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June,
2005

TOBACCO INDUSTRY NEWS

Swedish Match Completes Acquisition of General Cigar
Nuņez Named General's New C.E.O.


New York - Swedish Match completed its acquisition of General Cigar Holdings, Inc. from the Cullman family on April 22, 2005, acquiring all outstanding shares.

While wholly owned by Swedish Match, General Cigar will continue to be managed as a separate commercial unit of Swedish Match North America.

Daniel Nuņez was immediately appointed president and chief operating officer of General Cigar. In this position, Nuņez will be responsible for production, product development, sales, and marketing. He will report directly to Lennart Freeman, president and c.e.o. of Swedish Match North America.

"We recognize and salute the outstanding business the Cullman family has developed, and understand the integral role Daniel Nuņez has played in the success of General Cigar," said Freeman. "We look forward to his contributions toward expanding the presence of our premium cigars in domestic and international markets and to working with him to maintain General Cigar's leadership position within the industry."

Edgar. M. Cullman, Jr., former president and c.e.o. of General Cigar said, "For nearly 30 years, Daniel Nuņez has been a driving force in the success of General Cigar. His expertise in tobacco and manufacturing has set the industry standard for product quality and consistency. I am confident that Daniel and his team will continue to make the company prosper."

Edgar M. Cullman, Sr.; Edgar M. Cullman, Jr.; and David Danziger have agreed to remain in consultative roles and will participate in the transition of General Cigar's operations to Swedish Match North America for the remainder of 2005.


Cubatabaco Denied Motion for Rehearing in Cohiba Trademark Dispute; Supreme Court Next

New York - The Second Circuit Court of Appeals has issued an order denying Cubatabaco's motion for a rehearing of its February 2005 ruling in favor of General Cigar over the ownership of the Cohiba brand in the United States.

Based on the order date of June 1, Cubatabaco - Cuba's state-owned tobacco monopoly - would have until August 30, 2005 to file a further appeal with the Supreme Court of the United States.

Nick Simeonidis, senior vice president and general counsel of General Cigar Co., Inc. commented, "I am gratified, but not surprised, that none of the Second Circuit judges voted to grant a rehearing. The court's unanimous opinion in General Cigar's favor was thorough, well-reasoned, and conclusive. We feel confident that the Supreme Court will agree."

In February 2005, the Second Circuit Court of Appeals in New York ruled unanimously in favor of General Cigar Co., Inc. in the lawsuit filed by Cubatabaco in 1997 over trademark ownership of the Cohiba brand in the United States.

In the ruling, the Second Circuit held that "General Cigar's legal right to the Cohiba mark has been established as against Cubatabaco. General Cigar has a right to use the mark in the United States because it owns the mark in the United States."

General Cigar's Cohiba line, known as the "Red Dot" Cohiba, is produced in the Dominican Republic.


Carolina Tobacco Applies to Become a Future Signatory to the Master Settlement Agreement
Announces Financial Restructuring following Chapter 11 Filing


Portland, OR - Carolina Tobacco Company (CTC), a privately-held manufacturer of price-value cigarettes sold under the Roger and Kingsboro brands, has submitted its application to the National Association of Attorneys General (NAAG) to become a future signatory to the Master Settlement Agreement (MSA).

The MSA is the accord reached in 1998 when the Attorneys General of 46 states signed the Agreement with the four largest tobacco companies in the United States to settle pending state lawsuits.

"We feel the future growth and direction of our company warrants becoming a signatory," said David H. Redmond, president of CTC. "And, even without mandate, we already operate in the spirit of the MSA in how we manufacture and market our products. The approval of our application to become a Participating Manufacturer will bring new focus to CTC as we join in providing financial benefits to the participating states."

CTC also announced a financial restructuring intended to provide additional flexibility and to position itself for future growth. The company's Chapter 11 filing, implemented on April 18, 2005, is not expected to impact day-to-day operations, delivery of products to customers or its application to join the MSA. "The Chapter 11 filing is intended to provide us with the flexibility to continue to provide our current level of service to customers as we navigate the application process as an NPM and become a signatory to the MSA as an SPM," said Redmond.


Gallaher Buys Cigar, Cigarette Maker Cita, Canary Island Operations of Altadis S.A.

Madrid - U.K. tobacco company Gallaher Group PLC has bought Altadis S.A.'s Canary Island arm - Cita - the newspaper Cinco Dias reported, citing unnamed sources close to the deal. Both Gallaher and Altadis declined to comment on the report.

The 100 euro sale, which reportedly closed in May, was brokered by former Altadis co-chairman Pablo Isla, the newspaper claimed.

Tobacco group Cita is a 50-50 joint venture between Spain's Altadis and the Canary Island's Zamorano family. For more than a year Gallaher has been named in various press reports as a potential purchaser of a stake in the company, but has never formally declared an interest.

Last November, a report claimed that Gallaher, the maker of Benson & Hedges and Silk Cut cigarettes, ended talks to buy the Zamorano stake, after carrying out due diligence.

Altadis has right of refusal on the remaining 50 percent holding. Cita has publicly disclosed that the stake was offered to the Spanish company, but it showed no interest. In June of last year, Altadis' co-chairman Pablo Isla said its Cita interest was not for sale.

Cita produces nearly two dozen brands of American blend, Virginia, dark, and 100 percent Cuban tobacco cigarettes at its main factory in Santa Cruz on the island of Tenerife in the Canaries. While cigarettes account for the majority of Cita's volume and turnover, the company is best known outside of Spain for its cigars - both handmade and machine-made, which total over 100 million sticks annually. The company's cigar brands include Condal, La Fama, Goya, Peņamil, and Alvaro.

Cita also owns a chain of retail outlets - Condal & Peņamil Houses - with locations in the Canary Islands, Lisbon, and Miami. The elegant smoking emporiums and cafes showcase the company's tobacco products and smoker accessories.

Cita's premium cigar brands once enjoyed a high profile in the U.S. market, but imports have dwindled over the past decade.



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