Chattem to repay bank debt with convertible proceeds

New York, April 3 - Chattem Inc. plans to repay borrowings outstanding on its credit facility with part of the proceeds from an $85 million offering of seven-year convertible senior notes.

The convertibles are set to price after the close Wednesday via bookrunner Merrill Lynch. Talk is for a coupon of 1.625% to 1.875% and an initial conversion premium of 20% to 26%.

Of the proceeds, $25 million will be used to fund a convertible note hedge transaction. With the remaining proceeds and $14 million from a warrant transaction, Chattem will repay amounts outstanding under its credit facility.

Chattem is a Chattanooga, Tenn.-based maker of over-the-counter health care, toiletries and dietary supplement products.

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