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SUBSEQUENT EVENTS | 3 Months Ended
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Mar. 31, 2013
SUBSEQUENT EVENTS |
17. | SUBSEQUENT EVENTS
Plan of Reorganization As described in Note 1, on March 15, 2013, the Company failed to pay $257.9 million principal due on the 2013 Notes. Under the terms of the 2013 Notes Indenture, the failure to pay principal when due constituted an event of default (as defined under the CSN Indenture). On April 7, 2013, CEDC and its subsidiaries CEDC Finance Corporation International, Inc. and CEDC Finance Corporation, LLC filed voluntary petitions for reorganization under Chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) in order to effectuate the Debtors’ prepackaged Chapter 11 Plan of Reorganization, which became effective June 5, 2013. On June 5, 2013, the Company along with CEDC Finance Corporation International, Inc., an indirect wholly-owned subsidiary of the Company (the “Issuer”), entered into an Indenture (the “Senior Secured Notes Indenture”), between the Company, the Issuer, certain subsidiary guarantors named therein, and US Bank, N.A., as Trustee. In connection with the Senior Secured Notes Indenture, the Issuer issued $465 million Senior Secured Notes due 2018 (the “Senior Secured Notes”) to holders of the SSN which were cancelled pursuant to the Plan of Reorganization. The issuance of the Senior Secured Notes to holders of the SSN is expected to take place on or about June 19, 2013. The Senior Secured Notes will be secured by, among other things, (a) a first-priority pledge over the shares of the Issuer and certain subsidiaries of the Company, (b) a first-priority assignment of rights under certain bank accounts of the Company, (c) certain intercompany loans, and (d) a first-priority mortgage over certain real property and fixtures. On June 5, 2013, the Company and the Issuer, entered into an Indenture (the “Convertible Notes Indenture”), between the Company, the Issuer, certain subsidiary guarantors named therein, and US Bank, N.A., as Trustee (the “Trustee”). In connection with the Convertible Notes Indenture, the Issuer issued $200 million Convertible Junior Secured Notes due 2018 (the “Convertible Notes” and, together with the Senior Secured Notes, the “New Notes”) to holders of the SSN, which were cancelled pursuant to the Company and the Issuer’s plan of reorganization. The issuance of the Convertible Notes to holders of the SSN took place on or about June 19, 2013. The Convertible Notes will be secured by, among other things, (a) a first-priority pledge over the shares of the Issuer and certain subsidiaries of the Company, (b) a first-priority assignment of rights under certain bank accounts of the Company, (c) certain intercompany loans, and (d) a first-priority mortgage over certain real property and fixtures. Other material terms of the indentures can be found in the Company’s Form T-3/As, filed with the SEC on March 11, 2013 and May 20, 2013. On June 5, 2013, in connection with the consummation of the exchange offers, the Company issued an aggregate of 10,000 shares of New Common Stock to RTL. The issuance of the New Notes and the common stock under the Plan was made pursuant to an exemption from the registration requirements of the Securities Act contained in Section 1145(a) of the Bankruptcy Code. Pursuant to the Plan, all of the Company’s shares of pre-emergence common stock (“Pre-Emergence Shares”) were cancelled on the Effective Date. Holders of such Pre-Emergence Shares did not and will not receive any distributions under the Plan. In accordance with the terms of the Plan, RTL and its affiliates have acquired control of 100% of the voting securities of the Company. As a result of the Company’s emergence from Chapter 11 and in accordance with the Plan, the following persons have been named as directors of the Company:
| • |  | Mr. Roustam Tariko
| • |  | Mr. N. Scott Fine
| • |  | Mr. Jose L. Aragon
| • |  | Judge Joseph Farnan
| • |  | Mr. Alessandro Picchi
| • |  | Mr. Pavel Merkul
| • |  | Mr. Eberhard von Löhneysen
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year Pursuant to the Plan, the Company has filed an Amended and Restated Certificate of Incorporation (the “New Charter”) with the Secretary of State of the State of Delaware and has adopted Amended and Restated By-Laws (the “New By-Laws”), each of which became effective as of June 5, 2013. Changes implemented by the New Charter and New By-Laws include the following:
| • |  | The authorized share capital of the Company is 90,000 shares of common stock of $0.01 par value per share and 10,000 shares of preferred stock of $0.01 par value per share.
| • |  | The number of authorized shares of preferred stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Company entitled to vote, without the separate vote of the holders of the preferred stock as a class, unless a vote of any such holders is required pursuant to the terms of any certificate of designation. In case the number of shares of any series shall be decreased in accordance with the foregoing sentence, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series.
| • |  | A director may be removed with or without cause, but in any case such removal shall only be effective if accomplished by the affirmative vote of holders of not less than a majority of the shares of the capital stock the Company issued and outstanding and entitled to vote generally in the election of directors cast at a meeting of the stockholders called for that purpose, notwithstanding the fact that a lesser percentage may be specified by law.
| • |  | Certain provisions have been added to provide stockholder protections to Minority Stockholders (as defined in the New Charter), including:
| • |  | Minority Stockholders have the right to nominate one director and such director’s successor.
| • |  | The jurisdiction of incorporation and domicile of the Company will be Delaware until such time as (a) all of the Senior Secured Notes and all of the Convertible Notes have been redeemed, repaid or converted in their entirety, as applicable, and (b) no Minority Shares remain outstanding.
| • |  | Certain registration rights as provided in Sections 6.3 and 6.4 of the New Charter.
| • |  | Approval over certain significant transactions as provided in Section 6.5 of the New Charter.
| • |  | Minority Stockholders have been provided tag along rights, drag along rights and preemptive rights in respect of share transfers by RTL.
