Reynolds Offers Voluntary Retirement Packages To Select Production Workers

Source from:  journalnow.com 06/23/2017

R.J. Reynolds Tobacco Co. confirmed Tuesday it is offering a voluntary retirement package to select production workers ahead of its pending sale to British American Tobacco Plc.

The companies have set simultaneous shareholder votes for July 19: 2 p.m. in London and 9 a.m. in Winston-Salem. If shareholders approve, the deal is projected to close July 25.

BAT said in a regulatory filing Thursday it would pay $54.5 billion for the 57.8 percent of Reynolds American Inc. that it does not already own, up $5.1 billion from what the companies disclosed Jan. 17.

Ever since Reynolds’ independent board members announced they would accept BAT’s fourth offer proposal, there has been talk about how many local jobs would be affected by combining the companies into the world’s largest publicly traded tobacco manufacturer.

“We manage our businesses for maximum flexibility, and several factors led us to believe this was a good time to offer some production associates an opportunity to retire with severance benefits,” Reynolds spokesman David Howard said.

Howard said eligible employees are being offered two weeks’ pay for every year of service, in addition to regular retirement benefits.

“This is on a voluntary basis — we do not plan any involuntary job eliminations regardless of how many employees sign up,” Howard said.

Reynolds is estimated to have between 2,000 and 2,200 local employees, the majority of whom work at its Tobaccoville plant. Reynolds has declined to provide a local workforce count in recent years.

Reynolds had 5,500 full-time and 50 part-time employees as of Dec. 31, 2016, according to its 2016 annual regulatory report. The total includes 3,700 Reynolds Tobacco, 500 Santa Fe Natural Tobacco Co. Inc. and 600 American Snuff Co. LLC employees.

The bulk of the remaining Reynolds Tobacco employees are sales and marketing representatives out in the field serving retail, wholesale and distribution customers, as well as about half of Santa Fe’s workforce.

When asked about how many production workers Reynolds projects taking the voluntary retirement package, Howard said that “as we consider details of our benefit plans to be competitively sensitive information, I am not in a position to provide any more detail about those plans.”

BAT said in a Jan. 18 regulatory filing that it “has no plans to close or move the head office in Winston-Salem, nor make any significant changes to the current high-quality manufacturing facilities in North Carolina and Tennessee, nor to the trade marketing team.” Reynolds has an American Snuff production plant in Tennessee.

Nicandro Durante, BAT’s chief executive, said in Thursday’s letter to BAT shareholders that the company continues to project $400 million in cost savings by July 2020.

That includes eliminating duplicate corporate functions, greater supply chain economies of scale and enhanced manufacturing efficiency from Reynolds’ 2-million-square-foot Tobaccoville plant.

“The board is confident that the integration of Reynolds American can be achieved without causing any material disruption to the underlying operations of the two businesses,” Durante said.

That includes leaving Debra Crew as Reynolds’ chief executive. Crew took over that role on Jan. 1, with Susan Cameron sliding into what became in April a non-executive chairwoman role.

However, it appears a BAT executive could be hired as Reynolds’ No. 2 executive as chief financial officer. Andrew Gilchrist, Reynolds’ current chief financial officer, does not plan to remain with Reynolds post-sale.

Reynolds launched a subsidiary Jan. 1 that combines the sales, distribution and retail/wholesale trade strategies for its four main manufacturing subsidiaries. RAI Trade Marketing Services Co. has Mike Auger as its president. Joining forces in the subsidiary were Reynolds Tobacco, American Snuff, Santa Fe and R.J. Reynolds Vapor Co.

Reynolds said there were no plans to eliminate jobs related to forming the subsidiary. Enditem