Chattem receives consents needed to amend 7% notes indenture

By Angela McDaniels

Seattle, July 25 - Chattem, Inc. said it received consents from holders of 99% of its $107.5 million 7% senior subordinated notes due 2014 during a consent solicitation that ended Tuesday. The company, the guarantors and trustee US Bank NA have therefore amended the indenture governing the notes, according to a company news release.

The amendments permit an $85 million increase in the company's capacity to make restricted payments, including repurchasing common stock, and adjust to 2.5:1.0 the fixed charge coverage ratio that Chattem must meet before it and its guarantors can incur certain types of debt or issue certain types of securities.

The consent payment - $50 per $1,000 principal amount - is expected to be made on Wednesday to noteholders who consented.

The consent solicitation was launched on June 26 with a $15 per $1,000 principal amount consent fee, which was later raised to $40 per $1,000 principal amount and again to $50 per $1,000. The deadline, originally set for July 14, was also extended to July 18.

Questions can be directed to Wachovia Securities (liability management group at 704 715-8341 or 866 309-6316). Global Bondholder Services Corp. (212 430-3774) is information agent.

Chattem is a Chattanooga, Tenn. manufacturer of consumer products.

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