Category: Business

  • Pacific Cigarette Co. in Voluntary Business Rescue

    Pacific Cigarette Co. in Voluntary Business Rescue

    Image: iridescentstreet

    The Pacific Cigarette Company (PCC) was granted a request to be placed under voluntary business rescue following an assessment by revenue authorities that alleged tax violations and outstanding obligations, leaving the company facing liability in the amounts of USD19.3 million and USD79.8 billion, reports The Herald.

    The tax liability also put the company in an insolvent position, according to the PCC, formerly Savanna Tobacco Company.

    The PCC connects the financial issues to foreign currency challenges faced by Zimbabwe in 2005, when the PCC entered a partnership with the Reserve Bank of Zimbabwe (RBZ) and piloted toll manufacturing to survive the introduction of 50 percent foreign currency surrender requirements on exports.

    “Through toll manufacturing, PCC and other businesses were able to source raw materials from their customers, ensuring their sustainability, while complying with the RBZ’s 50 percent foreign currency surrender requirements,” the company said.

    “Then the Reserve Bank governor promoted toll manufacturing as a durable business model for companies facing similar foreign currency challenges.

    “Since then, the toll manufacturing model has been our accepted raw material funding model, removing the need for PCC to finance the working capital for export raw materials.

    “In June this year, without any notice, Zimra performed a spectacular U-turn that has undermined the stability of the business and deemed the raw materials funded by our customers as income, subject to VAT,” according to the PCC.

    “They also levied an arbitrary markup and interest penalties on PCC for the tax assessment period 2018 to 2020, to which we have objected.

    “The issued tax assessments against the company impose tax liabilities amounting to USD19.3 million and USD79.8 billion.” The PCC alleges that Zimra garnished all its bank accounts. “Next, Zimra took the unprecedented step of instructing our customers to pay Zimra any monies owed to PCC, effectively closing off all the company’s income streams.

    “In an effort to get the garnish lifted, PCC submitted a payment plan proposal while awaiting the determination of the objection, which payment plan was rejected by the tax authority,” said the PCC.

    “Zimra’s unprecedented actions on false tax violations have regrettably placed PCC in an insolvent position, forcing the company’s directors to place the business under voluntary business rescue to safeguard the interests of all creditors and stakeholders whilst the company continues to try and amicably resolve the matter with the tax authority.

    “PCC applied to be placed under voluntary business rescue on Oct. 2, 2023, and the Master of the High Court Oct. 4, 2023, appointed Mr. Reuben Mukavhi of Rubaya-Chinuwo Law Chambers Legal Practitioners as the corporate business rescue practitioner,” according to the company.

    “The Zimbabwe Revenue Authority is not in a position to comment in the public domain on the tax affairs of an individual taxpayer as the law through the preservation of secrecy protects clients’ right to confidentiality,” Zimra said.

    The PCC is Africa’s second-largest indigenous tobacco company and Zimbabwe’s first locally owned cigarette company.

  • PMI Joins We Card

    PMI Joins We Card

    Image: Tobacco Reporter archive

    Philip Morris International has joined the We Card Program, a national nonprofit serving the nation’s retailers of age-restricted products. The company’s Swedish Match affiliate will serve on We Card’s manufacturer advisory council.

    Independent retail establishments and large retail chains utilize We Card’s educational and training services for their compliance efforts with federal, state and local laws aimed at preventing age-restricted product sales to minors.

    National and state retail trade associations, government officials, community groups and others also support We Card’s ongoing efforts to raise awareness of responsible retailing and age verification requirements and to educate and train retail employees to identify and prevent underage attempts to purchase age-restricted products.

    “As we enter the U.S. market, our ambition is twofold: to be the market leader across America for innovative smoke-free products that are a better choice than continued cigarette use and to ensure that youth cannot access these products, which are intended only for adults who smoke or use another nicotine product,” said Stacey Kennedy, president of the Americas and CEO of the PMI U.S. business. “Joining We Card reflects the commitment shared by PMI and Swedish Match to further enhance youth access prevention programs in close cooperation with our retail partners.”

    “The We Card Program has long been a vital tool for retailers, and we look forward to working with them to expand the program’s suite of tools to reflect the growing range of innovative nicotine products, including oral pouches,” Kennedy added.

    “We Card is pleased to have Swedish Match join our manufacturer advisory council. This will help us further our mission to prevent underage access to nicotine products and work to address the problem of the social sourcing of those products,” said Doug Anderson, president of the We Card Program.

