Analysis

just The Facts – Russian Standard and Central Eastern Distribution

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Earlier today (23 April), Russian Standard finally got the okay to up its stake in Central European Distribution Corporation. The move, which could cost Russian Standard up to US$310m, could see the firm hold up to 28% of CEDC. Here, just-drinks breaks down the full terms of the tie-up.

Russian Standard will make its investment in three stages:

  • First, it will acquire 5.7m shares in CEDC for $30m ($5.25 per share), and $70m of senior notes, due in March 2013, which will have an interest rate of 3%, to be issued by CEDC. Either side could permit Russian Standard to buy further shares – around 13.3m - at $5.25 each to cover the $70m in notes plus any interest.
  • It will also buy $102.6m of senior rollover notes due in July 2016, from CEDC in exchange for $102.6m of CEDC's 3% Convertible Notes due 2013 then held by Russian Standard.
  • Finally, CEDC may issue senior backstop notes to Russian Standard of up to $107.5m, also due in July 2016. These notes would be used to pay the remaining principal amount of 3% Convertible Notes due 2013 then outstanding.

Each of the rollover and backstop notes will bear a blended interest rate of 6% over the term of each note.

All of these are subject to shareholder approval.


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