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BAT subsidiary nearing settlement in long-running Canadian case

  • ITCAN said: ‘Today marks an important step towards a potential settlement’
  • Like other nicotine sellers, BAT is expanding its ‘new categories’ offering 

A subsidiary of British American Tobacco (BAT) is close to reaching a settlement on a long-running tobacco litigation case in Canada.

Imperial Tobacco Canada (ITCAN) has been in talks with creditors since losing an appeal in March 2019 ordering the company and two other cigarette sellers, Philip Morris and Japan Tobacco, to pay CA$15.6billion in damages. 

The appeal concerned a landmark court ruling four years previously that found the three businesses had failed to sufficiently warn customers of the health problems associated with smoking.

Legal issues: A subsidiary of British American Tobacco (BAT) is close to reaching a settlement on a long-running tobacco litigation case in Canada

Legal issues: A subsidiary of British American Tobacco (BAT) is close to reaching a settlement on a long-running tobacco litigation case in Canada

It is thought to be one of Canada’s largest ever class-action lawsuits, affecting more than a million smokers in Quebec who either failed to quit or suffered severe illness because of smoking.

After losing the appeal, ITCAN filed for bankruptcy protection under the Canadian Companies’ Creditors Arrangement Act while working to resolve all tobacco-related litigation in Canada.

According to Philip Morris, a court-appointed mediator has now proposed the firms pay a C$32.5billion ($23.6 billion) compensation bill, although the exact amount each company will fork out is not yet known.

ITCAN said: ‘Today marks an important step towards a potential settlement. 

‘Since filing for CCAA protection in 2019, ITCAN has been working in good faith under the direction of the mediator to resolve all tobacco litigation in Canada.’

It added: ‘ITCAN is supportive of the settlement framework and structure in the mediator’s and monitor’s plan of arrangement and the progress that has been made, and we remain hopeful that a comprehensive settlement can be achieved quickly. 

‘We look forward to working towards a final agreement that is in the best interests of all stakeholders, including the claimants, and bringing this process to a successful conclusion.’ 

Like other nicotine sellers, BAT is gradually expanding its ‘new categories’ offering in response to enhanced public awareness of tobacco’s harms.

By 2030, it wants to have 50 million people using its non-combustible goods, such as e-cigarettes, heated tobacco brands and modern oral products.

In the first six months of 2024, the firm’s adjusted turnover from new categories increased by 3.1 per cent to £1.7billion, buoyed by strong demand among American customers for its Velo nicotine pouches.

However, its total adjusted sales fell by 3.7 per cent to £12.3billion, while reported revenue dropped by 8.2 per cent due to foreign exchange headwinds and the sale of its divisions in Russia and Belarus.

British American Tobacco shares were 3.1 per cent lower at £26.43 on early Friday afternoon, making them the FTSE 100’s top faller.

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