GT Reached MSA Settlement

North Carolina-based cigarette manufacturer, General Tobacco said it has reached an agreement with states that signed the tobacco industry’s Master Settlement Agreement (MSA) with respect to compliance with its obligations under the MSA.

The states entering into that agreement will support a permanent amendment to the terms under which General Tobacco entered into the MSA upon a favorable resolution of a lawsuit currently pending in California and compliance with the agreement just reached.

That lawsuit, filed in December 2008, seeks a determination from the court that the amended terms do not create any rights in General Tobacco’s MSA competitors to revise their MSA payment terms.

The resolution agreement is a large step towards a complete resolution of General Tobacco’s legal controversy with the states. It will allow General Tobacco to continue making payments towards its past financial obligation under the MSA, and to operate with sufficient working capital to continue as a viable and successful company.

By doing so, General Tobacco will continue to provide the states with a consistent stream of payments that can be used to reduce youth smoking and reimburse the states for medical expenses associated with tobacco related health costs.

“We are pleased with this outcome because it provides our customers with the assurance of General Tobacco’s stability and longevity in the market place,” said J. Ronald Denman, executive vice president of General Tobacco. “In April, when General Tobacco makes its next MSA payment, it will have contributed more than $550,000,000 to the states since its entry into the MSA in August 2004. The amount of our payments shows our commitment to the MSA, and our desire to continue to provide a value oriented economic alternative for adult smokers who can no longer afford the high prices of the premium brands.”

The MSA is a comprehensive accord reached in 1998 with the Attorneys General of 46 states, the District of Columbia and five territories that has fundamentally changed how tobacco is marketed, advertised and promoted. General Tobacco voluntarily joined the MSA in 2004 to support its national mission of improving public health and reducing youth smoking.

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