(Alliance News) - British American Tobacco PLC confirmed on Friday that tobacco litigation in Canada has now been resolved following a court sanction.
The London-based maker of cigarette and vaping products said the court-appointed mediator's and monitor's plan of compromise and arrangement has been sanctioned by the Ontario Superior Court of Justice.
Last month, the owner of Dunhill and Kent said it had made a provision of GBP6.20 billion, or around ZAR144.00 billion, to cover tobacco settlement in Canada.
Under the compromise plan, Philip Morris International Inc's 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 CAD32.5 billion or about GBP18 billion or nearly ZAR418 billion to settle the case.
In Canada, legislation to recover healthcare costs from tobacco companies was introduced in 1998. The law was revised and reintroduced in 2000, and was upheld as constitutional in 2005.
On Friday, the BAT said the plan resolves all Canadian tobacco litigation and provides a "comprehensive" release to its unit Imperial Tobacco Canada Ltd, BAT and all related entities for all Canadian tobacco claims.
"After six years of negotiation, today's decision is an important step that brings ITCAN closer to emerging from CCAA for the benefit of all stakeholders," BAT Chief Executive Officer Tadeu Marroco said, in reference to the Canadian Companies' Creditors Arrangement Act.
"Like our Canadian subsidiary, we remain committed to working with all parties to implement the plan, and complete this process," Marroco said.
Shares in BAT traded 0.4% lower at ZAR724.90 each on Friday afternoon in Johannesburg. In London, shares were up 0.3% to 3,102.00 pence each, however.
By Artwell Dlamini, Alliance News reporter
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British American Tobacco (BATS)
