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BAT sets aside £436 million provision after Quebec court ruling

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BAT sets aside £436 million provision after Quebec court ruling
FILE PHOTO: A logo is seen at the British American Tobacco offices in London, Britain October 21, 2016. REUTERS/Stefan Wermuth   -   Copyright  Stefan Wermuth(Reuters)
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(Reuters) – British American Tobacco Plc said on Tuesday it would set aside £436 million in 2019, after a Quebec court upheld a 2015 decision that awarded smokers in the Canadian province around C$15 billion (£8.6 billion).

BAT said its Canadian unit was required to place about £436 million in escrow as part of the 2015 decision. The deposit, which was held as an asset on BAT’s balance sheet at the end of 2018, will now be charged as an adjusting expense in 2019, BATS said.

BAT also said that there will be no impact from the charge to adjusted net debt to adjusted EBITDA ratio or to 2019 cash flow.

Canadian subsidiaries of BAT, Philip Morris International and Japan Tobacco International, were appealing a 2015 Quebec Superior Court ruling to award damages to some 100,000 Quebec smokers and ex-smokers who alleged the companies knew since the 1950s that their product was causing cancer and other illnesses and failed to warn consumers adequately.

Imperial Tobacco Canada has said it plans to appeal the judgment to Canada’s supreme court.

BAT, which was not a party to the proceedings and not a party to the judgment, has said it will decide on the next steps over the coming days and weeks.

BAT shares were seen down as much as 2 percent in premarket indicators.

(Reporting by Arathy S Nair in Bengaluru; Editing by Bernard Orr)

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