  • Reynolds Expands American Snuff Facility

    Reynolds Expands American Snuff Facility

    Image: Reynolds

    Reynolds American Inc. announced the opening of the recently expanded American Snuff Company (ASC) operations facility in Clarksville, Tennessee. The investment in the facility will position the company for future growth and has already added over 70 roles to the facility’s workforce, with plans to add more in the coming months.

    ASC celebrated the newly enhanced space with a ribbon-cutting ceremony on Tuesday, Sept. 26, 2023. ASC’s significant investment in the property will increase certain production capabilities, optimize existing processes and allow for the installation of additional processing and packaging lines.

    “American Snuff Company has a long history of operations in Clarksville, and we are proud to further invest in our workforce and production capabilities at the site,” said David Waterfield, president and CEO of Reynolds, in a statement. “This expansion and considerable investment reflect our focus on delivering long-term, sustainable growth for the future of our business.”

    The site will further accommodate research and development and create capacity for additional shipping, receiving and tobacco curing. Additionally, the expanded site will include modernized quality labs, maintenance shops and employee areas.

    The Clarksville site expansion follows a strategic review of Reynolds’ U.S. operations that spanned several years. Historically, the facility used processed tobacco from regional farmers before being sent to other ASC factories for production. This move will bring processing and finished goods production under one roof.

    ASC Clarksville is the Reynolds organization’s second-largest production facility in the U.S.

  • France’s Last Cigarette Factory Closing

    France’s Last Cigarette Factory Closing

    Image: Smeilov

    The last cigarette-making factory in France is set to close by the end of the year, according to the site’s owner, reports The Straits Times.

    The Manufacture Corse des Tabacs (Macotab) is located in Corsica, and it manufactures cigarettes for Philip Morris, which recently ended the contract.

    The factory is owned by SEITA, the former French monopoly. Now, around 30 employees work at the factory, down from 143 in the 1980s.

    In 2019, SEITA closed France’s tobacco processing factory located in the traditional growing region of the Dordogne.

    Legislation to reduce smoking and its related health issues has led to reductions in cigarette sales. Majority of European tobacco product production takes place in Germany and Poland.

  • Greenbutts Partners with H.I.E. Handelsgesellschaft

    Greenbutts Partners with H.I.E. Handelsgesellschaft

    Image: pickup

    Greenbutts, a science-driven leader in biodegradable filter technology, has entered into a strategic agreement with H.I.E. Handelsgesellschaft mbH effective Sept. 15, 2023, according to a press release. H.I.E. Handelsgesellschaft mbH is appointed as Greenbutts’ exclusive distributor for Poland in the European Union.

    Tadas Lisauskas, CEO of Greenbutts, said, “We are confident that our partnership with H.I.E. Handelsgesellschaft mbH will provide Greenbutts customers in Poland with an outstanding quality and exceptional customer service. We seek to achieve strong supply chains by providing them with Greenbutts biodegradable filter rods and filter substrate, offering an expanded range of innovative filter material and local stock for quicker deliveries.”

    Marc Sohns, managing director of H.I.E., added that “As the industry is facing transition by single-use plastic legislation and strengthening environmental commitments in the European Union, we are very pleased to partner with Greenbutts to offer our customers a certified biodegradable filter solution. We will ramp up our supply chain of sustainable substrate in 2024 for our clients in Poland and be in a position to provide them supply and support for the Greenbutts material. The Greenbutts partnership will continue to expand the H.I.E. product offerings to supply the materials that our customers need to be successful.”

  • Kaival Brands Earns Initial Royalties from Philip Morris

    Kaival Brands Earns Initial Royalties from Philip Morris

    Image: ariya j

    Kaival Brands Innovations Group, parent to Bidi Vapor, received its first royalty payments from Philip Morris International for marketing Bidi Vapor products in multiple countries.

    In a press release, Kaival Brands announced that PMI achieved a record level of monthly sales in July for its Bidi products that are marketed by PMI under the names VEEBA and VEEV NOW.

    Eric Mosser, CEO and president of Kaival Brands, said he was pleased to see the positive trajectory of sales and royalties to the company.

    “We are proud to work with Philip Morris and remain steadfast in our commitment to the responsible commercialization of better alternatives to cigarettes for adults who would otherwise continue smoking,” he said.

  • BAT to Invest Further in Bangladesh

    BAT to Invest Further in Bangladesh

    Image: Rumana

    BAT Bangladesh plans to invest BDT1.5 billion ($13.6 million) in its Savar factory site in order to scale up productivity to meet growing demand, according to The Business Post.

