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Non-Tech : Philip Morris - A Stock For Wealth Or Poverty (MO) -- Ignore unavailable to you. Want to Upgrade?

To: Geoff who wrote (1481)	4/27/1998 5:08:00 PM
From: Geoff	Read Replies (1) \| Respond to of 6439

DMG issued a 14 page report, that I found on Bloomberg, on the tobacco sector today and specifically MO, and its report was quite disturbing in its analysis of the terms of the proposed solutions. We are perplexed by the tendency of the financial news to almost interchangeably use the terms "tax" and "penalties." While both have the effect of raising prices of cigarettes to the consumer, an excise tax on cigarettes is obviously a dramatically different risk factor than a legally enforceable contractual "liability" that has priority of payment or even ranks pari passu with bondholders. It goes on to say that, MO, could easily meet its cash flow requirements under the capped amounts, there are more than a few legal trap doors in the language that do not allow such specific quantification of its liability. In addition to the fact that the caps can be waived and the nondeductible underage "look-back" penalties could kick in, the still vague joint and several liability provisions could leave MO on the hook for its weaker peers. A little scary, and something that everyone should be aware of, if not already. I know that the broad and vague terms of the latest proposals from Congress still baffles me every time I read more about it. geoff