Resolves Thousands of Lawsuits, Largest Group of Legal Cases Against
Company
Company Will Incur After-Tax Charge of $53 Million in Third Quarter
2013
MIAMI--(BUSINESS WIRE)--
Vector Group Ltd. (NYSE:VGR) today announced that the Company and its
Liggett Group tobacco subsidiary have reached a comprehensive settlement
resolving substantially all of the individual Engle progeny
tobacco litigation cases pending in Florida. Under the settlement, which
does not require court approval, more than 4,900 of the approximately
5,300 individual Engle plaintiffs will be dismissing their claims
against Vector Group and Liggett.
The Company expects to incur an after-tax charge of $53 million in the
third quarter of 2013 related to the settlement agreement. Pursuant to
the terms of the agreement, Liggett will pay a total of $110 million (or
a present value, net of income taxes, of $53 million), with
approximately $61 million ($38 million, net of income taxes) to be paid
in a lump sum, and the balance of approximately $49 million (or a
present value, net of income taxes, of $15 million) to be paid over 15
years. The settlement is expected to be finalized within 90 days and is
contingent upon delivery of the required settlement documents by
plaintiffs' attorneys.
Bennett S. LeBow, Chairman of Vector Group's Board of Directors, said,
"We are pleased to reach this landmark settlement, which prudently
resolves substantially all of the Engle progeny cases pending
against us. The Engle progeny cases have been the biggest
litigation overhang on our company in the last decade, and this
settlement substantially reduces the ongoing litigation risks, as well
as related legal fees and expenses, of these cases."
As background, the Engle litigation was originally filed against
Liggett Group and other cigarette manufacturers as a class action in
Miami-Dade County, Florida in May 1994. The class consisted of all
Florida residents who, by November 21, 1996, "… have suffered, presently
suffer or have died from diseases and medical conditions caused by their
addiction to cigarette smoking." In July 2006, after a multi-year trial,
the Florida Supreme Court decertified the class action, but determined
that certain jury findings from the class trial could be used in
individual Engle progeny cases, including jury findings that
smoking causes lung cancer, among other diseases, that nicotine in
cigarettes is addictive, and that the cigarette companies concealed
material information concerning the health effects or addictive nature
of smoking. To date, the U.S. Supreme Court has declined to accept any
appeals by Liggett and other tobacco companies of adverse verdicts in
the Engle progeny cases.
Vector Group is a holding company that indirectly owns Liggett Group LLC
and Vector Tobacco Inc. and directly owns New Valley LLC. Additional
information concerning the company is available on the company's
website, www.VectorGroupLtd.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
With respect to the after-tax amount of future payments regarding the Engle
settlement agreement, Vector Group used a discount rate of 11%. The
Company has tried, whenever possible, to identify these forward-looking
statements using words such as "anticipates", "believes", "estimates",
"expects", "plans", "intends" and similar expressions. These statements
reflect the Company's current beliefs and are based upon information
currently available to it. Accordingly, such forward-looking statements
involve known and unknown risks, uncertainties and other factors which
could cause the Company's actual results, performance or achievements to
differ materially from those expressed in, or implied by, such
statements.
Sard Verbinnen & Co
Paul Caminiti/Jonathan Doorley/Emily
Deissler
212-687-8080
Source: Vector Group Ltd.
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