Judge reduces Philip Morris' fine Morris bond payment cut

EDWARDSVILLE, Ill. -- Philip Morris got a break Monday as a judge ordered it to pay only half of a $12 billion bond the cigarette maker had said would force it into bankruptcy and halt payments under the landmark national tobacco settlement.\nThe decision means the company will be able to make a $2.6 billion payment Tuesday to 46 states under the 1998 settlement, company spokesman David Tovar said. The company called the ruling "an onerous but viable solution."\nUnder state law, Philip Morris must post an appeal bond before it can appeal a $10.1 billion judgment against it for misleading smokers into believing "light" cigarettes are less harmful than regular brands.\nThe nation's largest cigarette maker had said a $12 billion bond would force it out of business and keep it from paying the states, many of whom are counting on the money to cover budget gaps or issue bonds.\nAfter hearing from the company's attorneys, Madison County Judge Nicholas Byron ordered the tobacco giant to deposit $6 billion in escrow to begin its appeal. He also ordered Philip Morris to pay $800 million during the first year of the appeal and $420 million each year in interest as the case winds its way through court.\nPlaintiffs' lawyer Stephen Tillery said he would appeal the order.\n"In my view, it's an amount less than they're capable of paying," Tillery said.\nTillery said Byron appeared to have been swayed by Philip Morris' bankruptcy claim and the clamoring of attorneys general nationwide who feared losing the settlement money.\n"This court is very mindful of everything going on in the country, not just in this courtroom," Tillery said.\nA spokesman for Oklahoma Attorney General Drew Edmondson, president of the National Association of Attorneys General, called the decision "good news."\n"We appreciate the judge's decision, and we think that the attorneys general did the right thing by expressing the severity of potential damage to the states the original bond might have caused," spokesman Charles Price said.\nThe $12 billion bond would cover the judgment plus interest and costs, but Philip Morris said it couldn't afford it.\nLast week, Byron ordered the two sides to strike a deal that would keep Philip Morris in business and protect the interests of the one million smokers who prevailed in last month's lawsuit.