CEDC Pares Weekly Slide in U.S. as Delisting Delayed for HearingVictoria Stilwell
Central European Distribution Corp. rose in New York, paring its biggest weekly slump since November, as Poland’s second-largest vodka producer won a stay to appeal its delisting from the Nasdaq Global Select Market.
CEDC rallied 6.5 percent to $1.98 in New York, rising for the first day this week. The stock has declined 17 percent since Jan. 7, when the Warsaw-based company said it received a letter from the Nasdaq saying the delisting of CEDC would be initiated from Jan. 11. Shares in Warsaw fell for a fourth day, sliding 4.3 percent to 6.05 zloty, or $1.96.
The producer of branded vodka said that it requested a hearing yesterday to appeal Nasdaq’s decision, which was sparked by CEDC failing to hold its annual general meeting by the end of 2012. As a result of the request, Nasdaq has stayed the delisting and scheduled a hearing for March 21, CEDC said in a filing posted shortly before the close of trade today.
CEDC erased half of its market value in 2012 amid slumping sales, increasing debt, and management transitions. After the company said that it may not be able to pay back its debt, CEDC signed an agreement July 9 with billionaire Roustam Tariko’s Russian Standard Corp., making Tariko a non-executive chairman and allowing him to boost his stake in CEDC in return for buying debt to avoid default.
“It’s a very risky company, and I wouldn’t want to make it a big part of any portfolio,” said Colin Symons, chief investment officer of Symons Capital Management Inc. in Pittsburgh, Pennsylvania, which held 0.06 percent of CEDC’s U.S. stock as of the end of the third quarter, according to data compiled by Bloomberg. “Our basic attitude is that it’s so cheap right now it basically acts like a lottery ticket. To me, it’s worth staying in and taking the risk.”
CEDC trades for 13.7 times estimated earnings over the next 12 months, compared with an average valuation of 15.3 times for companies on the Nasdaq Composite Index, data compiled by Bloomberg show.
Even with its debt issues, CEDC has the potential for significant earnings power, Symons said by phone today. “They have some significant products they can derive some good revenue and earnings from.”
CEDC, which produces the Zelyonaya Marka, Bols and Zubrowka brands, posted profit of $35.8 million in the third quarter, compared to a $848.7 million loss a year earlier, according to a Nov. 19 filing.
William Carey, the company’s former chief executive officer, resigned in July, and two months later the company’s stock was temporarily suspended in Warsaw after it delayed the release of earnings.