Imperial Tobacco Canada reach

RNS Number : 3837A

British American Tobacco PLC

31 July 2008

 



For immediate release: Thursday, 31 July 2008

The following announcement was made today by our wholly owned subsidiary, Imperial Tobacco Canada:

IMPERIAL TOBACCO CANADA, federal government and provinces reach resolution on Contraband Tobacco Investigation

MONTREAL, July 31, 2008 - Imperial Tobacco Canada today announced that it has reached a resolution with the federal and all ten provincial governments with regards to the ongoing investigation related to the export to the United States of Imperial Tobacco Canada tobacco products in the late 1980s and early 1990s. 

Today in Montreal, the Company entered a plea of guilty to a regulatory violation of a single count of section 240 (1) (a) of the Excise Act and has paid a fine. The Company has also entered into a 15-year civil agreement (the Comprehensive Agreement) with the federal and provincial governments. 

"We are pleased to have resolved this issue," said Benjamin Kemball, president and CEO of Imperial Tobacco Canada. "Today's events give our business the stability it needs to move forward to address, with clarity and focus, the issues, opportunities and challenges it faces today and will face in the future."

The Company believes that this outcome is in the best business interests of Imperial Tobacco Canada as it provides closure to this issue that dates back many years, as well as providing a framework to work with the authorities on current and future illicit trade issues. 

Imperial Tobacco Canada paid a one-time $200 million fine following the plea.

In addition to the fine set out above ($200 million), and in order, amongst other things, to assist governments in their ongoing future efforts against illicit trade, Imperial Tobacco Canada has agreed to a civil agreement (the Comprehensive Agreement), requiring a payment of $50 million in 2008 and a percentage of Imperial Tobacco Canada's annual net sales revenue going forward for 15 years up to a maximum of $350 million. 

The most significant determinant of Imperial Tobacco Canada's future net sales revenue is expected to be the current and future levels of illicit tobacco sales in Canada. 

Rothmans, Benson & Hedges Inc. (RBH) has entered into a similar resolution. 

As part of the civil agreement, the Company, the federal government, the provinces and RBH will work together on initiatives to fight the growth of illegal tobacco products, which in 2007 accounted for an estimated 20 percent of the tobacco market in Canada. 

Imperial Tobacco Canada is and has been committed to educating Canadians on the current problem of illicit trade, which is very different to the situation 20 years ago; to financing research into the phenomenon; and to working with governments and business partners. Imperial Tobacco Canada looks forward to continued cooperation between all those concerned with this social, economic and business issue. 

ENDS

Notes to editors

For accounting purposes, the C$200 million fine referred to will be treated as an exceptional item for the calculation of the Group's fully diluted adjusted earnings per share. Net charges in 2008, under the Comprehensive Agreement, will not be material.

ENQUIRIES

British American Tobacco Press Office

David Betteridge / Kate Matrunola / Cat Armstrong

+ (44) 0 20 7845 2888 (24 hours)

British American Tobacco Investor Relations

Ralph Edmondson / Sharon Woodcock

[phone] / 1519

Imperial Tobacco Canada 

Catherine Doyle, Manager, Corporate Communications

001 514 932 6161 extension 2113

 

END

 

 

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