Altria Announces Cash Tender Offer for a Portion of Its Long-Term Debt

  Altria Announces Cash Tender Offer for a Portion of Its Long-Term Debt

  *Altria commences a $2.0 billion cash tender offer, in connection with
    which it expects to record a one-time, pre-tax charge of approximately
    $1.1 billion, or $0.35 per share, against reported earnings in the fourth
    quarter of 2013.
  *Altria also commences an offering for new senior unsecured debt.
  *Altria revises its guidance for 2013 full-year reported diluted earnings
    per share (EPS) from a range of $2.57 to $2.62 to a range of $2.22 to
    $2.27, reflecting the impact of the estimated one-time charge related to
    the cash tender offer.
  *Altria reaffirms its guidance for 2013 full-year adjusted diluted EPS to
    be in a range of $2.36 to $2.41, representing a growth rate of 7% to 9%
    from an adjusted diluted EPS base of $2.21 in 2012.

Business Wire

RICHMOND, Va. -- October 28, 2013

Altria Group, Inc. (Altria) (NYSE:MO) today announced that it is commencing a
cash tender offer for up to $2,000,000,000 aggregate principal amount (the
“Tender Cap”) of its senior unsecured notes identified in the table below (the
“Notes”). Concurrently, Altria is commencing an underwritten public offering
of new senior unsecured notes (the “New Notes”). Altria expects these
transactions to reduce the weighted average coupon rate and future interest
expense and extend the weighted average maturity of its consolidated debt.

The terms and conditions of the tender offer are described in the Offer to
Purchase, dated October 28, 2013, and the related Letter of Transmittal. The
following table sets forth the Notes subject to the tender offer and certain
information relating to pricing for the tender offer.

                         Outstanding       Acceptance   Aggregate         Early       U.S.         Fixed    Bloomberg
Title of    CUSIP      Principal        Priority    Maximum          Tender     Treasury    Spread  Reference
Securities   Number      Amount            Level        Purchase          Payment**   Reference    (bps)    Page
                                                        Sublimit*                     Security
9.950%                                                                                2.875% due
Notes due   02209SAE3  $ 1,500,000,000                               $30        05/15/2043  198     FIT1
2038
                                           1            $ 1,500,000,000
10.200%                                                                               2.875% due
Notes due   02209SAH6  $ 1,500,000,000                             $30        05/15/2043  198     FIT1
2039
9.700%                                                                                1.375% due
Notes due    02209SAD5   $ 1,949,308,000                                  $30         09/30/2018   95       FIT1
2018
                                           2            Not Applicable
9.250%                                                                                1.375% due
Notes due   02209SAJ2  $ 1,350,692,000                             $30        09/30/2018  135     FIT1
2019

* Applies to the aggregate principal amount of Notes with Acceptance Priority
Level 1.
** Per $1,000 principal amount of Notes validly tendered and not validly
withdrawn at or prior to the Early Tender Deadline and accepted for purchase.

The amount of each series of Notes that may be accepted for purchase will be
determined in accordance with the Acceptance Priority Levels set forth in the
table above and may be prorated as described in the Offer to Purchase. All
Notes validly tendered and not validly withdrawn of a series with Acceptance
Priority Level 1 up to the purchase sublimit of $1,500,000,000 set forth in
the table above (the “Aggregate Maximum Purchase Sublimit”) will be accepted
for purchase before any Notes of a series with Acceptance Priority Level 2 are
accepted for purchase. Upon the terms and subject to the conditions of the
tender offer, if the aggregate principal amount of all Notes with Acceptance
Priority Level 1 validly tendered and not validly withdrawn exceeds the
Aggregate Maximum Purchase Sublimit, such Notes will be accepted for purchase
on a prorated basis as described in the Offer to Purchase, such that the
aggregate principal amount of the Notes with Acceptance Priority Level 1
accepted in the tender offer equals the Aggregate Maximum Purchase Sublimit.

