Business & Finance - Tobacco Reporter

22nd Century Submits CBD Drug Master File

22nd Century Group filed a U.S. drug master file (DMF) to the U.S. Food and Drug Administration for cannabidiol (CBD) API from GVB Biopharma, a 22nd Century Group company, according to a company press release.

“GVB Biopharma is widely recognized for the quality and consistency of its Cannabinoid extracts and ingredients,” said James A. Mish, CEO of 22nd Century. “We are now leveraging these capabilities with our DMF filing to meet the increasing regulatory demands of the supplements markets.”

Additionally, 22nd Century and GVB Biopharma have entered into an agreement with Cannabinoid API Solutions (CAS) and Transo-Pharm for global sales, marketing and distribution of GVB’s Cannabinoid APIs. Transo-Pharm is a well-established supplier and distributor of pharmaceutical APIs to a broad portfolio of branded and generic finished drug product manufacturers, including more than 75 current active, ongoing development programs.

“The partnership with Transo-Pharm will accelerate opportunities to supply our APIs to the largest and most innovative pharmaceutical and consumer goods manufacturers in the world,” said Mish.

January 23, 2023

BAT Named Global Top Employer

BAT has been certified as a Global Top Employer for the sixth consecutive year, according to the company.

Certification is granted by the Top Employers Institute, an independent organization that studies the employee offerings of major employers around the world.

“We are delighted to have been recognized once again as a Global Top Employer,” said Hae In Kim, director of talent, culture and inclusion at BAT. “Our people are our most important asset as we strive to build ‘A Better Tomorrow.’ The BAT ethos sets a clear direction for us to enable a diverse and inclusive workplace culture, and we are committed to attracting, developing and retaining a talented workforce by putting our people first.”

In 2023, BAT has been named as a Top Employer in a total of 37 countries across the Americas, Europe, Asia-Pacific, the Middle East and Africa. Certification this year marks the first time BAT’s U.S. subsidiary, Reynolds American Inc., has been named as a Top Employer in the United States.

January 17, 2023

Pyxus Commences Exchange Offer

Pyxus International’s wholly owned subsidiary, Pyxus Holdings, has commenced a private offer to exchange any and all of the issuer’s outstanding 10 percent senior secured first lien notes due 2024 for an equal principal amount of new 8.5 percent senior secured notes due 2027 to be issued by the issuer, according to the company.

In conjunction with the exchange offer, the issuer is soliciting consents from the holders of the existing notes to amend the indenture, dated as of Aug. 24, 2020, among the issuer, the guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent, the existing notes and the related intercreditor and security documents as necessary to, among other things, eliminate most of the restrictive covenants and certain of the affirmative covenants applicable to the existing notes; eliminate the change of control repurchase obligation in the existing notes indenture and the existing notes; subordinate in right of payment the existing notes to the issuer’s existing and future senior indebtedness, including the new notes, the new term loans, the existing term loans and the ABL credit agreement; and eliminate certain events of default and release all of the collateral securing the existing notes.

This follows Pyxus’ previous announcement of its agreement with creditors.

January 6, 2023

Pyxus Enters Agreement with Creditors

Pyxus International and certain of its subsidiaries, including Pyxus Holdings, entered into a Support and Exchange Agreement with a group of creditors, including Glendon Capital Management, Monarch Alternative Capital, Nut Tree Capital Management, Intermarket Corporation and Owl Creek Asset Management, on behalf of certain funds managed by them and/or certain of their advisory clients as applicable, according to a company press release.

Pursuant to the Support Agreement, the company and its subsidiaries intend to launch comprehensive exchange transactions offered to all qualified holders of its secured debt, by which such holders will be offered the opportunity to exchange all of their secured debt at par for newly issued secured debt, maturing on Dec. 31, 2027. If consummated, the exchange transactions will result in a significant portion of the secured debt being replaced with longer dated debt.

“The company appreciates the support received from our lenders and noteholders, which demonstrates their confidence in our long-term strategy and the resilience of our business,” said Pyxus President and CEO Pieter Sikkel. “The exchange transactions will provide us with additional flexibility and extend near-term maturities to December 2027, allowing us to focus on the continued growth of our business and driving stakeholder value.”

