St. Louis Public Radio News
3:11 pm
Mon April 14, 2003

Philip Morris Says it Can Make Payments to States

Edwardsville, Illinois – Philip Morris USA says it will make a payment that's due Tuesday to 46 states under a 1998 national tobacco settlement.

Philip Morris spokesman David Tovar says the tobacco giant will make the $2.6 billion dollar payment.

The cigarette maker made the announcement Monday after an Illinois judge ordered it to deposit $6 billion in escrow toward a $12 billion appeal bond.

The company had argued paying the full amount would bankrupt the company and make it unable to pay the money to the states.

Plaintiffs lawyer Stephen Tillery says he will appeal today's order by the judge.

Tillery says the judge appeared swayed by the bankruptcy claim and the clamoring of attorneys general nationwide who feared losing settlement money. Still, he says he's glad the company is no longer marketing light cigarettes as healthier than regular cigarettes.

"I think the greatest consolation in this case so far is the fact that they announced in court that they're taking the words 'lowered tar and nicotine' off packages of Marlboro Lights," Tillery said.

Philip Morris said paying $12 billion would bankrupt the company and prevent it from making payments to states as required in the 1998 tobacco settlement.

The money Philip Morris has to pay before appealing a court loss will come from a loan from its corporate parent, Altria Group.

The order says Philip Morris will pay an additional $800 million over the next year toward the appeal bond, plus $420 million annually for however long appeals take.