General Tobacco Shutting Down

General Tobacco, a maker of low-priced cigarettes that became the sixth-largest U.S. tobacco company during the last decade, plans to shut down after failing to make payments it owed to states under an industry settlement, reported The Wall Street Journal.

General Tobacco news, Mayodan, N.C., stopped producing cigarettes and other tobacco products at its North Carolina plant several months ago and is winding down operations, J. Ronald Denman, executive vice president and general counsel, told the newspaper. He said the closely held company, which is formally called Vibo Corp., recently has been selling off inventory in foreign markets.

The maker of brands such as Bronco, Silver and GT One took market share from larger rivals after it began selling cigarettes in 200, the report said, and it posted annual sales of $335 million by 2004. But its U.S. market share fell to less than 1% from almost 2% in recent years, amid intense competition from other discounters.

Denman said General Tobacco struggled to keep its prices competitive with those of rivals such as Vector Group Ltd.'s Liggett Vector Brands Inc. while meeting the demands of the Master Settlement Agreement (MSA), the landmark pact between 46 state attorneys general and cigarette makers. Under the $206 billion agreement, companies agree to marketing restrictions and make payments to reimburse states for the costs of caring for sick smokers.

General Tobacco joined the accord in 2004, six years after it was signed by major tobacco companies, and agreed to make payments to the states for both ongoing sales and those it recorded prior to joining the agreement.