The bill, introduced by Sen. Mitch McConnell, R-Ky., along with other tobacco-state senators including Sen. Elizabeth Dole, R-N.C., and Sen. John Edwards, D-N.C., would require R.J. Reynolds to pay more than $570 million in taxes.
A spokeswoman called it “totally unpalatable” for the company.
Under the bill, cigarette makers would pay for 98 percent of the $13 billion buyout over a six-year period. The figure is based on the company’s market share. R.J. Reynolds is the second-largest cigarette maker in the nation. Over the six-year life of the bill, the company could pay out $3 billion.
Earnings forecast for 2003 are $470 million to $495 million, $775 million more than R.J. Reynolds’ projected operating profit for the year.
Tommy Payne, the company’s executive vice president said the bill “demonstrates an absolute lack of understanding of the financial situation of the tobacco industry.
Reynolds, Brown & Williamson and Lorillard Tobacco Co. are also concerned that buyout legislation will be linked to FDA regulation of cigarettes.
Philip Morris is pushing for linking FDA regulation with the tobacco buyout.