TORONTO, March 7, 2025 – Following years of mediation to resolve long-pending tobacco product-related litigation in Canada, Rothmans, Benson & Hedges Inc. (RBH) is pleased that the court in the Companies’ Creditors Arrangement Act (CCAA) proceeding has approved a plan of compromise and arrangement (the Plan).
The Plan, as approved, will resolve all tobacco product-related claims and litigation in Canada against RBH and its affiliates, including Philip Morris International (PMI). This legal process will now draw to a close, allowing RBH and its stakeholders to focus on the future.
The court also approved substantially similar plans for Imperial Tobacco Canada Limited and Imperial Tobacco Company Limited (together, ITL) and JTI-Macdonald Corp. (JTIM).
As previously disclosed, RBH’s court-appointed mediator and monitor filed a proposed plan for RBH in October 2024. In January 2025, RBH filed an objection to the proposed plan, arguing that the proposed plan could not be approved because the issue of allocation of the CAD 32.5 billion aggregate settlement amount among RBH, ITL, and JTIM remained unresolved. Following a judicial hearing on the proposed plan, RBH, JTIM and ITL reached a consensual resolution of all outstanding objections to the proposed plan filed by the companies, including with respect to the allocation issue, resulting in plan amendments that, among other things, will permit RBH to retain CAD 750 million in accumulated cash.
Select Terms of Plan as Approved by Court
- Under the resolution contemplated by the Plan, RBH, ITL and JTIM will pay an aggregate global settlement amount of CAD 32.5 billion. This amount will be funded by an upfront payment equal to the companies’ cash and cash equivalents on hand plus court deposits, less the CAD 750 million that RBH will be permitted to retain (RBH Retained Amount), and annual payments based on a percentage of the companies’ aggregate “net after-tax income” (NATI, as defined in the Plan and excluding that generated by alternative products such as heat-not-burn, nicotine pouches, and e-vapor) until the global settlement amount is paid in full;
- RBH will be free to deal in its sole discretion with the RBH Retained Amount of CAD 750 million, including being free to transfer or distribute such monies outside of Canada;
- RBH and its affiliates, including PMI and its indemnitees, will obtain a release of claims relating to the manufacture, marketing, sale, or use of or exposure to, RBH’s combustible and traditional smokeless tobacco products based on conduct prior to the effective date of the Plan; related litigation would also be dismissed;
- Alternative product businesses (including heat-not-burn, e-vapor, and nicotine pouches) will be maintained separately from RBH's combustible business; and
- The Plan also contains a number of operating covenants that would govern RBH’s combustible business going forward until the settlement amount has been paid;
Implementation of the Plan is subject to certain conditions precedent, including exhaustion of appeal rights and execution and delivery of definitive documentation, such as execution of contractual releases. Subject to satisfaction of the conditions precedent, it is expected that the Plan will be implemented and become effective in 2025.
About Rothmans, Benson & Hedges Inc.
Rothmans, Benson & Hedges Inc. (RBH), an affiliate of Philip Morris International Inc., is one of Canada's leading tobacco and nicotine companies and is working to deliver a smoke-free future. RBH is committed to sustainability and creating a positive impact on communities, the economy, and the environment. Currently, RBH employs nearly 800 people across the country with its headquarters in Toronto and a factory in Québec City. Discover more about the company at https://www.rbhinc.ca/ and stay updated on RBH's transformation by following Twitter and LinkedIn.
For further information: Media Inquiries: Media Relations, media@rbhinc.ca