Tomorrow's lineup

Tomorrow and Friday will see the second set of hearings related to the decision of Canada's tobacco companies to call on court protection from their creditors. In the warm up to the gathering at the court at 330 University Avenue in Toronto, a number of documents have been circulating among the several dozen lawyers who have signed up to the service list.

Thankfully, some of them are quicker to push the forward button than the Monitors are to post the documents on the public websites. (FTI Consulting for Imperial Tobacco, Ernst and Young for Rothmans, Benson and Hedges and Deloitte for JTI-Macdonald.)

While nominally independent, the monitors seem to play a role somewhat akin to golf caddies -- strategizing and carrying the weight to help their clients make sure that their clients keep out of the rough.

Agreeing to disagree in open court

JTI's Monitor has circulated suggestions for the Tee-time for each of the major issues of disagreement that are anticipated tomorrow.

• First up could be the Ontario government, with its request that the freeze on all legal proceedings be temporarily thawed to allow for some hearings related to its lawsuit against the companies to take place as scheduled this spring and early summer. 
• Coming next would be the requests of the Quebec class action lawyers for clarifications related to the permission they were given earlier this month to seek approval of a settlement with two defunct insurance companies.
• Last for consideration would be the case of the American pensioners who have found themselves cut off from cheques that had previously been covered by Imperial Tobacco.

Other disagreements under private discussion

From the monitors reports, it would appear that many items are still under discussion, and a few have been postponed or dropped.  Among complaints that now appear to be on the backburner are objections to the appointment of Deloitte as a Monitor, given its previous actions in tobacco-related files, the need for the Court to approve the billings of the (many) lawyers and other professionals working on the CCAA proceedings for the companies. Many other issues -- i.e. the continued repatriation of payments to BAT by ITL, and the scope of the stay -- remain unresolved.

Business as usual is quite profitable!

Imperial Tobacco's monitor's latest report  offers a rare insight into the profitability of the tobacco business.  The report gave details on income and expenses for 3 weeks in April. Of the $266 million in sales revenue, $164 million was forwarded to provincial and federal government treasuries. Another $62 million went to cover expenses.

That left $40 million profit on sales (net of taxes) of just over $100 million - a 40% profit margin.