Central European Distribution Corporation Announces Exchange Offers to Holders
of Certain Notes
MT. LAUREL, N.J., Feb. 25, 2013
MT. LAUREL, N.J., Feb. 25, 2013 /PRNewswire/ --Central European Distribution
Corporation (NASDAQ: CEDC) announced today that the Company and its subsidiary
CEDC Finance Corporation International, Inc. have launched exchange offers to
holders of their outstanding Convertible Senior Notes due 2013 and Senior
Secured Notes due 2016. The exchange offers are part of a financial
restructuring that contemplates a reduction of senior note debt by more than
The exchange offers were prompted in part by the impending March 15, 2013
maturity of the Convertible Senior Notes. Moreover, the Company believes that
a successful restructuring of both the Convertible Senior Notes and the Senior
Secured Notes will improve its financial strength and flexibility and enable
it to focus on maximizing the value of its strong brands and market position.
The Company is engaged in ongoing and constructive discussions with
representatives of its major stakeholders about the terms of the exchange
Separately, the Company has been informed that a committee of holders of the
2016 Senior Secured Notes and Roust Trading Ltd. (RTL), a major CEDC investor,
have proposed an alternative to the Company's exchange offers. The alternative
proposal has not been formally presented to the CEDC Board of Directors, and
the Board therefore has taken no position on it. However, the terms of the
alternative proposal are summarized in the same Offering Memorandum that the
Company is providing to Note holders to describe the Company's exchange
Under the Company's exchange offers, which expire at 11:59 PM, New York City
Time, on March 22, 2013:
oHolders of the outstanding 3% Convertible Senior Notes Due 2013 issued by
CEDC will receive in exchange for each $1,000 principal amount of their
notes 8.86 new shares of CEDC common stock.
oHolders of the outstanding 9.125% Senior Secured Notes due 2016 issued by
CEDC Finance Corporation International, Inc. will receive in exchange for
each $1,000 principal amount of their notes 16.52 new shares of CEDC
common stock and $508.21 principal amount of 6.5% Senior Secured Notes due
oHolders of the outstanding 8.875% Senior Secured Notes due 2016 issued by
CEDC Finance Corporation International, Inc. will receive in exchange for
each €1,000 principal amount of their notes 22.18 new shares of CEDC
common stock and $682.37 principal amount of 6.5% Senior Secured Notes due
Holders of both the Dollar and Euro classes of Senior Secured Notes are being
solicited, subject to the same deadline, to approve certain amendments to the
indenture governing their Notes, and holders of both the Convertible Senior
Notes and the Senior Secured Notes are being solicited, again subject to the
same deadline, to approve a back-up Chapter 11 Plan of Reorganization.
Assuming 100% participation in the exchange offers, holders of the Senior
Secured Notes collectively would receive 65% of the common stock in CEDC. The
Senior Secured Notes, with a current outstanding principal balance of
approximately $957 million (assuming an exchange rate of $1.3427 to €1.00),
would be replaced with $500 million aggregate principal amount of new 6.5%
Senior Secured Notes due 2020 referred to above. Holders of the Convertible
Senior Notes, with a current outstanding principal balance of approximately
$258 million, and RTL, which is owed $20 million in unsecured notes, together
would share pro rata in 10% of CEDC's common stock. A separate $50 million
secured credit facility provided by RTL would be converted into 20% of CEDC's
CEDC's recent business performance has been positive, and the Company is
optimistic about future results. However, current enterprise value is
insufficient to cover the debt and hence distributions to creditors will not
be enough to pay them in full. CEDC nevertheless has structured a proposal
that affords an opportunity for its shareholders to participate in the upside
of the Company's turnaround. Accordingly, existing shareholders are being
offered a 5% stake in the reorganized Company.
The final direction of the restructuring will be based on the outcome of the
solicitation process. If sufficient Notes are tendered in the exchange and
shareholders approve the plan, CEDC will consummate the exchange offers.
Alternatively, the Company may choose to effectuate the restructuring through
a fall-back, pre-packaged Plan of Reorganization through a filing in the U.S.
Bankruptcy Court for the District of Delaware. Absent requisite support for
the Plan, the Company may be forced to explore other immediate alternatives.
If the Company decides to make a bankruptcy filing to effectuate its Plan of
Reorganization, it is not expected to affect CEDC's operations in Poland,
Hungary, Russia or Ukraine. The Company will have sufficient cash and
resources on hand to ensure that its business will continue as usual and all
obligations to employees, vendors, and providers of credit support lines in
Poland, Hungary, Russia and Ukraine will be honored in the ordinary course of
The exchange offers are subject to the satisfaction or waiver of certain
conditions set forth in the Offering Memorandum, dated February 25, 2013 (the
"Offering Memorandum"), including but not limited to a minimum tender
condition. Subject to applicable law, CEDC may amend, extend or waive
conditions to, or terminate, the exchange offers. Full details of the terms
and conditions of the exchange offers are described in the Offering Memorandum
and the Letter of Transmittal for each of the Convertible Notes and the Senior
Secured Notes, which are being sent to the respective holders of such Notes.
As mentioned above, the Offering Memorandum also contains a summary of key
terms of the alternative proposal being put forward by the committee of 2016
Senior Secured Notes holders and RTL.
CEDC has filed today a Tender Offer Statement on Schedule TO, together with
the Offering Memorandum and related Letters of Transmittal that are exhibits
to the Tender Offer Statement on Schedule TO, with the Securities and Exchange
Commission ("SEC"). Each such document, as well as any amendments, supplements
or additional exhibits thereto, are available, free of charge, from the SEC's
website at www.sec.gov. Note holders are encouraged to read these documents,
as they contain important information regarding the tender offer.
Requests for the Offering Memorandum and other documents relating to the
Exchange Offers may be directed to Garden City Group, the information and
exchange agent for the exchange offers, at (800) 878-1684 (toll-free North
America) or (614) 763-6110 (direct-dial toll international).
None of CEDC, CEDC Finance Corporation International, Inc., or the information
and exchange agent makes any recommendation as to whether holders should
tender their notes pursuant to the exchange offers. Each holder must make its
own decision as to whether to tender its notes and, if so, the principal
amount of the notes to be tendered.
This press release is for informational purposes only and is neither an offer
to buy nor a solicitation of an offer to sell the notes or any other
securities of CEDC.
The exchange offers are being made pursuant to an exemption from registration
under Section 3(a)(9) of the Securities Act of 1933. The exchange offers are
only being made pursuant to the Offering Memorandum and the related Letters of
Transmittal. The exchange offers are not being made to noteholders in any
jurisdiction in which the making or acceptance thereof would not be in
compliance with the securities, blue sky or other laws of such jurisdiction.
SOURCE Central European Distribution Corporation
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