Philip Morris International (PMI) said it has been informed by its Canadian affiliate Rothmans, Benson, & Hedges (RBH) it has to contribute to $32.5 billion expected to be paid by Big Tobacco companies to various claimants in lawsuits in Canada. The court-appointed mediator and monitor in the Companies’ Creditors Arrangement Act (CCAA) proceeding filed a proposed plan against RBH outlining certain terms of a comprehensive resolution of tobacco product-related claims and litigation in Canada. The court-appointed mediator and monitors filed similar proposed plans against Imperial Tobacco Canada Limited and Imperial Tobacco Company Limited (ITL) and JTI-Macdonald Corp. (JTIM).“After years of mediation, we welcome this important step towards the resolution of long-pending tobacco product-related litigation in Canada,” said PMI CEO Jacek Olczak in a Friday press release.“Although important issues with the plan remain to be resolved, we are hopeful that this legal process will soon conclude, allowing RBH and its stakeholders to focus on the future.”If the proposed plans are approved and implemented, PMI said RBH, ITL, and JTIM would pay an aggregate settlement of $32.5 billion. It added this amount would be funded by an upfront payment equal to the companies’ cash and cash equivalents on hand in Canada plus certain court costs subject to $750 million being withheld. With these deals, it said annual payments would be based on a percentage of the companies’ total income after taxes until the aggregate settlement amount is paid. As stated in the plans, the issue of allocation of the $32.5 billion aggregate settlement in the CCAA proceedings remain unresolved.Broadly speaking, it said the plans would release claims against RBH and its affiliates relating to the manufacture, marketing, sale, or use of or exposure to their combustible and traditional smokeless tobacco products based on conduct prior to the effective date. It added related litigation would be dismissed, bringing an end to all pending tobacco product litigation in Canada. If the plans are approved and implemented, it pointed out RBH, ITL, and JTIM would pay an aggregate amount of $32.5 billion into trusts for the benefit of claimants comprising two parts. The first part would be an upfront contribution equal to the companies’ cash and cash equivalents on hand plus certain court deposits, with a withholding of $750 million. When it comes to this part, the plans project the total industry upfront contribution would be $12.5 billion as of December 31, which will see the $750 million withheld working capital amount deducted.The second part would be annual contributions determined by reference to a percentage of the companies’ net-after-tax income (NATI) until the aggregate amount is paid in full. Annual contributions start at 85% of NATI, with a 5% reduction in it every five years until reaching 70%.As stated in the plans, the issue of allocation of the $32.5 billion aggregate settlement between the companies in the CCAA proceedings remains unresolved. PMI said the plan remains subject to any further negotiation by the parties and CCAA court orders, voting by claimants, and approval by the court. Voting on its plan has been scheduled for December. If accepted by the claimants, a hearing to consider its approval would be extended in the first half of 2025. Health Canada said in August tobacco manufacturers could soon be footing the bill for enforcing the Tobacco and Vaping Products Act under a new proposal..Health proposal seeks to bill tobacco industry for enforcement costs.Currently, the $66.2 million annual enforcement cost is borne by taxpayers.“The charge for each tobacco manufacturer will be proportionate to their domestic market share,” said Health Canada.
Philip Morris International (PMI) said it has been informed by its Canadian affiliate Rothmans, Benson, & Hedges (RBH) it has to contribute to $32.5 billion expected to be paid by Big Tobacco companies to various claimants in lawsuits in Canada. The court-appointed mediator and monitor in the Companies’ Creditors Arrangement Act (CCAA) proceeding filed a proposed plan against RBH outlining certain terms of a comprehensive resolution of tobacco product-related claims and litigation in Canada. The court-appointed mediator and monitors filed similar proposed plans against Imperial Tobacco Canada Limited and Imperial Tobacco Company Limited (ITL) and JTI-Macdonald Corp. (JTIM).“After years of mediation, we welcome this important step towards the resolution of long-pending tobacco product-related litigation in Canada,” said PMI CEO Jacek Olczak in a Friday press release.“Although important issues with the plan remain to be resolved, we are hopeful that this legal process will soon conclude, allowing RBH and its stakeholders to focus on the future.”If the proposed plans are approved and implemented, PMI said RBH, ITL, and JTIM would pay an aggregate settlement of $32.5 billion. It added this amount would be funded by an upfront payment equal to the companies’ cash and cash equivalents on hand in Canada plus certain court costs subject to $750 million being withheld. With these deals, it said annual payments would be based on a percentage of the companies’ total income after taxes until the aggregate settlement amount is paid. As stated in the plans, the issue of allocation of the $32.5 billion aggregate settlement in the CCAA proceedings remain unresolved.Broadly speaking, it said the plans would release claims against RBH and its affiliates relating to the manufacture, marketing, sale, or use of or exposure to their combustible and traditional smokeless tobacco products based on conduct prior to the effective date. It added related litigation would be dismissed, bringing an end to all pending tobacco product litigation in Canada. If the plans are approved and implemented, it pointed out RBH, ITL, and JTIM would pay an aggregate amount of $32.5 billion into trusts for the benefit of claimants comprising two parts. The first part would be an upfront contribution equal to the companies’ cash and cash equivalents on hand plus certain court deposits, with a withholding of $750 million. When it comes to this part, the plans project the total industry upfront contribution would be $12.5 billion as of December 31, which will see the $750 million withheld working capital amount deducted.The second part would be annual contributions determined by reference to a percentage of the companies’ net-after-tax income (NATI) until the aggregate amount is paid in full. Annual contributions start at 85% of NATI, with a 5% reduction in it every five years until reaching 70%.As stated in the plans, the issue of allocation of the $32.5 billion aggregate settlement between the companies in the CCAA proceedings remains unresolved. PMI said the plan remains subject to any further negotiation by the parties and CCAA court orders, voting by claimants, and approval by the court. Voting on its plan has been scheduled for December. If accepted by the claimants, a hearing to consider its approval would be extended in the first half of 2025. Health Canada said in August tobacco manufacturers could soon be footing the bill for enforcing the Tobacco and Vaping Products Act under a new proposal..Health proposal seeks to bill tobacco industry for enforcement costs.Currently, the $66.2 million annual enforcement cost is borne by taxpayers.“The charge for each tobacco manufacturer will be proportionate to their domestic market share,” said Health Canada.
