WINSTON-SALEM, N.C. -- Reynolds American Inc. has announced that it has completed assuming the $3.5 billion in debt once held by Lorillard Inc., reported The Winston-Salem Journal.
A key element of Reynolds’ $29.25 billion offer for Lorillard to acquire No. 2 traditional cigarette brand Newport was taking possession of seven senior loans through exchange offers made in a private offering. The assumption is the latest follow-through piece of the megadeal, which was completed June 12.
The R.J. Reynolds Tobacco Holdings Inc. subsidiary is acquiring the senior loans, with due dates ranging from 2016 to 2041. Settlement of the exchange offers will be finalized Wednesday.
Winston-Salem, N.C.-based Reynolds issued its own senior debt, the report said, with individual loan amounts ranging from $250 million to $750 million.
Imperial spent $4.4 billion to acquire Reynolds’ Kool, Salem and Winston traditional cigarette brands, as well as Lorillard’s Maverick brand and Lorillard’s blu eCigs. Imperial also gained Lorillard’s Greensboro, N.C., headquarters and the bulk of its 2,900-person workforce, including about 1,400 in Greensboro.
Reynolds and ITG have agreed to continue to make the traditional cigarette brands involved in the deal for up to 18 months.
Reynolds spokesperson David Howard said there is no update on an agreement between Reynolds and British American Tobacco Ltd. (BAT) to pursue a technology-sharing initiative for product innovations, such as heat-not-burn cigarettes and vapor products. BAT made a $4.7 billion investment in Reynolds as part of the megadeal to keep its ownership stake at 42%.
A deal is expected to include allowing BAT to sell Vuse electronic cigarettes and Revo heat-not-burn cigarettes globally under a licensing agreement with Reynolds, said the report, which saves Reynolds the cost of reestablishing an international distribution channel and adds a critical new source of revenue.
“This strategic partnership will combine the experience and expertise of both companies to produce a world-class pipeline of next-generation products with global reach, better suited to meeting the emerging requirements of today’s smokers,” Nicandro Durante, BAT’s CEO, said in July 2014.
Susan Cameron, Reynolds’ CEO, said in July 2014 she is “very bullish about the combination of the research and development resources of both entities and the geographic and revenue-generating opportunities of that initiative.”
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