Central European Distribution (CEDC) to Get ~$310M Investment from Russian Standard
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Central European Distribution Corporation (Nasdaq: CEDC) and Russian Standard Corporation signed definitive agreements for a strategic alliance. Russian Standard has agreed to invest US$100,000,000 in CEDC by purchasing a combination of newly issued shares of CEDC common stock and exchangeable notes (exchangeable into common shares of CEDC upon shareholder approval) to be issued by CEDC. In addition, Roust Trading has agreed to purchase up to US$210,000,000 principal amount of newly issued, unsecured CEDC senior notes due July 31, 2016 at a blended interest rate of 6.00%. The proceeds of these investments are required to be used to retire CEDC's 3.00% Senior Convertible Notes due 2013.
Pursuant to a securities purchase agreement, Roust Trading will make its investment in CEDC in three stages, subject to typical closing conditions. First, Roust Trading will acquire 5,714,286 shares of CEDC common stock for an aggregate purchase price of US$30 million, or US$5.25 per share, and US$70 million aggregate principal amount of senior notes due March 18, 2013, bearing an interest rate of 3.00% to be issued by CEDC. Subject to approval by CEDC shareholders, CEDC or Roust Trading may cause Roust Trading to purchase from CEDC a number of shares of CEDC common stock at a purchase price of US$5.25 per share (which amount will be sufficient to pay the principal amount outstanding of the New Debt plus some or all of the then accrued and unpaid interest thereon) totaling approximately 13,333,333 CEDC shares plus additional shares representing such accrued and unpaid interest on the New Debt. In addition, if shareholder approval is obtained, then (subject to typical closing conditions), Roust Trading will purchase US$102,554,000 aggregate principal amount of senior rollover notes due July 31, 2016 (the "Rollover Notes"), from CEDC in exchange for US$102,554,000 of CEDC's 3.00% Convertible Notes due 2013 then held by Roust Trading, and, CEDC, at its option, may issue to Roust Trading senior backstop notes in an aggregate principal amount of up to US$107,500,000 due July 31, 2016 to be used by CEDC to pay the remaining principal amount of 3.00% Convertible Notes due 2013 then outstanding. Each of the Rollover Notes and Backstop Notes will bear a blended interest rate of 6.00% over the term of each note. Roust Trading and CEDC, and Roust Trading and each of the members of the CEDC's Board of Directors, have agreed to customary agreements to vote in favor of the transactions described above.
CEDC and Roust Trading also entered into a governance agreement in support of this investment. In accordance with this governance agreement, Roust Trading nominated, and CEDC's board of directors will appoint, a member to CEDC's Board of Directors and Roust Trading may nominate up to two additional directors to CEDC's Board of Directors depending on the amount of CEDC common stock held by Roust Trading. In addition, Roust Trading received various minority protection rights.
Jefferies & Company, Inc. served as financial advisor to CEDC's Board of Directors with respect to the transaction. Dewey & LeBoeuf LLP and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisors to CEDC. Ropes & Gray LLP acted as legal advisors to Roust Trading.
Pursuant to a securities purchase agreement, Roust Trading will make its investment in CEDC in three stages, subject to typical closing conditions. First, Roust Trading will acquire 5,714,286 shares of CEDC common stock for an aggregate purchase price of US$30 million, or US$5.25 per share, and US$70 million aggregate principal amount of senior notes due March 18, 2013, bearing an interest rate of 3.00% to be issued by CEDC. Subject to approval by CEDC shareholders, CEDC or Roust Trading may cause Roust Trading to purchase from CEDC a number of shares of CEDC common stock at a purchase price of US$5.25 per share (which amount will be sufficient to pay the principal amount outstanding of the New Debt plus some or all of the then accrued and unpaid interest thereon) totaling approximately 13,333,333 CEDC shares plus additional shares representing such accrued and unpaid interest on the New Debt. In addition, if shareholder approval is obtained, then (subject to typical closing conditions), Roust Trading will purchase US$102,554,000 aggregate principal amount of senior rollover notes due July 31, 2016 (the "Rollover Notes"), from CEDC in exchange for US$102,554,000 of CEDC's 3.00% Convertible Notes due 2013 then held by Roust Trading, and, CEDC, at its option, may issue to Roust Trading senior backstop notes in an aggregate principal amount of up to US$107,500,000 due July 31, 2016 to be used by CEDC to pay the remaining principal amount of 3.00% Convertible Notes due 2013 then outstanding. Each of the Rollover Notes and Backstop Notes will bear a blended interest rate of 6.00% over the term of each note. Roust Trading and CEDC, and Roust Trading and each of the members of the CEDC's Board of Directors, have agreed to customary agreements to vote in favor of the transactions described above.
CEDC and Roust Trading also entered into a governance agreement in support of this investment. In accordance with this governance agreement, Roust Trading nominated, and CEDC's board of directors will appoint, a member to CEDC's Board of Directors and Roust Trading may nominate up to two additional directors to CEDC's Board of Directors depending on the amount of CEDC common stock held by Roust Trading. In addition, Roust Trading received various minority protection rights.
Jefferies & Company, Inc. served as financial advisor to CEDC's Board of Directors with respect to the transaction. Dewey & LeBoeuf LLP and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisors to CEDC. Ropes & Gray LLP acted as legal advisors to Roust Trading.
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