Roustam Tariko takes control of CEDC3rd January, 2013 by Becky Paskin
Roustam Tariko, owner of Russian Standard, will take control of vodka producer Central European Distribution Corp’s (CEDC) operations in exchange for up to US$65m in funding.
Tariko became chairman and interim president of CEDC last year after agreeing to take a 28% stake in the company through his companies Russian Standard and Roust Trading.
However in a letter to shareholders dated 13 November he claimed CEDC lacked the “trustworthy management” needed to reinvigorate declining sales, and had breached the terms of their agreement. He claimed that as such, Russian Standard was no longer obliged to continue the alliance.
CEDC initially rejected Tariko’s request to be given control of the company’s financial management in a second letter to shareholders on 16 November, in which Scott Fine, vice president of CEDC’s special committee, called Tariko’s intentions “destructive and destabilising” and “contrary to the interests of CEDC, its shareholders and the CEDC/ Russian Standard partnership.”
Under the new agreement, announced on 28 December, Tariko will head a new operational management committee to oversee the day-to-day business of CEDC. Joining him on the board will be Fine plus an additional nominee of Roust Trading.
He will also head a new restructuring committee responsible for the company’s financial operations, which will also consist of three non-Russian Standard directors.
In addition, interim chief executive officer David Bailey is to resign from his position on 10 January, and be permanently replaced by Grant Winterton, currently general manager of CEDC subsidiary, the Russian Alcohol Group.
In return, Tariko will release restrictions on US$50m of cash previously invested in CEDC, and commit to an additional US$15m revolving credit facility.
CEDC reported a net sales loss of 8.7% to US$191m during the third quarter of 2012.