The support agreement and the exchange transactions were recommended by a special committee of the board of directors of the company comprising a majority of the disinterested members and approved by the board of directors of the company.

January 5, 2023

PMI, Medicago Cut Ties After WHO Rejection

Philip Morris International and the health group Medicago have severed ties after the World Health Organization rejected Medicago’s Covid-19 vaccine, according to a tobacco control body.

Covifenz, the world’s first plant-based Covid-19 vaccine, was jointly developed by Medicago, which is owned by Mitsubishi Chemical, Philip Morris and Glaxo, according to Bloomberg. The Canadian government, which provided $173 million in funding for its development, has cleared it for use.

The government of Quebec previously said it wanted to help Medicago replace its shareholder PMI with another investor so that the biotech firm can distribute its Covifenz Covid-19 vaccine internationally.

“Tobacco corporations, vaccines and governments don’t mix well, and we applaud the expulsion of Philip Morris from the Medicago collaboration,” Les Hagen, the executive director of not-for-profit organization ASH Canada, said in a statement.

Medicago’s request for an emergency-use listing was denied earlier this year by the World Health Organization because of the links with tobacco industry.

Earlier this year, Medicago announced it would cut 62 jobs at its manufacturing facility in Durham, North Carolina, USA, which played a key role in producing the company’s tobacco plant-based Covid-19 vaccine.

December 26, 2022

Altria Abandons Expiring Cronos Warrant

Altria Group has notified Cronos Group of its irrevocable abandonment of its warrant to purchase additional common shares of Cronos and all rights that it may have held in the warrant or any common shares underlying the warrant for no consideration, according to an Altria press release.

In March 2019, Altria acquired, through its subsidiaries, a 45 percent ownership interest in Cronos and the warrant. The warrant was exercisable until March 8, 2023, at an exercise price of CAD19 ($13.93) per common share. Prior to abandonment of the warrant, Altria, through its subsidiaries, owned 156,573,537 common shares of Cronos (representing approximately 41 percent of the Cronos common shares issued and outstanding) and, by fully exercising the warrant, could increase its ownership by 84,243,223 Cronos common shares to 240,816,760 Cronos common shares (representing approximately 52 percent of the Cronos common shares that would be issued and outstanding following full exercise of the warrant).

The closing share price of Cronos common shares on Dec. 15, 2022, was CAD3.81, and the Cronos common shares have not traded above CAD6 over the past 12 months. Given the Cronos trading levels and the March 2023 expiry of the warrant, Altria elected to abandon the warrant on Dec. 16, 2022. As a result of the warrant abandonment, Altria expects to claim a capital loss of $483 million on its U.S. federal consolidated income tax return for 2022. Altria continues to own 156,573,537 common shares of Cronos.

Altria, through its subsidiaries, holds the Cronos common shares for investment purposes. Altria will continue to evaluate Cronos’ business and prospects and all other factors it deems relevant in determining whether it or its affiliates will acquire additional common shares of Cronos or dispose of common shares of Cronos in the open market, in privately negotiated transactions (which may be with Cronos or with third parties) or otherwise.

December 19, 2022

Companies to Post ‘Corrective Statements’

Tobacco companies will have to start displaying signs with “corrective” statements about the health effects and addictive nature of cigarettes at U.S. points of sale in the second half of 2023, according to the Department of Justice (DOJ), reports Fox News. A court order requiring the statements will take effect July 1, 2023, after which tobacco companies will have three months to start posting the statements for 21 months in English and Spanish.

The order “resolves the government’s long-running civil racketeering lawsuit against the largest United States cigarette companies,” according to the DOJ. The racketeering lawsuit was filed in 1999 and ended in 2005; however, the DOJ said the new court order is the last of several corrective remedies related to that case.

Altria Group, Philip Morris USA, R.J. Reynolds Tobacco Co. and four cigarette brands owned by ITG Brands are subject to the order. An estimated 200,000 of 300,000 retail stores in the U.S. that sell cigarettes have agreements with the tobacco companies. The order requires the companies to amend their agreements, requiring corrective statements to be placed at the stores on color signs that are eye-catching. Messaging will include adverse health effects of smoking, the addictive nature of nicotine and adverse health effects of secondhand smoke, among others.

