MT. LAUREL, N.J., April 23, 2012 /PRNewswire/ -- Central European Distribution Corporation (NASDAQ: CEDC) announced today that CEDC and Russian Standard Corporation (via Roust Trading Limited ("Roust Trading")) have signed definitive agreements for a strategic alliance. Russian Standard has agreed to invest US$100,000,000 in CEDC by purchasing a combination of newly issued shares of CEDC common stock and exchangeable notes (exchangeable into common shares of CEDC upon shareholder approval) to be issued by CEDC. In addition, Roust Trading has 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. This strategic alliance between Russian Standard Corporation and CEDC will create a powerful player in the Russian and Polish alcohol markets with best-in-class portfolios of own vodka brands and partner brands distributed worldwide. The investment by Roust Trading is expected to provide CEDC with the financial resources and capital to repay or repurchase all of its outstanding 3.00% Senior Convertible Notes due 2013. Following completion of these transactions and assuming CEDC receives the shareholder approval described below, Roust Trading and its affiliates may in the future hold approximately 28% of CEDC's outstanding common stock. "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," said William V. Carey, President and Chief Executive Officer of CEDC. "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," said Roustam Tariko, Founder and Chairman of Russian Standard Corporation. Terms of the Investment Pursuant to a securities purchase agreement, Roust Trading will make its investment in CEDC in three stages, subject to typical closing conditions. First, Roust Trading will acquire 5,714,286 shares of CEDC common stock for an aggregate purchase price of US$30 million, or US$5.25 per share, and US$70 million aggregate principal amount of senior notes due March 18, 2013, bearing an interest rate of 3.00% (the "New Debt") to be issued by CEDC. Subject to approval by CEDC shareholders, CEDC or Roust Trading may cause Roust Trading to purchase from CEDC a number of shares of CEDC common stock at a purchase price of US$5.25 per share (which amount will be sufficient to pay the principal amount outstanding of the New Debt plus some or all of the then accrued and unpaid interest thereon) totaling approximately 13,333,333 CEDC shares plus additional shares representing such accrued and unpaid interest on the New Debt. In addition, if shareholder approval is obtained, then (subject to typical closing conditions), Roust Trading will purchase US$102,554,000 aggregate principal amount of senior rollover notes due July 31, 2016 (the "Rollover Notes"), from CEDC in exchange for US$102,554,000 of CEDC's 3.00% Convertible Notes due 2013 then held by Roust Trading, and, CEDC, at its option, may issue to Roust Trading senior backstop notes in an aggregate principal amount of up to US$107,500,000 due July 31, 2016 (the "Backstop Notes") to be used by CEDC to pay the remaining principal amount of 3.00% Convertible Notes due 2013 then outstanding. Each of the Rollover Notes and Backstop Notes will bear a blended interest rate of 6.00% over the term of each note. Roust Trading and CEDC, and Roust Trading and each of the members of the CEDC's Board of Directors, have agreed to customary agreements to vote in favor of the transactions described above. CEDC and Roust Trading also entered into a governance agreement in support of this investment. In accordance with this governance agreement, Roust Trading nominated, and CEDC's board of directors will appoint, a member to CEDC's Board of Directors and Roust Trading may nominate up to two additional directors to CEDC's Board of Directors depending on the amount of CEDC common stock held by Roust Trading. In addition, Roust Trading received various minority protection rights.
Central European Distribution (Nasdaq:CEDC) hit a new 52-week low Thursday as it is currently trading at $2.73, below its previous 52-week low of $2.75 with 347,910 shares traded as of 11 a.m. ET. Average volume has been 915,600 shares over the past 30 days.