Rothmans Inc. announces resolution of RCMP investigation

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[{"type":"text","content":"\n\n\n\nTrading: TSX: ROC\n\n\nTORONTO, July 31 /CNW/ - Rothmans Inc. announced today that an agreement\nhas been reached with the Government of Canada and the governments of all ten\nprovinces that resolves the RCMP's investigation relating to sales of products\nexported from Canada by Rothmans, Benson & Hedges Inc. ("RBH") in the period\n1989 - 1996. Under the terms of the comprehensive agreement, payments expected\nto total C$550 million are to be made commencing in 2008 and over the next ten\nyears. As part of the overall resolution, RBH has entered a plea of guilty to\na single count of violating a provision of the Excise Act (Canada).\n\n\nAs previously disclosed, the RCMP investigation related to allegations\nthat some of the tobacco products manufactured and exported by RBH were\nillegally smuggled back into Canada without payment of applicable excise and\ntobacco taxes and duties. RBH and Rothmans Inc. have agreed to this overall\nresolution in order to bring closure to this legal matter and to put an end to\nthe uncertainty and burden on the companies arising from the RCMP's\ninvestigation.\n\n\nThe terms of the settlement require the following payments to be made:\n\n- $100 million fine payable by RBH by no later than October 29, 2008;\n- $50 million towards a new government Contraband Tobacco Enforcement\n Strategy payable by RBH no later than December 15, 2008;\n- $200 million payable by Rothmans Inc. over 10 years at a rate of $20\n million per year with the first payment to be made by December 31,\n 2009;\n- an estimated $200 million payable by RBH, with the first payment of\n $50 million to be made no later than December 31, 2008 and the\n remainder scheduled to be paid over a 10-year period based on a\n formula related to the revenue of RBH set out in the comprehensive\n agreement.\n\n\nIn conjunction with the resolution of this matter, RBH expects to repay\nits currently outstanding 5.552% Senior Unsecured Bonds in the principal\namount of C$150 million (the "Bonds"). Although the Bonds have a scheduled\nmaturity date of December 21, 2011, the terms of the settlement may result in\nan event of default under the terms of the trust indentures pursuant to which\nthe Bonds were issued.\n\n\nRBH has entered into an agreement with JP Morgan Chase Bank, N.A. for a\none-year revolving loan facil...

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