    The board of directors approved the decision at its Sept. 24 board meeting.

    The investment will be generated from internal sources and bank financing based on the company’s cash flow, according to the Dhaka Stock Exchange disclosure.

    BAT Bangladesh is constructing a bonded warehouse for storage of wrapping material, leaf and finished goods, according to the disclosure. The company also invested in the electrical, fire detection and protection systems, air conditioning and ventilation systems, IT systems and security systems as well as construction of site ancillary facilities for employee well-being and factory services, the construction of a reinforced cement concrete road and creation of an underground drainage system.

    Earlier this year, the company invested in the Savar factory to create contingency capacity and take advantage of upcoming export opportunities.

    BAT Bangladesh is headquartered in Dhaka and has cigarette factories in Dhaka and Savar, a green leaf threshing plant in Kushtia and a green leaf re-drying plant in Manikganj.

  • PMI Considering Selling Stake in Vectura

    PMI Considering Selling Stake in Vectura

    Image: Denys Rudyi

    Philip Morris International is considering selling a stake in Vectura, according to Reuters.

    PMI is looking to bring on a partner to help operate and grow Vectura’s drug manufacturing outsourcing business, according to company statements to the Wall Street Journal. PMI could possibly sell a majority or a minority stake. Other options are a licensing or royalties deal or a commercial partnership.

    In 2021, PMI bought Vectura for $1.36 billion as part of the company’s long-term plan to transition to a “broader healthcare and wellness” company. PMI also acquired Fertin Pharma and OtiTopic in the same year.

    “We aim to accelerate Vectura’s growth and will be exploring potential partnerships to enhance its contract development and manufacturing organization business,” Chief Financial Officer Emmanuel Babeau said in July, noting that the company remained committed to developing the wellness healthcare segment.

  • BAT Sells Russian Business

    BAT Sells Russian Business

    Image: Tobacco Reporter archive

    BAT has formally entered into an agreement to sell its Russian and Belarusian businesses.

    The buyer is a consortium led by members of BAT Russia’s management team, which, upon completion, will wholly own both businesses. Post completion, these businesses will be known as the ITMS Group.

    “Throughout the transfer process, one of BAT’s key priorities has been the interests of its colleagues in Russia and Belarus,” BAT wrote in a statement. “As part of the agreement, their employment terms will remain comparable to their existing BAT terms for at least two years post-completion.”

    BAT anticipates that the transaction will complete within the next month once certain conditions have been satisfied. Upon completion, BAT will no longer have a presence in Russia or Belarus and will receive no financial gain from ongoing sales in these markets.

    BAT remains confident of delivering its full-year guidance as set out at its half-year results on July 26, 2023.

    BAT’s operations in Russia include a head office in Moscow, 75 regional offices and a manufacturing facility in St. Petersburg. BAT also has an office in Belarus.

    On June 30, 2023, on a constant currency basis, Russia and Belarus accounted for approximately 2.7 percent of group revenue and approximately 2.5 percent of group adjusted profit from operations.

    BAT’s decision to sell its Russian business is a response to Moscow’s military invasion of Ukraine.

  • 22nd Evaluates Alternatives for Tobacco Assets

    22nd Evaluates Alternatives for Tobacco Assets

    Photo: 22nd Century

    22nd Century Group has initiated a process to evaluate strategic alternatives with respect to the company’s tobacco assets. The process will include consideration of a range of strategic, operational and financial transactions and alternatives, such as business combinations, asset sales, licensing agreements, alternate financing strategies and other options.

    “We believe the current market capitalization of the company does not appropriately reflect the value of our assets or their long-term potential. After extensive discussion, our board has determined that the best way to maximize value for shareholders is to comprehensively evaluate the company’s strategic alternatives,” said Nora Sullivan, chair of the board of 22nd Century, in a statement.

    “Through the strategic alternatives process, we hope to identify ways to monetize the value or more effectively expand the market reach of our tobacco portfolio, including our innovative VLN tobacco harm reduction products, the first and only combustible tobacco product to receive a modified-risk tobacco product designation from the U.S. Food and Drug Administration.”

    The company has engaged TD Cowen as advisors in its review of strategic alternatives. There is no assurance that the strategic alternatives process will result in the approval or completion of any specific transaction or outcome.

    The company has not established a timeline for completion of the review process and does not intend to disclose developments unless and until its board of directors approves a specific transaction, concludes the review or determines that further disclosure is appropriate or is required.