Illinois lawmakers reject bill. California officials temporarily shelve plans to sell $2.3 billion in bonds backed by tobacco settlement.
Jump to full article: Los Angeles Times, 2003-04-04
Author: Myron Levin, Times Staff Writer
Intro: The result has been a high-stakes game of chicken in which plaintiffs and anti-smoking groups have urged authorities to call the company's bluff. State attorneys general simultaneously are vowing to sue the company and to ask trial Judge Nicholas G. Byron to lower the appeal bond.
Tobacco company debt ratings have been lowered and bond sales canceled since the March 21 verdict, as the financial repercussions have overshadowed legal issues in the Illinois class-action case, which was the first to accuse cigarette makers of deceptively marketing low-tar cigarettes.
In further fallout Thursday, California officials temporarily shelved plans to sell $2.3 billion in bonds backed by future tobacco settlement receipts. Missouri also scrapped a bond sale. . .
In more bad news for Philip Morris and No. 3 cigarette maker Brown & Williamson Tobacco Corp., a state court jury in St. Petersburg, Fla., on Thursday found them liable in a case filed by John F. Eastman, 74, a longtime smoker who suffers from emphysema. It appeared the $6.54-million verdict would be halved based on a finding that Eastman was 50% at fault. The firms said they would appeal. . .
Some analysts say that although Philip Morris may be unable to pay the bond and the states, Altria certainly could.
"It may be literally true that Philip Morris alone" can't pay the $12 billion, said Charles Linke, an emeritus professor of finance at the University of Illinois who is a consultant to plaintiffs lawyers in the light-cigarette case. But "Altria certainly can post the bond of $12 billion," Linke said.
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