Altria Slides on Slew of Bad News

Updated from 10:17 a.m. EST

Investors sent shares of AltriaMO sharply lower Monday amid news of more woes for the company.

The first blow came when Standard & Poor's warned Friday that it could cut the firm's debt rating to junk status if the company has to shell out for a $12 billion bond to appeal the verdict in a recent trial in Illinois. Then, Moody's Investors Service on Monday cut its rating on Altria by two notches. Also, Monday marked the second day of New York's smoking ban in restaurants and bars, adding to investor nervousness.

The company's shares ended down almost 7% at $29.96 amid the barrage of bad news. R.J. Reynolds, meanwhile, shed 5% to $32.26, and Loews' LTR Lorillard Tobacco, which trades as the tracking stock Carolina GroupCG, lost 3% to $18.50.

Altria was ordered March 21 to pay more than $10 billion for deceiving smokers into thinking that low-tar cigarettes were less harmful than regular brands. In order to appeal the case, the firm must pay a bond of $12 billion -- the amount of the award plus interest. An appeals bond is designed to assure that the plaintiff who has won a verdict will get paid if the appeal fails. The Illinois Court has stayed the entry for its judgment until April 21, and Altria is trying to reduce the cost of the bond by negotiating with the defendants. Formal discussions between the two parties are scheduled to start Tuesday.

In a note Friday, Standard & Poor's credit analyst Nicole Detz Lynch said she would cut the firm's debt rating to "speculative-grade" prior to April 21 "if there is not a viable and realistic plan to address the bonding issue." If the amount of the bond can't be reduced to a manageable amount, she said, Philip Morris USA "might have to consider bankruptcy as an option."