The New Charter and the New By-Laws are attached as Exhibit 3.1 and Exhibit 3.2 of our 8-K Form filed with the SEC on June 11, 2013. License Agreement with LUCAS BOLS B.V. The Company is party to a License Agreement dated August 17, 2005 with LUCAS BOLS B.V. that gives the Company the right to use the BOLS Vodka trademark in Poland and Russia. The License Agreement provides LUCAS BOLS B.V. with the right to terminate the agreement upon a change of control or bankruptcy event occurring at the level of Central European Distribution Corporation and may allow LUCAS BOLS B.V. to terminate the agreement following the filing of the Plan. The Company’s representatives have discussed the License Agreement with LUCAS BOLS B.V. and LUCAS BOLS B.V. continues to assess its options under the License Agreement. The Company also has a similar license contract with LUCAS BOLS B.V. in respect of the use of the license for the Bols Vodka trademark in Hungary and this contract contains a similar termination right. The Company currently believes that the risk that the license will be terminated is relatively low and there is no risk of a negative cash outflow following any such termination. Bilateral Facility Agreement On April 7, 2013, the Company’s Board of Directors approved the terms of a Bilateral Facility Agreement, to be entered into between JSC “Russian Alcohol Group” or one or more other Company subsidiaries (a “Borrower”) and Steb Holdings Ltd. (the “Lender”), an affiliate of the Alfa Group, pursuant to a term sheet agreed between the Lender, Roust Trading Ltd. (“RTL”) and Closed Joint Stock Company “Russian Standard Corporation” (“RSC”) (the “Term Sheet”). The Lender’s commitment to make loans pursuant to a Bilateral Facility Agreement will terminate on the earliest to occur of (x) the date of drawdown, (y) the six-month anniversary of the date of the Term Sheet and (z) the termination of the Term Sheet by RTL pursuant to the terms thereof. Under the Term Sheet, Company subsidiaries may enter into up to five Bilateral Facility Agreements with the Lender in a principal amount up to $100 million for general corporate and business development purposes. The Bilateral Facility Agreements are subject to definitive documentation. Any amounts drawn by the Borrower under a Bilateral Facility Agreement shall be unsecured with an interest rate of 13.75% payable quarterly and shall be for a term of one year that may be extended upon the agreement of the Lender, RTL, RSC and the Company. Each Borrower’s obligations with respect to the Bilateral Facility Agreements would be guaranteed by RTL and RSC. In addition, RTL, guaranteed by RSC, has agreed to pay the Lender an arrangement fee of $0.5 million, a commitment fee of $10.3 million that is payable in three installments and, in certain circumstances specified in the Term Sheet, a break-up fee of $15.0 million, minus any arrangement fee paid. NASDAQ Delisting On April 10, 2013, the Company received a letter from the NASDAQ Office of General Counsel, Hearings, informing the Company that the NASDAQ Hearings Panel has affirmed the decision of the Listing Qualifications Department of The NASDAQ Stock Market LLC (“NASDAQ”) to delist the shares of the Company from NASDAQ. As a result, the Company’s shares were suspended from trading on NASDAQ, effective at the open of business on Friday, April 12, 2013. Sale of Receivable Arrangement On April 18, 2013 CEDC International Sp. z o.o. (the CEDC subsidiary) entered into the agreement on sale of a receivable of one of its customer with Bank Handlowy w Warszawie Spółka Akcyjna (“Bank Handlowy”). There is no financing limit in this arrangement. The agreement is in nature the non-recourse factoring and the Company has no further involvement in receivable sold under terms of such arrangement. Credit lines with Alfa-Bank On May 28, 2013 Alfa-Bank, resumed lending to CEDC by providing access to previously established credit lines of 2 billion Russian rubles (approximately $60 million) with the bank. New Loans On June 7, 2013 the Company signed new loan agreement with MKB Bank for a billion Russian rubles (approximately $30 million). Loan is partially secured by pledge on goods. There are no financial covenants related to this loan. Bank guarantees Up to date of these financial statements guarantees of 25.4 billion Russian rubles (approximately $765 million) have been issued with following banks: Alfa-Bank, Bank of Moscow, Rossgostrakh, Nomos Bank, Sudostroitelny Bank, Stroykredit Bank, Morskoy Bank.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References No definition available. + Details
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