Reynolds American Inc. said it is consolidating production of its Vuse electronic cigarettes at its Tobaccoville, N.C., plant, where it recently completed a multimillion-dollar upgrade of its e-cigarette manufacturing equipment.
Winston-Salem, N.C.-based Reynolds, the maker of Camel and Pall Mall cigarettes, said it expects to post roughly $100 million in asset write-downs and exit charges for the third quarter as a result of the move.
Production of certain cartridges for the digital vapor cigarettes had been done by a contractor’s facility in Kansas, but starting Wednesday all Vuse production will be at the North Carolina plant.
The move comes a day after Japan Tobacco Inc. said Tuesday it would buy non-U.S. rights to the Natural American Spirit cigarette brand from Reynolds for about $5 billion. The deal is designed to expand Tokyo-based Japan Tobacco’s reach beyond the shrinking Japanese market and reduce Reynolds’s debt following its $25 billion acquisition of Lorillard Inc. in June.
Reynolds completed its the national rollout of its Vuse electronic cigarette in April. However in late July Chief Executive Susan Cameron said the company no longer expected its e-cigarette brand Vuse to be profitable during the third quarter.