Central European Distribution Corp. (CEDC) filed for Chapter 11
bankruptcy protection Sunday to carry out a restructuring that will
slash about $665 million in debt off its balance sheet.
If approved by the U.S. Bankruptcy Court in Wilmington, Del.,
the restructuring plan would hand ownership of the vodka producer
to Roust Trading, an affiliate of Russian Standard. Current CEDC
Chairman Roustam Tariko owns Roust Trading.
Bondholders owed $982.2 million in notes due in 2016 would
receive $172 million in cash, $450 million in new secured notes and
$200 million in new convertible notes under the plan, a recovery of
about 83.7%.
Another group of bondholders, whose debt is due this year, would
receive $25 million in cash and $30 million in notes for a recovery
of 34.9%. Those who don't participate in the offer would share in
$16.9 million in cash. Roust Trading is funding the plan in
exchange for 100% equity in the new company.
The Mount Laurel, N.J., company said nearly all of its
bondholders have already voted to accept its prearranged
restructuring plan, for which it hopes to secure bankruptcy-court
approval in the next 30 to 45 days.
CEDC announced this restructuring plan and began soliciting
support for it in March while also fielding a rival offer from a
group composed of Alfa Bank's A1 investment group, Stolichnaya
owner SPI Group and former CEDC chairman Mark Kaufman.
That group had offered $230 million in cash plus $50 million in
bankruptcy financing to take control of the vodka producer. It also
wanted to execute the plan, which included $650 million in new
notes for the company's 2016 bondholders, through a Chapter 11
filing.
After several rounds of negotiations, in which the group
insisted its offer was the best available while CEDC said the Roust
Trading-supported plan was better, the group withdrew its bid.
CEDC had announced that it had a majority of votes for the Roust
plan, ending the group's hopes of soliciting enough bondholders
support to overtake the Roust proposal. The company had said that
the rival offer wasn't competitive with the Roust plan because of
lack of recovery for 2013 bondholders.
This restructuring does include a new $100 million unsecured
loan that's being provided by an affiliate of Alfa Bank. It's not
clear in court documents whether that affiliate is A1, and the
investment firm didn't immediately respond to a request for
comment.
In a press release announcing the filing, the company said "CEDC
welcomes the opportunity to enhance its relationship with one if
its key financial partners--Alfa Bank."
CEDC, which sells vodka brands including Green Mark and
Parliament in Russia and Poland and has six manufacturing
facilities in those countries, employs 4,100 people. It reported
assets and debts of more than $1 billion in its Chapter 11
petition.
Write to Stephanie Gleason at
stephanie.gleason@dowjones.com.
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