First Horizon plans exchange offer for 1.75% convertibles

By Angela McDaniels

Seattle, Feb. 28 - First Horizon Pharmaceutical Corp. plans to run an exchange offer for its 1.75% contingent convertible senior subordinated notes due 2024, according to a company news release.

The company said the purpose of the exchange offer is to issue new 1.75% contingent convertible senior subordinated notes due 2024 that contain different terms than the existing notes, including a net share settlement feature that will allow First Horizon to calculate earnings per share using a less dilutive method.

First Horizon will pay an exchange fee of $2.50 per $1,000 principal amount of old notes, of which there were $150 million outstanding as of Feb. 24.

The initial conversion rate for the new notes is 45.1467 shares per $1,000 principal amount, and the maximum number of shares of common stock issuable upon conversion is 60.9385 shares per note.

The company's stock (Nasdaq: FHRX) closed at $20.52 on Tuesday.

Under the net share settlement provision, First Horizon will pay cash up to the principal amount of the notes in response to a conversion, and stock for the remainder. The existing notes convert into stock only.

The exchange offer is subject a minimum of $112.5 million in principal amount of old notes being tendered for exchange, according to the release.

The new notes will also provide for an increase in the conversion rate for holders who convert upon the occurrence of selected fundamental changes that occur before March 13, 2007, according to an S-4 filing with the Securities and Exchange Commission.

If the acquirer is a public acquirer, the new notes may instead become contingently convertible into cash and, if applicable, common stock of the public acquirer.

Morrow & Co. Inc. is the information agent (800 662-5200 or 800 607-0088).

First Horizon is a specialty pharmaceutical company based in Alpharetta, Ga., that markets, develops and sells branded prescription products primarily for cardiology and women's health.

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