Russian Standard has injected US$100m into CEDC

Russian Standard has injected US$100m into CEDC

A deal with vodka rival Russian Standard has given Central European Distribution Corp (CEDC) breathing space over refinancing and pumped value into its flat-lining shares, according to an analyst. 

Last month, Russian Standard put US$100m into CEDC in return for a potential 28% share. The deal has been a kiss of life for the troubled drinks maker, according to Nomura research anaylyst Edward Mundy.

“The strategic alliance with Russian Standard has addressed the refinancing requirement for debt due in 2013,” Mundy said.

“We move our rating from Reduce to Neutral, as the focus moves from refinancing to the turnaround of the core Russian operation, including a potential further deal with Russian Standard.”

Mundy said Nomura will increase its target price from zero to US$4 per share. 

However, Mundy questioned which company would benefit most from future partnerships.

He said there could be problems if Russian Standard increased its share in CEDC to more than 33% because of Polish regulations. He said there was some risk Russian Standard would be the greater beneficiary of any value creation.