RUSSIA/US: US$310m injection wins CEDC stake rise for Russian Standard
We've been waiting a while, but Russian Standard and CEDC finally announced a stake purchase agreement today
Russian Standard has agreed to pump up to US$310m into Central European Distribution Corporation in a move which could see the Russian firm take a 28% stake in its vodka rival.
The tie-up, announced today (23 April), sees Russian Standard spend $100m initially on upping its stake in CEDC. The firm, which owns the namesake Russian Standard vodka brand, will then buy up to US$210m of newly-issued, unsecured CEDC senior notes, which will be used to retire CEDC's 3% senior convertible notes due 2013. The new notes will be due at the end of July 2016 at a blended interest rate of 6%.
Russian Standard, which previously held a 9.9% stake in CEDC, will subsequently hold around 28% of CEDC's outstanding common stock, CEDC said.
"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,” said CEDC' president & CEO, William Carey. “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.”
Roustam Tariko, Russian Standard's founder & chairman, added: “While the global spirits market is at the final stage of its consolidation, the process in Russia is just beginning. Not only should we become a strong vodka market player across all categories and a leading importer of alcohol beverages … 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.
As part of the stake increase, Russian Standard will nominate director to CEDC's board and may nominate up to two additional directors depending on the amount of CEDC stock its parent company, Roust Trading, ends up holding.
To read CEDC's official announcement, click here.
For a breakdown of the proposed transactions, click here.
Central European Distribution Corp has hailed a welcome distraction from its recent troubles, with its Zubrowka vodka brand names as the fastest-growing spirits brand last year....
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