First Horizon starts net share settlement exchange for 1.75% convertibles

New York, March 16 - First Horizon Pharmaceutical Corp. said it has begun an exchange offer for its $150 million of 1.75% contingent convertible senior subordinated notes due 2024.

The Alpharetta, Ga., specialty pharmaceutical company is offering new 1.75% contingent convertible senior subordinated notes due 2024 with net share settlement on a one-for-one basis for the existing notes.

Holders who participate will also receive a few of $2.50 per $1,000 principal amount.

Under the terms of the new notes, conversions will be paid in cash up to the principal amount of the notes. Any remaining value will be paid in stock. The existing notes are convertible into stock only.

The new provision will allow First Horizon to use the treasury method of calculating earnings per share, which is less dilutive.

In addition, the new notes will have change of control protection up to March 13, 2007 through an increase in the conversion rate.

The exchange is subject to at least $112.5 million of the old notes being tendered.

Expiration of the offer is 5 p.m. ET on April 18.

UBS Investment Bank is the dealer manager (888 722-9555 ext. 4210). Morrow & Co., Inc. is the information agent (203 658-9400 or 800 662-5200).

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