General Tobacco reaches deal with states on MSA

February 19, 2009 - An forbearance agreement between General Tobacco Co. and a majority of participating states in the landmark Master Settlement Agreement, including North Carolina, may give the manufacturer a better chance at weathering its financial crunch. According to the National Association of Attorneys General, the essence of the conditional agreement is that General will forgo its rights to future reductions in annual MSA payments if the participating states forgive a portion of General's prior payment obligations.

General Tobacco was founded in 2000 and did not join the Master Settlement Agreement until 2004, roughly six years after the MSA was created in 1998. Because of its late entry, General Tobacco had to make retroactive payments before it could join. As of April, it will have made about $550 million in payments. GT-ONE was General Tobacco's first brand of cigarettes launched in 2000.

It has sought changes to how it pays, in an effort to give it a more predictable payment schedule. In the forbearance agreement, General has agreed to pay $6 million toward its prior obligations by April 15, as well as continue to make its current MSA payments.

Back in October 2008 General sued 52 attorneys general and other tobacco makers in complaining that the belated payments limited competition and forced it to pay more than the original entrants. The lawsuit was dismissed by a Kentucky judge last month.

Related news briefs: Judge dismisses General Tobacco challenge to tobacco settlement..;
General Tobacco lays off nearly 25% of work force..; General Tobacco Sues 52 U.S Attorneys General and 19 Tobacco Companies..; N.C.'s General Tobacco Appoints New Sales Head..; General Tobacco completes move to Mayodan, N.C.. and General Tobacco (GT) could “potentially” come out with a snus product in the future..

References: General Tobacco Co. requests deal for payments It asks for flexibility with MSA agreement by Richard Craver, Winston-Salem Journal, 2/19/2009; General Tobacco nears deal with states on MSA, Forbes.com - Associated Press, 2/17/2009.