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BRITISH AMERICAN TOBACCO PLC - Imperial Tobacco Canada Ltd. files for CCAA an opportunity to settle all outstanding Canadian tobacco litigation

Release Date: 13/03/2019 09:00
Code(s): BTI     PDF:  
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Imperial Tobacco Canada Ltd. files for CCAA an opportunity to settle all outstanding Canadian tobacco litigation

British American Tobacco p.l.c.
Incorporated in England and Wales
(Registration number: 03407696)
Short name: BATS
Share code: BTI
ISIN number: GB0002875804
("British American Tobacco p.l.c." or "the Company")



12 March 2019
British American Tobacco p.l.c.

                            Imperial Tobacco Canada Ltd. files for CCAA

                An opportunity to settle all outstanding Canadian tobacco litigation

British American Tobacco p.l.c. has today been informed by its Canadian subsidiary, Imperial
Tobacco Canada Ltd (ITCAN), that ITCAN has obtained an Initial Order from the Ontario Superior
Court of Justice granting it protection under the Companies’ Creditors Arrangement Act (“CCAA”).
This has the effect of staying all current tobacco litigation in Canada against ITCAN and other Group
companies.

ITCAN’s decision to file for protection under the CCAA follows the Quebec Court of Appeal judgment
holding the industry jointly and severally liable for a maximum of CAD$13.6 billion, and the recent
decision by one of the other Canadian tobacco companies, JTI-Macdonald, to seek, and subsequently
obtain, CCAA protection. If ITCAN had not also obtained court protection, it could have been
required to pay for all or part of JTI-Macdonald’s share of the Quebec judgment, in addition to its
own.

In addition, across Canada, other tobacco plaintiffs and provincial governments are collectively
seeking significant damages which substantially exceed ITCAN’s total assets. In seeking protection
under the CCAA, ITCAN will look to resolve not only the Quebec case but also all other tobacco
litigation in Canada under an efficient and court supervised process, while continuing to trade in the
normal course.

It will remain business as usual for ITCAN, its employees, customers and suppliers and during the
CCAA process, ITCAN’s management will continue to focus on growing its current cigarette and
potentially reduced risk products business.

The Group will continue to consolidate the results of ITCAN, in line with IFRS 10 “Consolidated
Financial Statements”, and ITCAN’s CCAA filing will not negatively affect the Group’s adjusted net
debt to adjusted EBITDA ratio.

The £2.3 billion of goodwill relating to ITCAN on the Group’s balance sheet at 31 December 2018 will
continue to be reviewed on a regular basis. Any future impairment charge would result in a non-cash
charge to the income statement that will be treated as an adjusting item.

Since 2014 the Group has received no dividends from ITCAN and expects that this situation will
continue whilst ITCAN remains under CCAA protection. Notwithstanding this, there will be no
impact on the BAT Group’s dividend payments or policy.
A British American Tobacco spokesperson said:

“Imperial Tobacco Canada has informed us that it disagrees with the Court’s judgment. However, we
understand that CCAA protection will provide Imperial Tobacco Canada an opportunity to settle all of
its outstanding tobacco litigation under an efficient and court supervised process whilst continuing to
run its business in the normal course.”

Quebec Class Action Update

Following the upholding of the Quebec Superior Court’s judgment on 1 March 2019, ITCAN’s share
of the judgment is a maximum of approximately CAD$9.2 billion. Following the first instance
judgment, ITCAN made an initial deposit of CAD$758 million into escrow. As announced on 5 March
2019, an amount of approximately £436 million (CAD$758 million) will be charged to the Group’s
consolidated income statement in 2019 in respect of this sum and treated as an adjusting item.

ITCAN continues to disagree with the judgments of the Quebec Court of Appeal and the Quebec
Superior Court. Canadian consumers and governments have been aware of the health risks
associated with smoking for decades, and ITCAN has always operated and sold its legal products
within a regulatory framework prescribed by successive governments.

Notes to Editors

CCAA is the Companies’ Creditors Arrangement Act, and it refers to the Canadian Federal Act that
allows corporations the opportunity to restructure their affairs. An organisation that files for court
protection under CCAA continues to operate and maintain business that is “in the ordinary course”
or business as usual.

About British American Tobacco

British American Tobacco (BAT) is one of the world’s leading, multi-category consumer goods
companies, providing tobacco and nicotine products to millions of consumers around the world. It
employs over 55,000 people, with market leadership in over 55 countries and factories in 48. Its
Strategic Portfolio is made up of its global cigarette brands and a growing range of potentially
reduced-risk products. These include vapour, tobacco heating products, and modern oral products
as well as traditional oral products such as snus and moist snuff. In 2018, the Group generated
revenue of £24.5 billion and profit from operations of £9.3 billion.

ENQUIRIES

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Investor Relations
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+44 (0)20 7845 1180 / 1519


Forward looking statements

This announcement contains certain forward-looking statements, including “forward-looking” statements made
within the meaning of Section 21E of the United States Securities Exchange Act of 1934. These statements are
often, but not always, made through the use of words or phrases such as “believe,” “anticipate,” “could,” “may,”
“would,” “should,” “intend,” “plan,” “potential,” “predict,” “will,” “expect,” “estimate,” “project,” “positioned,”
“strategy,” “outlook”, “target” and similar expressions. These include statements regarding our intentions, beliefs
or current expectations concerning, amongst other things, our results of operations, financial condition, liquidity,
prospects, growth, strategies and the economic and business circumstances occurring from time to time in the
countries and markets in which the Group operates.

All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties
and other factors that could cause actual future financial condition, performance and results to differ materially
from the plans, goals, expectations and results expressed in the forward-looking statements and other financial
and/or statistical data within this announcement. Among the key factors that could cause actual results to differ
materially from those projected in the forward-looking statements are uncertainties related to the following: the
impact of competition from illicit trade; the impact of adverse domestic or international legislation and regulation;
changes in domestic or international tax laws and rates; adverse litigation and dispute outcomes and the effect of
such outcomes on the Group’s financial condition; changes or differences in domestic or international economic
or political conditions; adverse decisions by domestic or international regulatory bodies; the impact of market size
reduction and consumer down-trading; translational and transactional foreign exchange rate exposure; the impact
of serious injury, illness or death in the workplace; the ability to maintain credit ratings and to fund the business
under the current capital structure; the inability to develop, commercialise and roll-out Potentially Reduced-Risk
Products; and changes in the market position, businesses, financial condition, results of operations or prospects
of the Group.

It is believed that the expectations reflected in this announcement are reasonable but they may be affected by a
wide range of variables that could cause actual results to differ materially from those currently anticipated. Past
performance is no guide to future performance and persons needing advice should consult an independent
financial adviser. The forward-looking statements reflect knowledge and information available at the date of
preparation of this announcement and the Group undertakes no obligation to update or revise these forward-
looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned
not to place undue reliance on such forward-looking statements.

No statement in this communication is intended to be a profit forecast and no statement in this communication
should be interpreted to mean that earnings per share of BAT for the current or future financial years would
necessarily match or exceed the historical published earnings per share of BAT.

Additional information concerning these and other factors can be found in the Company’s filings with the U.S.
Securities and Exchange Commission (“SEC”), including the Annual Report on Form 20-F filed on 15 March 2018
and Current Reports on Form 6-K, which may be obtained free of charge at the SEC’s website,
http://www.sec.gov, and the Company’s Annual Reports, which may be obtained free of charge from the British
American Tobacco website www.bat.com.




Sponsor: UBS South Africa (Pty) Ltd

13 March 2019

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