Exhibit 99.1
[RJ REYNOLDS LOGO]
R.J. REYNOLDS TOBACCO COMPANY
P.O. BOX 2959
WINSTON-SALEM, NC 27102
CONTACT: Maura Payne Fred McConnell RJRT 2005-10
(336) 741-6996 (336) 741-7405
(336) 829-9024 - cell (336) 406-3213 - cell
R.J. REYNOLDS TOBACCO COMPLETES SALE OF RJR PACKAGING
WINSTON-SALEM, N.C. - MAY 2, 2005 - R.J. Reynolds Tobacco Company (R.J.
Reynolds) and RJR Packaging, L.L.C. today closed the sale of the assets and
business of RJR Packaging to five packaging companies. The buyers have agreed to
pay $48.2 million for the business, and entered into long-term tobacco packaging
materials supply agreements with R.J. Reynolds.
"The sale represents an opportunity for the packaging business to maximize its
potential by partnering with leaders in the packaging industry," said Jeffrey A.
Eckmann, executive vice president of strategy, integration, information
technology and business development for Reynolds American Inc., the parent
company of R.J. Reynolds. "These companies have a long-term interest in
investing in and growing that business, whereas R.J. Reynolds' focus is on
growing its cigarette business."
The RJR Packaging assets, facilities and supply agreement rights for certain
business areas were acquired as follows:
- Alcan Packaging Food and Tobacco Inc. -- R.J. Reynolds' printed
packaging, including cartons, boxes and labels;
- Alcoa Flexible Packaging, L.L.C. -- R.J. Reynolds' cigarette foil
and inner frame;
- Southern Graphic Systems, Inc. -- cylinder engraving and prepress
services;
- Mundet Inc. -- R.J. Reynolds' tipping and low-ignition propensity
paper;
- Oracle Flexible Packaging, Inc. -- non-R.J. Reynolds, or external,
packaging business. Oracle also acquired RJR Packaging's two main
facilities, located in Winston-Salem at 1300 Cunningham Avenue and
190 East Polo Road.
RJR Packaging currently employs 740 people, and it is expected that at least 650
of them will ultimately receive offers for ongoing employment from one of the
buyers, or from R.J. Reynolds.
Effective immediately after the sale, nine current RJR Packaging employees will
become employees of Southern Graphic Systems, and about 75 employees will
transfer to R.J. Reynolds Tobacco Co. The balance of RJR Packaging employees
will become employees of Oracle Flexible Packaging. Over the next 24 months, the
buyers will transition employees from Oracle to each company's individual
payroll.
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Displaced employees will be eligible to receive severance benefits equaling two
weeks of pay for every year of service (with a minimum of 26 weeks of pay), as
well as a $25,000 bonus for those who stay the required period of time requested
by the buyers during the transition period.
"From the beginning of this process, it was our goal to find buyers who would
offer ongoing employment to the majority of current RJR Packaging employees,"
Eckmann said. "RJR Packaging has an experienced, dedicated workforce that will
be a real asset to the new buyers.
"The closing of this sale allows R.J. Reynolds to focus on its core business of
manufacturing and marketing cigarettes," Eckmann said. "Our supply agreements
with the buyers will provide R.J. Reynolds with reliable, cost-efficient, high
quality packaging materials going forward, and we are committed to making those
relationships successful and mutually beneficial."
Morgan Stanley acted as financial advisor to R.J. Reynolds in connection with
the transaction.
In December 2002, R.J. Reynolds announced its intent to sell RJR Packaging.
Following the combination of R.J. Reynolds and the U.S. business of Brown &
Williamson Tobacco Corp. in 2004, the packaging business was reassessed. In
February 2005, R.J. Reynolds and RJR Packaging signed a letter of intent to sell
RJR Packaging to the group of packaging companies.
CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Statements included in this news release that are not historical in nature are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
regarding R.J. Reynolds's future performance and financial results inherently
are subject to a variety of risks and uncertainties that could cause actual
results to differ materially from those described in the forward-looking
statements. These risks and uncertainties include any adverse impacts from the
transition of our packaging operations to the buyers. Due to these risks and
uncertainties, you are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this news
release. Except as provided by federal securities laws, neither R.J. Reynolds,
nor its parent company, Reynolds American Inc., is required to publicly update
or revise any forward-looking statement, whether as a result of new information,
future events, or otherwise.
R.J. Reynolds Tobacco Company is an indirect wholly owned subsidiary of Reynolds
American Inc. (NYSE: RAI). R.J. Reynolds is the second-largest tobacco company
in the United States, manufacturing about one of every three cigarettes sold in
the United States. R.J. Reynolds' product line includes five of the nation's 10
best-selling cigarette brands: Camel, Winston, Kool, Salem and Doral. For more
information about R.J. Reynolds, visit the company's Web site at WWW.RJRT.COM.
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