Central European Distribution Corporation (NASDAQ: CEDC) announced today that they, along with Russian Standard Corporation (via Roust Trading Limited (“Roust Trading”)) have signed definitive agreements for a strategic alliance.
Russian Standard is to invest one hundred million USD ($100,000,000) in CEDC by purchasing a combination of newly issued shares of CEDC common stock and exchangeable notes that are to be issued by CEDC. Note, exchangeable shares into common shares of CEDC upon shareholder approval.
Roust Trading also agreed to purchase up to US$210,000,000 principal amount of newly issued, unsecured CEDC senior notes due July 31, 2016 at a blended interest rate of 6.00%. The proceeds of these investments are required to be used to retire CEDC’s 3.00% Senior Convertible Notes due 2013.
What’s the point of this alliance? There is hope among alliance partners that it will form a big player in the global spirits market.
Here’s what William V. Carey, President and Chief Executive Officer of CEDC had to say regarding today’s announcement, “After many months of working on this transaction, we are pleased to announce the signing of definitive agreements today with Russian Standard for a strategic investment that addresses our near term financial obligations. In addition to this, we anticipate further discussions on the combination of our Russian businesses as well as other synergies that can be obtained from this strategic relationship. Our partnership with Mr. Roustam Tariko and Roust Trading, will not only benefit CEDC from the financial and business side but with Mr. Tariko’s vast experience in the Russian spirits market, he will represent valuable support for management and the Board in strengthening CEDC’s position in the Russian market, as well as in international markets.”
Roustam Tariko, Founder and Chairman of Russian Standard Corporation had the following to say, “I am pleased that our discussions have resulted in an exciting new alliance between Russian Standard Corporation and CEDC. While the global spirits market is at the final stage of its consolidation, the process in Russia is just beginning. As a result, customers will be offered an unparalleled choice of quality global alcohol brands and the market should become more transparent with fewer players. Russian Standard Corporation’s partnership with CEDC should provide both companies with a number of synergies: not only should we become a strong vodka market player across all categories and a leading importer of alcohol beverages offering one of the most significant portfolios of premium brands in Russia and Poland but we also should have a very effective production and distribution infrastructure in the near future, which should increase our competitiveness on global markets. I am confident that we should be able to quickly complete all phases of the transaction with CEDC.”