Reynolds to be Compensated for Early End to BATUS Contract

Source from:  Winston-Salem (NC) Journal 06/07/2010

R.J. Reynolds Tobacco Co. said yesterday in a regulatory filing that it will receive $20.5 million from BATUS Japan Inc. as part of an early termination of a manufacturing contract that was set to expire at the end of 2014. Since 2004, Reynolds has been the exclusive maker of American-blend cigarettes for the Japanese market for BATUS, a wholly owned subsidiary of British American Tobacco PLC. On May 26, the companies agreed to end their 10-year agreement early, retroactive to Dec. 31, 2009. BATUS agreed to pay $20.5 million to resolve all disputes regarding the agreement. The companies also reached an agreement on May 26 on an exclusive five-year contract for the same American-blend cigarettes that retroactively went into effect Jan. 1 and will expire Dec. 31, 2014. The cigarettes are made primarily at Whitaker Park but production will be transferred to Reynolds' plant in Tobaccoville in the next year. Enditem