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MarketScreener Homepage  >  Equities  >  Deutsche Boerse AG  >  British American Tobacco    BMT   GB0002875804

BRITISH AMERICAN TOBACCO

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British American Tobacco's Canadian Unit Files for Bankruptcy in U.S. -- Update

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03/14/2019 | 05:41pm EDT

By Katy Stech Ferek

British American Tobacco PLC put one of Canada's top cigarette distributors into bankruptcy protection in the U.S. after that subsidiary, sued by Quebec smokers in 1998 for hiding health risks, was ordered to pay 9.2 billion Canadian dollars (US$6.9 billion).

Officials who put Imperial Tobacco Canada Ltd. into chapter 15 protection in U.S. Bankruptcy Court in New York said the move is meant stop creditors from taking the tobacco held at the company's Ohio and Montana warehouses while it negotiates a payment plan. Tobacco for its cigarettes, grown in Mexico, is stored in those warehouses as part of its importing process.

"If there were any hiccups in that process, it would cripple the enterprise," said Imperial Tobacco lawyer Jennifer Feldsher, at a hearing held Thursday in New York.

Company officials added in court-filed documents that if legally operating distributors such as Imperial Tobacco shut down, operators that sell untaxed tobacco illegally "will expand to fill the void in the marketplace." More Canadians are buying illegal tobacco, they said.

Judge Shelley Chapman later agreed to temporarily block seizures.

British American Tobacco, one of the world's largest tobacco companies, indirectly owns Imperial Tobacco and several associated companies, which sell to roughly half of Canada's five million tobacco buyers.

Ontario-based Imperial Tobacco, through a subsidiary, sells its 15 brands of cigarettes and a line of vaping products through a network of roughly 180 wholesalers and 27,000 retailers. The two companies employ about 570 people.

Last year, Imperial Tobacco recorded profit before taxes and interest of C$792 million, according to court papers.

The U.S. bankruptcy case, initiated several days after Imperial Tobacco filed for Canada's equivalent of chapter 11 protection, has the potential to delay payments to Quebec smokers and their families behind a class-action lawsuit.

Canada's tobacco industry has fought off more than dozen major lawsuits filed in recent decades from smokers and government authorities who are trying recover health-care costs and other damages.

Imperial Tobacco said litigation claims filed against it in Canadian courts call for damages of more than C$600 billion. That amount dwarfs the company's value, an estimated C$5.5 billion as of Dec. 31.

On March 1, the Quebec Court of Appeals affirmed a May 2015 ruling that found Imperial Tobacco and its two main competitors are liable to pay up to $13.6 billion in damages to Quebec smokers and their families involved with the 1998 lawsuit.

Imperial Tobacco has denied wrongdoing in that case. The decision could be appealed to the Supreme Court of Canada, but tobacco companies haven't indicated they will pursue an appeal.

--Jacquie McNish contributed to this article.

Write to Katy Stech Ferek at katherine.stech@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
BRITISH AMERICAN TOBACCO -2.94% 3086.5 Delayed Quote.23.46%
BRITISH AMERICAN TOBACCO -1.00% 36.155 Delayed Quote.26.48%
BRITISH AMERICAN TOBACCO PLC -0.31% 590.48 End-of-day quote.28.36%
IMPERIAL BRANDS -1.32% 2588.5 Delayed Quote.8.90%
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Financials (GBP)
Sales 2019 25 265 M
EBIT 2019 10 822 M
Net income 2019 6 968 M
Debt 2019 42 103 M
Yield 2019 6,76%
P/E ratio 2019 10,23
P/E ratio 2020 9,38
EV / Sales 2019 4,47x
EV / Sales 2020 4,22x
Capitalization 70 797 M
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Income Statement Evolution
Consensus
 
Mean consensus OUTPERFORM
Number of Analysts 22
Average target price 34,7  GBP
Spread / Average Target 13%
EPS Revisions
Managers
NameTitle
Nicandro Durante Chief Executive Officer & Executive Director
Jack Marie Henry David Bowles Chief Executive Officer-Designate & Director
Richard George William Burrows Chairman
Alan Davy Director-Group Operations
John Benedict Stevens Executive Director & Finance Director
Sector and Competitors
1st jan.Capitalization (M$)
BRITISH AMERICAN TOBACCO26.48%93 551
PHILIP MORRIS INTERNATIONAL36.56%141 731
BRITISH AMERICAN TOBACCO23.46%93 551
IMPERIAL BRANDS8.90%32 725
SWEDISH MATCH33.03%8 816
PHILIP MORRIS CR, A.S.0.00%1 218