Upon the terms and subject to the conditions of the tender offer, Altria will
accept for purchase Notes validly tendered and not validly withdrawn with
Acceptance Priority Level 2 in an aggregate principal amount up to the Tender
Cap remaining available for application to Acceptance Priority Level 2 Notes
following the purchase of Acceptance Level Priority 1 Notes, provided that in
no event will the aggregate principal amount of Acceptance Priority Level 1
Notes and Acceptance Priority Level 2 Notes purchased exceed the Tender Cap.
If the aggregate principal amount of such Acceptance Priority Level 2 Notes
validly tendered and not validly withdrawn exceeds the Tender Cap remaining
available for application to Acceptance Priority Level 2 Notes following the
purchase of Acceptance Level Priority 1 Notes, Altria will accept such Notes
for purchase on a prorated basis as described in the Offer to Purchase, in an
aggregate principal amount equal to the Tender Cap remaining available for
application to Acceptance Priority Level 2 Notes following the purchase of
Acceptance Level Priority 1 Notes. Subject to applicable law, Altria has the
right to increase or decrease the Tender Cap and/or the Aggregate Maximum
Purchase Sublimit at its discretion. Altria may increase or decrease the
Tender Cap and/or the Aggregate Maximum Purchase Sublimit after the Withdrawal
Deadline (as defined below) without extending the withdrawal rights.

The tender offer for the Notes will expire at 12:00 midnight, New York City
time, on Monday, November 25, 2013, unless extended or earlier terminated (the
“Expiration Date”) by Altria. Holders who wish to be eligible to receive the
Total Consideration (as defined below), which includes an Early Tender Payment
specified in the table above, must validly tender and not validly withdraw
their Notes at any time at or prior to 5:00 p.m., New York City time, on
Friday, November 8, 2013, unless extended or earlier terminated (the “Early
Tender Deadline”) by Altria. Holders tendering their Notes after the Early
Tender Deadline and at or prior to the Expiration Date will be eligible to
receive only the tender offer consideration, namely the Total Consideration
less the Early Tender Payment specified in the table above. Tendered Notes may
be withdrawn at any time at or prior to 5:00 p.m., New York City time, on
Friday, November 8, 2013, unless extended by Altria (as may be extended, the
“Withdrawal Deadline”), but may not be withdrawn after the Withdrawal
Deadline.

For Notes validly tendered and not validly withdrawn at or prior to the Early
Tender Deadline and accepted for purchase, the applicable total consideration
per $1,000 principal amount of each series of Notes (for each series, the
“Total Consideration”) will be a price determined as described in the Offer to
Purchase intended to result in a yield to maturity (calculated in accordance
with standard market practice) equal to the sum of (i) the yield to maturity
for the applicable United States Treasury (“UST”) Reference Security specified
in the table above, calculated based on the bid-side price of such UST
Reference Security as of 11:00 a.m., New York City time, on Tuesday, November
12, 2013 (being the first business day following the Early Tender Deadline),
plus (ii) the applicable Fixed Spread specified in the table above. The Total
Consideration includes the Early Tender Payment specified in the table above.

In addition, holders whose Notes are purchased in the tender offer will be
paid accrued and unpaid interest on their purchased Notes from the applicable
last interest payment date up to, but not including, the payment date for such
purchased Notes.

The tender offer is subject to the satisfaction or waiver of certain
conditions, as specified in the Offer to Purchase, including the issuance of
the New Notes prior to the Expiration Date on terms and conditions
satisfactory to Altria.

Note Issuance

Altria is also commencing an underwritten public offering of New Notes under
its effective shelf registration statement on Form S-3 that was previously
filed by Altria with the Securities and Exchange Commission (the “SEC”).
Altria expects to use the net proceeds from the issuance of the New Notes to
fund the purchase of the Notes accepted in the tender offer and for general
corporate purposes.

Information Relating to the Tender Offer

Goldman, Sachs & Co., RBS Securities Inc. and Deutsche Bank Securities, Inc.
are acting as the lead dealer managers for the tender offer. Investors with
questions may contact Goldman, Sachs & Co. at (800) 828-3182 (toll-free) or
(212) 902-6595 (collect) and RBS Securities Inc. at (877) 297-9832 (toll-free)
or (203) 897-6145. Global Bondholder Services Corporation is the Information
Agent and Depositary and can be contacted at the following numbers: banks and
brokers can call (212) 430-3774 (collect), and all others can call (866)
470-4200 (toll-free).

