In the news release, Central European Distribution Corporation
Wins Overwhelming Creditor Approval of Proposed Restructuring Plan,
issued 07-Apr-2013 by Central
European Distribution Corporation over PR Newswire, we are advised
by the company that in the second paragraph, the company name
should read "Alfa Group" rather than "Alfa Bank" as originally
issued inadvertently. The complete, corrected release follows:
Central European Distribution Corporation Wins Overwhelming
Creditor Approval of Proposed Restructuring Plan Plan to be
Implemented Through Prepackaged Chapter 11 Plan of Reorganization;
Company Also Obtains Commitment For New
$100
Million Unsecured Facility for Russian Operations;
Restructuring Should Have No Impact on Company Business Operations
in
Poland,
Russia,
Ukraine or
Hungary; Company Will Honor Obligations in
those Countries in the Ordinary Course without Interruption
WARSAW, Poland, April 7, 2013 /PRNewswire/ -- Central European
Distribution Corporation (NASDAQ: CEDC) announced that CEDC and its
U.S. subsidiaries, CEDC Finance Corporation International, Inc. and
CEDC Finance Corporation LLC, have received overwhelming support
from creditors for their proposed restructuring, which will be
implemented through a Prepackaged Chapter 11 Plan of
Reorganization. Accordingly, the Company today commenced voluntary
proceedings under Chapter 11 of the U.S. Bankruptcy Code to seek
confirmation of the Plan.
Separately, CEDC approved the terms of a new $100 million unsecured credit facility, to be
provided by an affiliate of Alfa Group, for the benefit of CEDC's
Russian operations. The facility was arranged for CEDC by its
strategic partner, Roust Trading Ltd. (RTL), which will pay the
origination and other fees involved. CEDC welcomes the opportunity
to enhance its relationship with one if its key financial partners
– Alfa Group.
The financial restructuring, which will eliminate approximately
$665.2 million in debt from CEDC's
and CEDC FinCo's balance sheets, does not involve the Company's
operating subsidiaries in Poland,
Russia, Ukraine or Hungary and should have no impact on their
business operations. Operations in these countries are
independently funded and will continue to generate revenue during
this process. All obligations to employees, vendors, credit support
providers and government authorities will be honored in the
ordinary course without interruption.
Voting on the Plan closed on April
4, 2013. According to the official vote tabulation
prepared by CEDC's voting and information agent, impaired creditors
have voted overwhelmingly to accept the Plan. In particular,
approximately 95% of all Existing 2013 Notes were voted. The
Plan was accepted by 99.13% in number and 99.00% in amount of those
Existing 2013 Notes that were voted on the Plan. Approximately
95% of all Existing 2016 Notes were voted, and of those, 97.26% in
number and 97.34% in amount voted to accept the Plan.
The voluntary Chapter 11 proceedings commenced today with a
filing in the U.S. Bankruptcy Court for the District of
Delaware, in Wilmington, Delaware. At the initial hearing
in the case, which is expected to be on Tuesday, April 9, 2013, the Company will present
routine requests to the Court that will allow the Company a
seamless transition into Chapter 11. The Company also will request
that the Court schedule its final confirmation hearing for the Plan
of Reorganization within 30 to 45 days.
If confirmed, the restructuring will result in Roust Trading,
owned by CEDC Chairman and leading investor Roustam Tariko, owning
100% of the outstanding stock of reorganized CEDC. Holders of
Existing 2016 Notes will receive total consideration of
$822 million, consisting of
$172 million in cash, $450 million in new secured notes and
$200 million in new convertible
notes, on account of their claims totaling approximately
$982.2 million in U.S. dollars. This
consideration will afford holders of Existing 2016 Notes an
estimated recovery of approximately 83.7%.
Holders of Existing 2013 Notes other than Roust Trading who
participate in a separate offer by Roust Trading will receive total
consideration of $55 million,
composed of $25 million in cash and
$30 million in Roust Trading Notes,
which collectively will afford such holders an estimated recovery
of 34.9%. Holders of Existing 2013 Notes that do not participate in
Roust Trading's offer will receive their proportionate share of
$16.9 million in cash under the Plan
(shared with the RTL Notes). Holders of Existing 2013 Notes that
participate in Roust Trading's offer will not receive a
distribution from CEDC or its U.S. subsidiaries under the Plan.
The new $100 million unsecured
credit facility will be provided to CEDC subsidiary JSC Russian
Alcohol Group ("RAG"). The facility has a one year term that may be
extended by agreement of the parties. RAG's obligations under the
new facility will be guaranteed by Roust Trading and its affiliate,
Russian Standard Corporation. RAG's obligations under the new
facility will be subordinate to the Company's obligations under the
New Secured Notes and New Convertible Notes to be issued to holders
of Existing 2016 Notes under the Plan.
CEDC and CEDC FinCo also announced the successful completion of
the consent solicitation conducted with respect to the indenture
governing the Existing 2016 Notes, as the requisite consents were
obtained to approve the Covenant Amendments, the Collateral and
Guarantee Amendments and the Bankruptcy Waiver Amendments, each as
defined in the Amended and Restated Offering Memorandum, Consent
Solicitation Statement and Disclosure Statement dated March 8, 2013. Approximately 95% of the Notes by
principal amount voted to approve.
CEDC and CEDC FinCo also announced the termination of the CEDC
FinCo Exchange Offer for the Existing 2016 Notes. The CEDC FinCo
Exchange Offer failed to meet the minimum tender condition
necessary for the consummation of the offer. All Existing 2016
Notes tendered in the CEDC FinCo Exchange Offer will be returned to
tendering holders.
History of the Transaction
The financial restructuring detailed above is the culmination of
a process that began in early 2012, when the Company began seeking
both a partner with a strong background in Russian retail goods and
a new source of capital to bolster the Company's business and repay
the Existing 2013 Notes coming due in 2013.
The search led to a strategic alliance with RTL and Mr. Tariko,
an alliance that simultaneously addressed the Company's operating
and financial needs. Over the next year, Mr. Tariko and RTL made
substantial financial commitments to the Company, becoming the
largest investor in its stock and Existing 2013 Notes and joining
the Board of Directors. Mr. Tariko also lent his operating
expertise to the Company.
As the relationship with Mr. Tariko and RTL grew, two entities
assumed responsibility for safeguarding the interest of all CEDC
constituencies from a corporate governance standpoint and
developing the long-term financial restructuring plan: These were
the Special Committee of independent directors, headed by CEDC Vice
Chairman N. Scott Fine, and the
Restructuring Committee, consisting of Mr. Fine, Mr. Tariko and
independent Director Markus Sieger.
These committees were assisted by the firm of Skadden, Arps, Slate,
Meagher and Flom LLP as legal advisor, the firm of Houlihan Lokey
Capital Inc. as financial advisor, and the firm of Alvarez &
Marsal LLC as chief restructuring officer.
The Roust Trading Notes referred to in this announcement have
not been and will not be registered under the U.S. Securities Act
of 1933 and may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements.
SOURCE Central European Distribution Corporation