22nd Century purchases equipment out of bankruptcy

22nd Century Group has purchased the cigarette production equipment used by the defunct Renegade Tobacco in Mocksville, North Carolina, USA. The Clarence, New York-based biotechnology firm intends to manufacture experimental and high-end cigarettes at the plant.

22nd Century paid $3.22 million for the equipment owned by GE Capital during a bankruptcy proceeding. In October, the company had already signed a lease agreement for Renegade’s 61,500-square-foot facility.

22nd Century plans to first manufacture Spectrum research cigarettes and shortly thereafter begin production of its Red Sun and Magic super-premium brands. The company also expects to enter into a manufacturing agreement with a strategic partner and to begin exporting its products in 2014.

22nd Century believes that having its own factory will create shareholder value as control and production of its differentiated tobacco products will be greatly facilitated and costs will be reduced. Until now, 22nd Century Group’s subsidiary, Goodrich Tobacco Co., had produced all of its products through contract manufacturers.

The company makes the Spectrum cigarette for the U.S. government, which is distributed under the direction of the National Institute on Drug Abuse, part of the National Institutes of Health. The Spectrum line includes a series of cigarette styles that have a similar tar yield, but varying nicotine yields.

Approximately one-third of the manufacturing equipment purchased will not be needed and is expected to be sold to other parties that have already expressed interest.