This press release is neither an offer to sell nor a solicitation of offers to
buy any securities. The tender offer is being made only pursuant to the Offer
to Purchase and the related Letter of Transmittal. The tender offer is not
being made to holders of Notes in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the securities, blue sky or
other laws of such jurisdiction. None of Altria, the Dealer Managers, the
Depositary, the Information Agent or the trustee for the Notes makes any
recommendation in connection with the tender offer. Please refer to the Offer
to Purchase for a description of offer terms, conditions, disclaimers and
other information applicable to the tender offer. The offering of the New
Notes is being made only by means of a prospectus and related prospectus
supplement, copies of which may be obtained, when available, by visiting the
SEC’s website at www.sec.gov or by contacting Goldman, Sachs & Co. by mail at
Prospectus Department, 200 West Street, New York, NY, 10282, by telephone at
(866) 471-2526, by facsimile at (212) 902-9316, or by email at
prospectus-ny@ny.email.gs.com or by contacting RBS Securities Inc. by mail at
600 Washington Boulevard, Stamford, CT 06901, Attention: Syndicate, or by
telephone at (866) 844-2071.

2013 Full-Year EPS Guidance

Altria expects to record a one-time pre-tax charge of approximately $1.1
billion, or $0.35 per share, against reported earnings in the fourth quarter
of 2013, reflecting the estimated loss on early extinguishment of debt related
to the tender offer (the “Estimated Charge”). The Estimated Charge assumes
current market pricing and that $2.0 billion in Notes are tendered. The final
pre-tax charge will vary to the extent that the pricing and amount of Notes
tendered differ from Altria’s original assumptions.

Altria revises its guidance for 2013 full-year reported diluted EPS from a
range of $2.57 to $2.62 to a range of $2.22 to $2.27, reflecting the Estimated
Charge and the other special items detailed in Table 1 below.

Altria reaffirms its guidance for 2013 full-year adjusted diluted EPS, which
excludes the special items shown in Table 1 below, to be in the range of $2.36
to $2.41, representing a growth rate of 7% to 9% from an adjusted diluted EPS
base of $2.21 per share in 2012. Altria’s reaffirmation of the 2013 full-year
adjusted diluted EPS guidance includes an increase in Altria’s 2013 full-year
effective tax rate on operations that Altria expects to result from the tender
offer, as discussed below.

The factors described in the Forward-Looking and Cautionary Statements section
of this release represent continuing risks to this forecast. Reconciliations
of full-year adjusted to reported diluted EPS are shown in Table 1 below.

Table 1 - Altria’s Full-Year Earnings Per Share Guidance Excluding  
Special Items
                      Full Year
                       2013 Guidance               2012     Change
Reported diluted       $  2.22  to  $  2.27      $  2.06      8  %  to  10  %
EPS
NPM Adjustment                         (0.21  )     -
items ^1
Asset impairment,
exit and                               -            0.01
implementation
costs
SABMiller special                      0.01         (0.08  )
items
PMCC leveraged                         -            (0.03  )
lease benefit
Loss on early
extinguishment of                      0.35         0.28
debt
Tax items ^2                        (0.01  )    (0.03  )          
Adjusted diluted      $  2.36  to  $  2.41     $  2.21     7  %  to  9   %
EPS
^1Reflects the impact of Philip Morris USA Inc.’s (PM USA) settlement with
certain states of the non-participating manufacturer adjustment (NPM
Adjustment) disputes for 2003-2012 (NPM Adjustment Settlement) ($0.16) and the
diligent enforcement rulings of the arbitration panel presiding over the NPM
Adjustment dispute for 2003 (NPM Arbitration Panel Decision) ($0.05).
^2Excludes the tax impact of the Philip Morris Capital Corporation (PMCC)
leveraged lease benefit.

2013 Full-Year Tax Rate Guidance

Altria anticipates that its 2013 full-year effective tax rate on operations
will increase by half of one percent to approximately 36.2% due to a reduction
in certain consolidated tax benefits resulting from the tender offer. The
factors described in the Forward-Looking and Cautionary Statements section of
this release represent continuing risks to this forecast. Reconciliations of
2013 full-year effective tax rate on operations to reported effective tax rate
are shown in Table 2 below.