“Justice Department attorneys have worked diligently for over 20 years to hold accountable the tobacco companies that defrauded consumers about the health risks of smoking,” said Associate Attorney General Vanita Gupta. “Today’s resolution implements the last remedy of this litigation to ensure that consumers know the true dangers of the smoking products they may consider purchasing.”

“This is an important moment in the history of cancer control in the United States,” said William Klein, associate director of the National Cancer Institute’s behavioral research program. “Smoking causes about 30 percent of all cancer deaths in the United States, and therefore, the court-ordered corrective statements appearing at the point of cigarette sale will help support our mission to reduce the burden of cancer. We are grateful to our colleagues at the Department of Justice for having completed this significant work.”

December 7, 2022

Philip Morris International to Delist Swedish Match

Philip Morris International plans to take Swedish Match off of the stock market now that it owns a large enough share of the company to initiate a compulsory redemption of remaining shares, according to Reuters.

“We are delighted to have obtained over 90 percent ownership of Swedish Match, allowing us to initiate a minority redemption process to acquire the remaining shares outstanding and request the delisting of the company from the stock market,” said PMI CEO Jacek Olczak in a statement.

“This transaction marks a major milestone in accelerating our shared objective of a smoke-free future. We look forward to welcoming Swedish Match’s employees and leading oral nicotine portfolio into the PMI family to create a global smoke-free champion, notably bringing IQOS and Zyn together in both the U.S. and international markets.

“We are very excited about the growth, value creation and progress in tobacco harm reduction that we believe can be achieved together over the coming years. Despite the increased cost of financing over recent months, we expect the combination to be low single-digit accretive to PMI’s adjusted diluted EPS in 2023, before potential revenue synergies and excluding transaction-related and one-off costs and the amortization of acquired intangibles.”

In May, PMI submitted a $16 billion takeover bid for Swedish Match. The bid initially received pushback from Elliott Management, Framtiden and other stakeholders as they felt that it undervalued the company. PMI later raised its bid from SKK106 ($10.21) per share to SKK116 per share. Elliott Management, Framtiden and the other shareholders agreed to tender their shares after the bid was raised, and PMI secured over 83 percent approval by the end of the initial offer period.

November 28, 2022

Shares Sold in Imperial’s Former Russia Unit

Russian businessman Sergei Katsiev has acquired a 15 percent stake in International Tobacco Group, the former Russian subsidiary of Imperial Brands, reports Interfax, citing data from the Unified State Register of Legal Entities (USRLE).

In March, Imperial Brands announced that it was suspending operations in Russia, including production at its factory in Volgograd, sales and marketing, in response to Russia’s military assault on Ukraine. In April, the company said it had transferred its business in Russia to local investors.

Earlier this year, Imperial Tobacco Sales and Marketing and Imperial Tobacco Volga were renamed International Tobacco Group and International Tobacco Group Volga, respectively.

According to the USRLE, Nikolai Tyaka owns 75 percent of International Tobacco Group and International Tobacco Group Volga.

Following the Feb. 24 invasion, international cigarette manufacturers announced they would end their operations in Russia, but retreating from such a major market is easier said than done. Tobacco companies have had to carefully navigate shifting regulations and avoid missteps that could prompt the government to seize the business, for example—all the while trying to protect employees from becoming targets for arrest.

Tax payments by the leading international cigarette manufacturers have provided the Russian government with at least $7.25 billion in additional income since President Vladimir Putin ordered his army to attack Ukraine, according to an analysis of Russian Treasury figures conducted by The Telegraph.

Because Russia and Ukraine were relatively small markets for Imperial Brands, representing around 2 percent of net revenues and 0.5 percent of adjusted operating profit in 2021, the company may have found it easier to extract itself from Russia than some of its larger competitors.

November 9, 2022

KT&G Partners with Mirae Financial Group

KT&G and Mirae Asset Financial Group have created the New Growth Investment Partnership No. 1 to identify and develop new business areas.

“We are forming a strategic alliance with Mirae Asset for investment in new-growth industries in order to secure sustainable growth in the midst of the rapidly changing business environment and to identify businesses of new plant species,” said Lee Woong-kyu, a representative of KT&G’s growth and investment department, in a statement.

He explained that KT&G will invest in new business areas while strengthening the capacity of its existing businesses.

October 18, 2022

Category: Business & Finance