Secondhand Smoke At Rjr Nabisco

The chief products of RJR Nabisco are cigarettes, food, and high drama. In Act One of an epic that premiered in 1988, the corporation and its luscious cash flow were prizes in a titanic takeover battle won by Kohlberg Kravis Roberts & Co. Two years later, in Act Two, RJR's megadebt almost destroyed it. But in the nick of time, a KKR refinancing rescued the company.

Now, as the curtain opens on Act Three, the drama continues at RJR Nabisco Holdings Corp. There's management turbulence as CEO Louis V. Gerstner Jr. exits to head IBM. Further thickening the plot: A cigarette price war and a proposed tobacco tax hike threaten the cash flow it needs to handle its still mountainous debt.