Altria Group Inc. made dramatic efforts to distance itself from the legal troubles of Juul, as it wrote down the value of its stake in the vaping company to about a third of what it initially paid.

Altria also said in a statement it has changed the terms of its minority investment in the company, including an end to all services other than regulatory affairs and an option to be released from its non-compete obligation in some circumstances. Altria valued its Juul stake at US$4.2 billion at the end of 2019, after paying US$12.8 billion in Dec. 2018.

Altria shares dipped slightly by 0.8 per cent to US$49.71 in early trading Thursday. The stock was so far flat for the year.

For the tobacco company, it’s another blow as it attempts to broaden its portfolio beyond cigarettes. Atria’s 35 per cent stake in Juul has become a headache as the e-cigarette market grapples with slew of vaping-related lung illnesses and deaths. Altria has also been named in lawsuits claiming youth addiction to Juul. These are new kinds of challenges for an old-guard company like Altria that’s used to taking things slow, getting FDA approval and testing the market before making big decisions.

Altria Chief Executive Howard Willard cited the “unexpected challenges” of Juul that had led to impairment charges and reported losses. The new charge comes amid a rise in lawsuits over Juul’s vaping devices, which allege it has addicted a new generation of youth and become a burden on school districts. Legal cases have increased by more than 80% since Oct.31, and many name Altria as a co-defendant.

The Juul writedown is “a prelude to a pivot to prioritizing other noncombustible products,” such as the iQOS vaporizer, Bloomberg Intelligence analysts Kenneth Shea and Gopal Srinivasan said in a note. Such a massive impairment charge “may raise concerns about CEO Howard Willard’s stewardship,” they said.

Altria said its non-compete option would be void if Juul can’t sell its products in the U.S. for at least a year, or if the value falls to less than 10 per cent of its initial US$12.8 billion investment.