Vodka seller Central European Distribution Corp., headed by Russian billionaire Roustam Tariko, won court approval of its prepackaged restructuring plan a little more than a month after filing for bankruptcy.
U.S. Bankruptcy Judge Christopher Sontchi approved the Warsaw, Poland-based company’s reorganization plan that cuts debt by about $665 million at a hearing today in Wilmington, Delaware, according to court documents.
“The court’s approval of our financial restructuring is a very positive step forward for the company,” Tariko, CEDC’s chairman, said in statement today. “The company’s world-class brands are now able to continue to build on their success locally and globally and perform as category leaders.”
The company expects that it will be able to close on the restructuring transactions on or about May 31, according to the statement. Regulatory agencies in CEDC’s key markets of Poland, Russia and Ukraine already have given their blessings to the deal.
The plan, negotiated with and voted on by creditors before the bankruptcy filing, will eliminate about $665.2 million in debt from the balance sheets of CEDC and its CEDC FinCo. unit, according to an April 7 statement.
Holders of 2013 and 2016 notes voted 99 percent and 97 percent respectively to accept the plan, the company said in the statement. Under the restructuring proposal, holders of existing 2016 notes will receive $822 million, consisting of $172 million in cash, $450 million in new secured notes and $200 million in new convertible notes for an estimated recovery of about 83.7 percent.
Holders of existing 2013 notes will get the option to partake in a separate offering from Tariko’s Roust Trading Ltd. for a share of $25 million in cash and $30 million in Roust Trading notes, for a projected recovery of about 35 percent. The note holders that don’t participate in the Roust offering will split $16.9 million in cash, according to the statement.
Once the turnaround is completed all of reorganized CEDC’s equity will be owned by Roust Trading. Current shareholders are slated to receive nothing under the plan and the shares will be canceled.
The recovery plan also includes a new $100 million unsecured loan from an affiliate of Alfa Group. The restructuring doesn’t involve operating subsidiaries in Poland, Russia, Ukraine or Hungary, according to statements.
“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,” CEDC said in today’s statement.
The maker of Bols vodka listed $1.98 billion in assets and $1.73 billion in debt in bankruptcy court documents filed April 7.
The company’s financial challenges surfaced after almost two decades of success in Poland. CEDC traces its roots to 1991 as the exclusive importer of Anheuser-Busch beer in Poland, according to its website. In 1998 it went public in New York with 2 million shares, and in 2005 it began distilling vodka. CEDC then expanded into Hungary, Russia and Ukraine.
The company said in court filings that it’s the largest integrated spirits beverage business by volume in central and Eastern Europe.
The case is In re Central European Distribution Corp., 13-10738, U.S. Bankruptcy Court, District of Delaware (Wilmington).