SOURCE: Altadis

August 01, 2006 12:31 ET

ALTADIS : The Moroccan State extends the monopoly granted to Régie des Tabacs for three years

PARIS and MADRID, SPAIN -- (MARKET WIRE) -- August 1, 2006 -- Altadis will increase its interest in RTM from 80% to 100%

The Moroccan State has approved a decree law published on July 31 that extends the monopoly on the import and wholesale of tobacco products until December 31, 2010. The monopoly was granted to Régie des Tabacs du Maroc (RTM), which is 80%-owned by Altadis since 2003.

The decree law modifies law 46-02, which has governed the tobacco industry since April 2003. This law initially called for the elimination of the monopoly on the import and wholesale of tobacco products on December 31, 2007. Today's decree law provides for a three-year extension.

The reason for this extension lies in the irreversible shift in demand from dark to blond cigarettes, which has affected local tobacco farmers. Most produce dark tobacco and will have to switch to blond.

In light of its experience in this area, RTM will provide technical support to Moroccan tobacco farmers until December 31, 2010 under the terms of the decree law, with the goal of deploying a plan to develop a variety of blond tobaccos.

To avert the risk of a price war, the decree law also includes a system to regulate the selling prices of tobacco products in Morocco.

Sale of remaining 20% interest to Altadis

The decree law's approval triggers the sale of the Moroccan government's 20% interest in RTM to Altadis. The transaction, already planned for in June 2003, when Altadis acquired 80% of RTM as part of the State-led privatization process, amounts to 4.020 billion dirham (370 million euros).

Enhanced position in Morocco

The extension of RTMs' monopoly significantly enhances Altadis' position in Morocco.

In 2005, RTM's economic sales rose to EUR 237 million, while EBITDA increased to EUR 129.4 million.

Altadis' unit sales in Morocco totaled 11.7 billion, in a total market of 13.4 billion units.

RTM has widened its market share since it was acquired by Altadis, from 85% in 2003 to 88% in 2005, thanks to improvements brought to its local Marquise brand and the successful introduction of the Group's international brands (Fortuna and Gauloises Blondes), which have performed very well. RTM currently leads the steadily growing blond cigarette market.

At the same time, RTM's logistics business has benefited from the strategy of diversification into general logistics implemented in 2004. The business is growing at a good pace, with successful forays into new activities such as phone cards. Some 22 million phone cards were distributed in 2005, representing an 85% increase in value from the year before. RTM has also initiated a vast loyalty and upgrading program for sales outlets. Ultimately, 2,000 have committed to this program.

With these developments, RTM is well positioned to pursue its growth and improve performance in the years ahead.

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