Facing multibillion payouts over the health risks of tobacco, RJR has proposed spinning off its domestic tobacco operations to shareholders and retaining its interest in Nabisco Holdings Corp., which makes Oreo cookies, Ritz crackers and a host of other products.

Financier Carl Icahn, meanwhile, is promoting a slate of candidates, including himself, to take over the RJR board on May 12 and instead spin-off Nabisco and retain tobacco.

"Restructuring a multibillion-dollar company that faces enormous legal issues is not a high-school science experiment -- you don't get to start over necessarily after you've dropped your work onto the lab floor, shattered in pieces," RJR Chief Executive Steven Goldstone writes in a letter sent to shareholders Friday.

"As a fiduciary, you knowfull well that you don't elect a board of directors to play Russian roulette with your investment," Goldstone writes.

Icahn said in an interview with Reuters that Goldstone's letter failed to produce any legal reason why the alternative plan would fail.

RJR Nabisco on Thursday reported quarterly earnings of $83 million, sharply depressed by tobacco litigation costs and price increases set to recoup some of those legal expenses.

When shareholders meet in North Carolina on May 12, they will weigh competing plans to divvy up the company, which makes everything from Camel and Winston cigarettes to Chips Ahoy, Wheat Thins and Life Savers candy.

Critics say it would be a waste of time to pursue Icahn's plan because anti-tobacco litigants would likely win a court injunction to prevent a Nabisco spin-off by arguing that such a move would jeopardise fair legal settlement awards.

And although Icahn's attorneys produced a 150-page report arguing his plan would survive any legal challenges, Goldstone ridiculesit as "flatly wrong or inaccurate on material legal points and woefully incomplete on others."

Icahn said he was in the process of talking to RJR's major shareholders about his plan. And although they are receptive to his deal, they also want to see what Goldstone has to say, Icahn said.