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Minnesota gets first payment in tobacco case

ST. PAUL, Minn., Sept 8 (Reuters) - The state of Minnesota received its first payment from tobacco companies totaling $240 million on Tuesday as part of a record $6.17 billion settlement reached earlier this year, Minnesota Attorney General Hubert Humphrey III said at a news conference here.

The settlement was reached this spring after a nearly 3-1/2 year legal battle between the state and the tobacco industry over the payment of health care costs related to smoking.

"This check literally is the first installment of our victory," Humphrey said.

The money goes into the state's general fund and the Legislature will decide how it should be used. Legislators have floated several suggestions, including cutting taxes, but nothing concrete has emerged during an election year filled with ideas.

Humphrey  said he hopes the Legislature will allocate at least $200 million to a non-profit foundation established under the settlement to undertake efforts in smoking prevention. 

The timing of the first payment was negotiated in the settlement agreement months ago, he told reporters.

Some tobacco companies began writing their payments this past Friday, while some chose to make their payments today. Of the $240 million total payment, Philip Morris Cos. Inc.'s <MO.N> share came to $163.2 million; Brown & Williamson Tobacco Corp., a unit of B.A.T Industries Plc <BATS.L>, will pay $42.96 million; Lorillard Tobacco Co., a unit of Loews Corp. <LTR.N>, will pay $17.53 million; and the share of R.J. Reynolds Tobacco Co., a unit of RJR Nabisco Holdings Corp. <RN.N>, will be $16.32 million.

The $6.17 billion settlement will be spread over 25 years. The next payment, in the amount of $102 million, will be made in December 1998.


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