Court approves vodka maker CEDC’s bankruptcy plan

A US bankruptcy court has approved an exit plan for Central European Distribution Corporation (CEDC), which will leave Russian billionaire Roustam Tariko in charge.

The plan will see Tariko add one of the world’s largest vodka producers to his group of companies, which already includes Russian Standard Vodka.

Tariko will receive all of CEDC’s freshly issued stock in exchange for US$277 million, which will go to the company’s current creditors.

Tariko said: “The court’s approval of our financial restructuring is a very positive step forward for the company.

“The company’s world-class brands are now able to continue to build on their success locally and globally and perform as category leaders.”

CEDC had been hit by the global financial crisis and filed for bankruptcy at the beginning of April, and now emerges from that having shed around $665m in debt.

After making investments in CEDC last year, Tariko became chairman of the company which produces Absolwent and Parliament vodkas, it also has a leading market share in Russia, Poland and Hungary.

In a statement about the plan, CEDC said: “The approval of the plan marks the culmination of more than a year’s worth of work to bolster the company’s financial structure and create a long-term business alliance with Mr Tariko’s Russian Standard Vodka.”

As part of the recovery plan all CEDC’s current stock will be cancelled and it will stop trading as a public company.

The statement added: “The approval means that the court has confirmed the plan submitted to the court by CEDC and that the company may proceed with the closing of the restructuring transactions contemplated by the plan, which, assuming all conditions are met, is expected on or about 31 May.”

Skadden, who represent CEDC, told the Spirits Business that it expects the new deal will actually have a positive impact on the company’s distribution deals.

Partner Scott Simpson (London: Cross-Border Mergers and Acquisitions) said: “CEDC expects the restructuring to have a significantly positive impact on its distribution contracts, brands and operations. First, it should be noted that the Chapter 11 filing did not involve CEDC’s operating subsidiaries in Poland, Russia, Ukraine or Hungary.

Partner Jay Goffman (New York: Corporate Restructuring), added: “Those operations, which are independently funded and generate their own revenues, have continued normally and without interruption during the US restructuring process. Now that the US restructuring has been confirmed,  and the uncertainty has been removed, the overall company is far stronger today, with an improved balance sheet and greater liquidity. Factoring in the ongoing relationship with Russian Standard, we expect significant business improvements going forward.”