Chattem makes major announcement to purchase Gold Bond.CHATTANOOGA, Tenn.--(BUSINESS WIRE)--April 10, 1996--Chattem, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CHTT), a Chattanooga, Tennessee “Chattanooga” redirects here. For other uses, see Chattanooga (disambiguation). Chattanooga is the fourth-largest city in Tennessee (after Memphis, Nashville, and Knoxville), and the seat of Hamilton CountyGR6 , based manufacturer of health and beauty aids, announced today the signing of an agreement to purchase the worldwide rights for the Gold Bond line of medicated medicated /med·i·cat·ed/ (med´i-kat?id) imbued with a medicinal substance. medicated contains a medicinal substance. powders and anti-itch creams from Martin Himmel Inc. ("MHI MHI Manufactured Housing Institute MHI Montreal Heart Institute (Montreal, Quebec, Canada) MHI Median Household Income MHI Main Hawaiian Islands MHI Material Handling Institute "). Gold Bond is the leading brand of adult medicated powder and has a significant position in the medicated baby powder and anti-itch cream categories. Since MHI's acquisition of the brand in 1990, Gold Bond brand sales have grown rapidly to over $25,000,000 in 1995. The terms of the purchase price were not disclosed. Concurrently with the closing of the acquisition, the Company will enter into a $61,500,000 bank credit agreement and issue 1,100,000 new shares of Company stock at $5.00 per share to a group of investors, including certain officers, directors and affiliates. The Company received an opinion from an independent investment banking firm that the terms of the sale of stock to certain insiders are fair to the public shareholders from a financial point of view. The proceeds of the financings will be used to fund the Gold Bond purchase and repay all existing bank indebtedness. The purchase of Gold Bond is consistent with Chattem's strategic plan to grow through the acquisition and introduction of quality products which are or can become leaders in small to medium size categories or segments. This is evidenced by the successful acquisition and development of brands such as Bullfrog bullfrog, common name of the largest North American frog, Rana catesbeiana. Native to the E United States, this species has been successfully introduced in the West and in other parts of the world. The body length is 4 to 8 in. , Flex-all, Icy Hot and most recently, pHisoderm. The Gold Bond brand, which is approximately 100 years old, competes in the medicated powder and anti-itch cream markets with each category being under $200 million in retail sales. Gold Bond is the leading brand in the medicated powder market and has a growing presence in the anti-itch cream market. Gold Bond has been and will continue to be focused on skin care categories where fast and effective itch relief is a primary consumer benefit. MHI has built a loyal consumer franchise with high brand awareness through heavy advertising and promotional campaigns. Chattem believes opportunities exist to continue to expand the business to other skin care categories and to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. the Company possesses. Further opportunities exist internationally since Gold Bond had focused its efforts on the domestic business. Chattem expects that Gold Bond will add incremental earnings on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis of $0.30 to $0.35 per share in the first full year of operations. In its fiscal year ended November 30, 1995, Chattem earned $0.32 per share from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the and has previously projected 1996 earnings of $0.30 to $0.35 per share after a $0.15 to $0.20 per share investment related to the launch of pHisoderm Anti-bacterial Skin Cleanser. Looking to fiscal 1997, aggregate earnings including earnings from Gold Bond, could approach $0.90 to $1.00 per share. NationsBank, N.A. has underwritten the credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities and will serve as Agent and Arranger of the new bank agreement which will include term loans totaling $37,500,000 and a $24,000,000 working capital facility. The transaction is expected to close by early May and is subject to receiving favorable termination of a Hart Scott Rodino filing. The Company is extremely excited about the long-term opportunities the Gold Bond acquisition brings to Chattem. With a goal of being a health and beauty aids company with sales of $200 million, this acquisition addresses several critical issues in achieving that goal, including sales growth, critical mass, diversification in an increasingly competitive industry, and meaningful cash flow and earnings growth. CONTACT: Chattem Inc. Robert E. Bosworth, Executive Vice President & Chief Financial Officer, 800/366-6077, ext. 287 or Joey B. Hogan, Director of Finance, 800/366-6077, ext. 221 or The Foristall Company, Inc. Telephone: 212/797-4646 130 Water Street, Suite 4M New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , New York 10005 (Contact: L.E. Foristall) |
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