Chattem, Inc. Commences Tender Offer and Consent Solicitation for Existing 8.875% Senior Subordinated Notes Due 2008.

Business Editors

CHATTANOOGA, Tenn.--(BUSINESS WIRE)--Feb. 10, 2004

Chattem, Inc., (NASDAQ:CHTT) a leading marketer and manufacturer of branded consumer products, announced today that it has commenced a cash tender offer and consent solicitation (the "Offer") for any and all of its $204,538,000 outstanding principal amount of its 8.875% Senior Subordinated Notes due 2008 (the "Notes").

The Offer is scheduled to expire at 12:00 midnight, New York City time, on Tuesday, March 9, 2004, unless extended or earlier terminated (the "Expiration Date"). The consent solicitation will expire at 5:00 p.m., New York City time, on Tuesday, February 24, 2004 (the "Consent Date"), unless extended or earlier terminated. Holders tendering their Notes under the indenture will be required to consent to certain proposed amendments (the "Proposed Amendments") to the indenture governing their Notes, which will eliminate substantially all of the restrictive covenants and certain events of default. Adoption of the Proposed Amendments requires the consent of holders of at least a majority of the aggregate principal amount of the outstanding Notes under the indenture. Holders may not tender their Notes without delivering consents or deliver consents without tendering their Notes.

Holders who validly tender their Notes on or prior to the Consent Date will receive the total consideration of $1,036.73, consisting of (i) the tender price of $1,006.73 and (ii) the consent payment of $30.00, per $1,000 principal amount of Notes (if such notes are accepted for purchase). Holders who validly tender their Notes after the Consent Date but on or prior to the Expiration Date will receive the tender price of $1,006.73 per $1,000 principal amount of Notes (if such notes are accepted for purchase). In either case, Holders who validly tender their Notes also will be paid accrued and unpaid interest up to, but not including, the applicable date of payment for the Notes (if such notes are accepted for purchase).

The Offer is subject to the satisfaction of certain conditions, including the Company's receipt of tenders of Notes representing a majority of the aggregate principal amount of the Notes outstanding, consummation of the required financing, consent from the lenders under the Company's credit facility, as well as other customary conditions. The terms of the Offer are described in the Company's Offer to Purchase and Consent Solicitation Statement dated February 10, 2004, copies of which may be obtained from Global Bondholder Services.

The Company expects to obtain the funds necessary to complete the tender for the Notes from a new long term debt financing.

The Company has engaged Banc of America Securities LLC to act as the exclusive dealer manager and solicitation agent in connection with the Offer. Questions regarding the Offer may be directed to Banc of America Securities LLC, High Yield Special Products, at [phone] (US toll-free) and [phone] (collect). Requests for documentation may be directed to Global Bondholder Services, the information agent for the Offer, at [phone] (US toll-free) and [phone] (collect).

The announcement is not an offer to purchase, a solicitation of an offer to purchase or a solicitation of a consent with respect to any securities. The Offer is being made solely by the Offer to Purchase and Consent Solicitation Statement dated February 10, 2004.

Statements in this press release which are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks, uncertainties and assumptions that could cause actual outcomes and results to differ materially from those expressed or projected.