difficult financial environment," the chief executive said in a news release on Friday. "These additional funds will now ensure that we will be able to carry out all of our anticipated exploration programs for the next 18 months on our portfolio."

The Vancouver, B.C.-based company's shares (TSX Venture: SCM) fell 6.72%, or 9 cents, to close at C$1.25 Friday.

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