By Kenneth Lim
Boston, April 5 - Chattem Inc. priced $85 million of seven-year convertible senior notes near the rich end of talk on Wednesday to yield 1.625% with an initial conversion premium of 24%.
The convertibles were offered at par. They were talked at a coupon of 1.625% to 1.875% and an initial conversion premium of 20% to 26%. The deal priced after the market closed.
There is an over-allotment option for a further $15 million.
Merrill Lynch is the bookrunner of the Rule 144A offering.
The convertibles are non-callable and may not be put.
There is a contingent conversion trigger at 130% of the conversion price.
The convertibles have dividend and takeover protection.
There is a net-share settlement feature.
Chattem, a Chattanooga, Tenn.-based maker of over-the-counter health care, toiletries and dietary supplement products, said $25 million of the proceeds will be used to fund a convertible note hedge transaction and to repay outstanding debt. The convertible note hedge transaction and a separate warrant transaction increase the effective conversion price to Chattem to about $94.45, or a 60% conversion premium.
| Issuer: | Chattem Inc.
|
| Issue: | Convertible senior notes
|
| Bookrunner: | Merrill Lynch
|
| Amount: | $85 million
|
| Greenshoe: | $15 million
|
| Maturity: | May 1, 2014
|
| Coupon: | 1.625%
|
| Price: | Par
|
| Yield: | 1.625%
|
| Conversion premium: | 24%
|
| Conversion price: | $73.20
|
| Conversion ratio: | 13.6617
|
| Contingent conversion: | 130%
|
| Effective conversion premium: | 60%
|
| Effective conversion price: | $94.45
|
| Net-share settlement option: | Yes
|
| Dividend protection: | Yes
|
| Takeover protection: | Yes
|
| Call protection: | Non-callable
|
| Puts: | None
|
| Price talk: | 1.625%-1.875%, up 20%-26%
|
| Pricing date: | April 4, after the close
|
| Settlement date: | April 11
|
| Distribution: | Rule 144A
|
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