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Philip Morris International Inc confirmed on Friday the mediator has proposed that tobacco companies pay about C$32.5 billion or around $23.5 billion to settle litigation in Canada. The court-appointed mediator’s and monitor’s plan of compromise and arrangement has been filed in the Ontario Superior Court of Justice, Philip Morris and British American Tobacco PLC reported separately on Friday. Under the proposed plan, Philip Morris’ deconsolidated Canadian affiliate Rothmans, Benson & Hedges Inc; BAT unit Imperial Tobacco Canada Ltd & Imperial Tobacco Co Ltd; and JTI-Macdonald Corp would pay an aggregate settlement amount of C$32.5 billion, Philip Morris said. Philip Morris said the settlement amount would be funded by an upfront payment equal to its cash and cash equivalents on hand in Canada plus certain court deposits and annual payments based on a percentage of its net income after taxes. The issue of allocation of the C$32.5 billion aggregate settlement as between the companies remains unresolved, the Stamford, Connecticut-based multinational tobacco company which owns Marlboro said. ‘After years of mediation, we welcome this important step towards the resolution of long-pending tobacco product-related litigation in Canada,’ Philip Morris Chief Executive Officer Jacek Olczak said. Earlier, BAT also said it had reached an ‘important step’ in its bid to settle its tobacco litigation in Canada. In a statement, BAT said: ‘This has been a complex, confidential mediation and, like our Canadian colleagues, we are hopeful of a quick conclusion to this process and securing a Canadian settlement for the benefit of all stakeholders.’ ‘We look forward to working towards a final agreement that is in the best interests of all stakeholders, including the claimants, and bringing this process to a successful conclusion,’ the owner of Dunhill and Rothmans said. ‘This settlement will be funded by the cash on hand and the cash generated from the future sale of tobacco products in Canada while at the same time maximizing recovery for the creditors,’ BAT said. It also allows the Canadian tobacco companies to continue operating as a going concern for the benefit of all stakeholders, the company said. Shares in BAT were down 3.1% to 2,644.83 pence each on Friday in London, while they traded 3.3% lower at R 608.20 each in Johannesburg. Philip Morris shares closed down 0.6% to $120.14 in New York on Thursday. Copyright 2024 Alliance News Ltd. All Rights Reserved.
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