Rhode Island Wins Tobacco-bond Lawsuit

Source from:  Providence (RI) Journal-Bulletin 01/20/2015

Rhode Island defeated a legal challenge from OppenheimerFunds Inc. to its plan to sell $594 million of debt backed by payments from tobacco companies that agreed in 1998 to reimburse states for expenses associated with smoking-related illnesses.

Oppenheimer Funds in August sued the state's Tobacco Settlement Financing Corp. in state court in Providence, saying the plan to divert at least $20 million from earlier bondholders is illegal because Rhode Island can't change the order in which holders are paid.

Superior Court Judge Michael Silverstein granted a request to dismiss the suit. He said the state and the corporation followed proper procedure for issuance of the new bonds and obtained the appropriate approvals from holders. Enditem