S&P: Chattem on positive watch

Standard & Poor's said it placed its ratings on Chattem Inc. on CreditWatch with positive implications, including the B+ corporate credit and senior unsecured debt ratings and the B- senior subordinated debt rating on the company.

The CreditWatch listing follows a court-approved final settlement of the class action lawsuit in the phenylpropanolamine (PPA) litigation relating to Chattem's Dexatrim brand. The company expects to record pretax charges totaling $10 million to $15 million, which is below the previous estimate of $20 million to $25 million.

While the distribution of proceeds related to the settlement may not be completed until fiscal 2005, S&P said it believes the court approval of the settlement largely resolves the company's exposure to PPA litigation. Until now, Chattem's ratings have been constrained by the potential effects of the lawsuit.

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