CEDC And Russian Standard Agree To Revised Transaction
MT. LAUREL, N.J., Dec. 28, 2012 /PRNewswire/ -- Central European Distribution Corporation (NASDAQ: CEDC) announced today that it has agreed to a revised transaction with Russian Standard (through its affiliate, Roust Trading Ltd. ("RTL")). This agreement represents a renewed commitment by Russian Standard to a strategic alliance with CEDC and is an important vote of confidence in the future success of CEDC's business. The agreement also addresses the ongoing management of CEDC, with directors nominated by Russian Standard taking responsibility for CEDC's operations through a newly-formed committee of the CEDC Board of Directors. A special committee led by CEDC directors unaffiliated with Russian Standard will retain control of any restructuring of CEDC's capital structure. This amended transaction is intended to stabilize CEDC's business and to pave the way for CEDC to address its balance sheet issues in an orderly fashion.
Under the revised terms, Russian Standard has:
- released restrictions on $50 million in cash previously invested in CEDC, making such funds available for working capital and general corporate purposes,
- agreed to provide a new $15 million revolving credit facility to CEDC, and
- agreed to provide up to $107 million in new capital to CEDC (reduced by the commitment under the new revolving credit facility) subject to and conditional upon an overall restructuring of CEDC's capital structure that is acceptable to CEDC and Russian Standard.
In turn, CEDC has:
- created an Operational Management Committee of the CEDC Board of Directors to be led by Mr. Tariko,
- created a Restructuring Committee of the CEDC Board of Directors to be led by non-Russian Standard directors,
- appointed Grant Winterton as Chief Executive Officer of CEDC, effective January 10, 2013. Mr. Winterton is the current General Manager of the Russian Alcohol Group - a CEDC subsidiary. Mr. Winterton has over 20 years of experience working in marketing, sales and general management positions for Campbells Soup ( Australia), The Coca-Cola Company ( Australia, Russia, Ukraine, China), Wimm Bill Dann ( Russia) and Red Bull ( Russia). Mr. Winterton has lived in Russia for over 10 years, working in the consumer goods industry, and has extensive working experience across the Russia, Ukraine, Belarus and CIS markets. He joined CEDC as General Manager of the Russian Alcohol Group in April 2012.
- agreed to call an annual shareholders' meeting as soon as practicable to vote on a slate of directors agreed between CEDC and Russian Standard and to decide if Russian Standard nominees will comprise a majority of the CEDC Board of Directors.
CEDC and Russian Standard are implementing these revised terms pursuant to a binding term sheet signed today, which modifies the Amended and Restated Securities Purchase Agreement and Amended and Restated Governance Agreement between CEDC and RTL. These two agreements will terminate with automatic effect on January 21, 2013, and, from today, CEDC will be permitted to have restructuring discussions and negotiations with the holders of CEDC's outstanding debt obligations. These revised terms also represent a settlement of the issues between CEDC and Russian Standard stemming from, among other things, the restatement of CEDC's financial statements for its 2010 and 2011 fiscal years in October of this year, with CEDC and RTL agreeing to mutually release all claims and causes of action and not to bring any legal action against the other under either agreement for matters arising prior to today.CEDC and Russian Standard believe that these revised terms constitute a mutually beneficial way of addressing CEDC's near-term funding and operational issues while also committing CEDC and Russian Standard to work together to address CEDC's long-term capital requirements, including a restructuring of its current debt obligations. In that regard, CEDC and Russian Standard also believe that the changes to CEDC's corporate governance comprise an appropriate component of CEDC's strategy.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts