Interactive Health to redeem 40% of 7¼% notes with IPO proceeds

By Ted A. Knutson

Washington, Jan. 18 - Interactive Health Inc. revealed it intends to spend $38.3 million from a planned initial public offering of common stock to redeem 40% of its 7¼% senior notes due 2011. Interactive announced the plans in an S-1/A filing with the Securities and Exchange Commission.

The 7¼% notes are scheduled to be redeemed at accreted value plus accrued interest and related redemption premiums. Assuming a redemption date of March 31, the accreted value would be $33 million with a redemption premium of $3.8 million and accrued interest totaling $1.5 million. The effective interest rate of the notes is 12.56%.

Interactive Health also disclosed an estimated IPO price range, putting it at $15 to $17 per share.

Proceeds from the stock sale are expected to be from $41.5 million to a high of $47.9 million if the greenshoe is exercised in full.

Interactive Health is selling 2.9 million shares in the offering. The company's principal owner Whitney & Co. LLC is selling 2.035 million shares.

The notes were originally issued primarily to repay subordinated notes held by affiliates of Whitney and to make a cash dividend payment of $19.3 million to Interactive stockholders.

The Long Beach, Calif.-based massage chair manufacture is prepared to record a $5.5 million early extinguishment of debt pre-tax loss.

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