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Feb 2nd, 2007 - 16:31:59
April 17 Deadline State attorneys general said they expect manufacturers to meet the April 17 payment deadline and are in talks with the companies to ensure no money is withheld. The states ``believe it would not be appropriate'' for manufacturers ``to withhold any portion'' of the $6.5 billion due, the attorneys general statement said. Before they can cut their payments, tobacco companies must prove in court that the states haven't enforced laws that require them to collect money from companies outside the settlement. The states ``believe that every state will be found to have diligently enforced'' the statutes, the statement said. Altria shares rose 33 cents to $72.37 at 12:58 p.m. in New York Stock Exchange composite trading. Reynolds American rose $1.66 to $108.24. Loews Corp. shares rose 80 cents to $101.48. The manufacturers didn't have immediate comment, according to spokesmen Michael Neese at Philip Morris USA, David Howard at Reynolds American's R.J. Reynolds Tobacco Co. and Jordan Bressler at Loews' Lorillard Tobacco Co. Greater Payments? The Cambridge, Massachusetts-based arbiter's decision affirmed its March 1 preliminary ruling. Ken Wise, a Brattle spokesman in San Francisco, said the company won't release or comment on the findings. Big tobacco companies may pay the $1.2 billion in exchange for state legislatures requiring greater payments from small manufacturers that aren't part of the health-care settlement, said Eric Lindblom, director of policy research at the Washington-based Campaign for Tobacco-Free Kids. Higher payments might spur these producers, including makers of discount cigarettes, to raise prices, helping big manufacturers win back smokers who switched to the cheaper brands, Lindblom said. Under the settlement, states are required to collect sales results from tobacco companies that are not part of the pact and then force those producers to put payments in escrow. Those escrow payments are intended to replace declining payments by manufacturers participating in the settlement. Iowa Legal Maneuver Iowa Attorney General Tom Miller told reporters March 8 that state attorneys general notified major cigarette makers in letters they may sue the companies over the $1.2 billion in disputed payments. ``The states are going to have to find whatever legal means they can to prevent the tobacco companies from withholding their payments,'' said Richard Larkin, a municipal bond analyst with J.B. Hanauer & Co. ``I don't know how successful they will be.'' The big companies may withhold that amount from the $6.5 billion they're scheduled to pay states on April 17, citing a provision that allows them to adjust payments if their collective market share decreases by more than 2 percentage points, attorney generals said. That occurred in 2003, starting a two-year waiting period that prevented the companies from seeking the adjustment until now. Manufacturers have so far paid more than $41 billion in the settlement, Miller said. Other conditions also have to be met before the companies can reduce payments. These include proving that states failed to diligently enforce certain statutes passed after the agreement, he said. Producers covered by the accord accounted for 91.6 percent of U.S. market share in 2003, down from 99.6 percent in 1997, Philip Morris USA's Neese said on March 8, citing PricewaterhouseCoopers, the settlement fund's auditor. Advertising Restrictions The settlement, signed by companies including Reynolds American's R.J. Reynolds and Brown & Williamson Tobacco Corp. and Loews's Lorillard, called for them to make payments to 46 states in perpetuity. Mississippi, Florida, Minnesota and Texas had already settled their claims for about $40 billion. The tobacco makers agreed to restrict advertising and marketing, including a ban on billboards, buses and taxicabs, and merchandise logos. They're also paying for anti-tobacco ads by the American Legacy Foundation, an organization that runs programs to reduce teen smoking. South Carolina Attorney General Henry McMaster is planning to file a lawsuit April 17 if the state doesn't get its full $77 million payment from the agreement. The state is expecting the payment to be cut by $14 million if the tobacco companies follow through on threats to reduce payments. The attorney general has gotten approval for $1 million of legal fees to start the legal fight, according to Trey Walker, a spokesman for McMaster. ``The attorney general is preparing for a massive lawsuit fighting tobacco companies for full payment,'' said Walker. South Carolina sold $912 million of bonds. © Copyright 2006 by DiscountCigarettesBox.Com Top of Page |
