Vector Closes Offering Of $230 Million Of Variable Interest Convertible Senior Notes

Vector Group Ltd. (NYSE: VGR) (“Vector” or the “Company”) today announced the closing of its previously announced registered public offering of $230.0 million aggregate principal amount of its Variable Interest Convertible Senior Notes due 2019 (the “Notes”), which includes the underwriter’s full exercise of its over-allotment option (the “Notes Offering”). The Notes will bear cash interest at a rate of 2.50% per year, plus an additional amount of interest based on the amount of cash dividends per share actually paid by the Company on its common stock, provided that the interest payable on the Notes shall not be less than 7.50% per year.

In connection with the Notes Offering, the Company entered into a share lending agreement with Jefferies & Company, Inc. (in such capacity, the “Share Borrower”), under which it lent the Share Borrower 6,114,000 shares of its common stock, par value $0.10 per share (the “Borrowed Shares”), to facilitate hedging transactions related to the Notes Offering. Within one business day after the closing of the Notes Offering, the Share Borrower will return 3,057,000 of the Borrowed Shares to the Company, reducing the number of shares outstanding under the share lending agreement to 3,057,000 shares. Subject to certain limitations, the Share Borrower may from time to time during the term of the share lending agreement borrow from the Company up to 1,000,000 additional shares of the Company’s common stock for additional offerings that may be made in subsequent offerings, on a delayed basis, in transactions that may include block sales, sales in the over-the-counter market, sales pursuant to negotiated transactions or otherwise.

The Company intends to use the net proceeds received from the Notes Offering for general corporate purposes, including in its existing tobacco business and in additional investments in real estate through its wholly owned subsidiary, New Valley LLC. The Company may also consider using a portion of the proceeds of the Notes Offering to address upcoming debt maturities. The Company will not receive any proceeds from the offering of the Borrowed Shares, but the Company will receive a nominal loan fee from the Share Borrower for the use of the Borrowed Shares, which the Company intends to use for general corporate purposes.

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