Table 2 - Altria’s 2013 Tax Rates                               
                                                                 Full Year
                                                                 2013 Guidance
Reported effective tax rate                                      35.6     %
Tax benefit from Mondelēz International, Inc. tax matters        0.2      %
Other tax benefits primarily due to the reversal of tax
accruals no longer required                                      0.4      %
Effective tax rate on operations                                36.2     %

Dividend and Share Repurchase Program

Altria does not expect the tender for the Notes or the issuance of the New
Notes to impact Altria’s dividend payout ratio target of approximately 80% of
its adjusted diluted EPS or its current $1.0 billion share repurchase program.
Future dividend payments and the share repurchase program remain subject to
the discretion of Altria’s Board of Directors.

Altria’s Profile

Altria directly or indirectly owns 100% of each of PM USA, U.S. Smokeless
Tobacco Company LLC (USSTC), John Middleton Co. (Middleton), Nu Mark LLC (Nu
Mark), Ste. Michelle Wine Estates Ltd. (Ste. Michelle) and PMCC. Altria holds
a continuing economic and voting interest in SABMiller plc (SABMiller).

The brand portfolios of Altria’s tobacco operating companies include
Marlboro®, Black & Mild®, Copenhagen®, Skoal® and MarkTen™. Ste. Michelle
produces and markets premium wines sold under various labels, including
Chateau Ste. Michelle®, Columbia Crest®, 14 Hands® and Stag’s Leap Wine
Cellars®, and it imports and markets Antinori®, Champagne Nicolas Feuillatte™
and Villa Maria Estate™ products in the United States. Trademarks and service
marks related to Altria referenced in this release are the property of Altria
or its subsidiaries or are used with permission. More information about Altria
is available at altria.com.

Forward-Looking and Cautionary Statements

This press release contains projections of future results and other
forward-looking statements  that involve a number of risks and uncertainties
and are made pursuant to the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995.

Important factors that may cause actual results and outcomes to differ
materially from those contained in the projections and forward-looking
statements included in this press release are described in Altria’s publicly
filed reports, including its Annual Report on Form 10-K for the year ended
December 31, 2012 and its Quarterly Report on Form 10-Q for the period ended
September 30, 2013.

These factors include the following: Altria’s tobacco businesses (PM USA,
USSTC, Middleton and Nu Mark) being subject to significant competition;
changes in adult tobacco consumer preferences and demand for their products;
fluctuations in raw material availability, quality and price; reliance on key
facilities and suppliers; reliance on critical information systems, many of
which are managed by third-party service providers; fluctuations in levels of
customer inventories; the effects of global, national and local economic and
market conditions; changes to income tax laws; federal, state and local
legislative activity, including actual and potential federal and state excise
tax increases; increasing marketing and regulatory restrictions; the effects
of price increases related to excise tax increases and concluded tobacco
litigation settlements on trade inventories, consumption rates and consumer
preferences within price segments; health concerns relating to the use of
tobacco products and exposure to environmental tobacco smoke; privately
imposed smoking restrictions; and, from time to time, governmental
investigations.

Furthermore, the results of Altria’s tobacco businesses are dependent upon
their continued ability to promote brand equity successfully; to anticipate
and respond to evolving adult consumer preferences; to develop, manufacture,
market and distribute products that appeal to adult tobacco consumers
(including, where appropriate, through arrangements with third parties); to
improve productivity; and to protect or enhance margins through cost savings
and price increases.

Altria and its tobacco businesses are also subject to federal, state and local
government regulation, including broad-based regulation of PM USA and USSTC by
the U.S. Food and Drug Administration. Altria and its subsidiaries continue to
be subject to litigation, including risks associated with adverse jury and
judicial determinations, courts reaching conclusions at variance with the
companies’ understanding of applicable law, bonding requirements in the
limited number of jurisdictions that do not limit the dollar amount of appeal
bonds and certain challenges to bond cap statutes.

Altria cautions that the foregoing list of important factors is not complete
and does not undertake to update any forward-looking statements that it may
make except as required by applicable law. All subsequent written and oral
forward-looking statements attributable to Altria or any person acting on its
behalf are expressly qualified in their entirety by the cautionary statements
referenced above.

Contact:

Altria Client Services
Investor Relations
804-484-8222
or
Altria Client Services
Media Relations
804-484-8897
 
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