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RELATED PARTY TRANSACTIONS
 3 Months Ended
Mar. 31, 2013
RELATED PARTY TRANSACTIONS
9. RELATED PARTY TRANSACTIONS

Pursuant to the SPA, the Amended SPA and the Plan of Reorganization, as described in our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on June 18, 2013. Mr. Roustam Tariko became the sole shareholder of CEDC. Further, Mr. Roustam Tariko has been appointed to CEDC’s Board of Directors as a non-Executive Chairman of the Board. Given that Mr. Roustam Tariko indirectly controls Roust Trading and Roust Trading directly controls Russian Standard Corporation (and indirectly controls other Russian Standard entities), all entities controlled by Mr. Tariko have become related parties of CEDC, including Russian Standard Bank, Russian Standard Corporation, Roust Inc., Russian Standard Vodka (USA), Inc., Russian Standard Vodka, Union Trust Story, F.LLI GANCIA & C. SpA.

As disclosed in Note 4, on May 7, 2012, the Company issued the RTL Notes, bearing on interest rate of 3% to Russian Standard Bank. On March 1, 2013, with effect from February 25, 2013 the Company and Roust Trading entered into the RTL Credit Facility. Pursuant to the terms of the RTL Credit Facility, $50 million RTL Notes were converted into a new term loan from Roust Trading to the Company. The RTL Credit Facility of $50 million is disclosed below in the table.

The outstanding balance of RTL Notes of $20.0 million was addressed through the Plan of Reorganization as described in our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on June 18, 2013. Effective June 5, 2013 the outstanding balance of RTL Notes was fully eliminated.

Accrued interest on RTL Credit Facility and RTL Notes in the amount of $0.8 million and $1.1 million, is included in bank loans and other accrued liabilities, respectively, as of March 31, 2013.

Russian Standard Bank loan of $15.1 million was described in details in Note 4.

 

In the ordinary course of business, the Company is involved in transactions with entities controlled by Mr. Tariko (“Roust”) that resulted in recognition of revenues, expenses, assets and liabilities by the Company. There were no significant transactions with the entities controlled by Mr. Tariko within the comparative quarter of prior year.

The following table summarizes the transactions with Roust as included in the Company’s Condensed Consolidated Financial Statements (unaudited):

 

Related Party Transactions

(in thousands)

  

Condensed Consolidated Statements of Operations and Comprehensive Income
(unaudited)

    Three months ended March 31,  
   2013      2012  

Net Sales

    $ 204       $ 0   

Cost of goods sold

      160         0   

Selling, general and administrative expenses

      417         0   

Interest expense

      904         0   

 

Condensed Consolidated Balance Sheets (unaudited)

(in thousands)

    March 31,
2013
(unaudited)		      December 31,
2012		  

Current Assets

      

Accounts receivable

      1,025         57   

Other current assets

      1,571         2,291   
  

 

 

     

 

 

  

Total due from Roust

      2,596         2,348   
  

 

 

     

 

 

  

Current Liabilities

      

Trade accounts payable

      3,873         1,946   

Bank loans (Russian Standard)

      15,946         0   

RTL Credit Facility

      50,000         0   

RTL Notes

      20,000         70,000   

Other accrued liabilities

      1,204         929   
  

 

 

     

 

 

  

Total due to Roust

      91,023         72,875   

Accounts receivable and trade accounts payable result from sold and purchase transactions made primarily with Roust Inc. in the ordinary course of business. Other current assets comprise mainly of CEDC inventories sold at market prices and held by Roust Inc. under an arrangement to repurchase those inventories with storage and logistic cost mark-up.

Net sales and costs of goods sold comprise revenue and related costs from sales of Gancia products to Roust Inc. SG&A relate to costs of renting office premises from Union Trust Story and Russian Standard Vodka. Interest expense comprises $0.6 million of interest on RTL Notes and $0.3 million of interest on bank loans from Russian Standard Bank and Roust Trading Ltd., mentioned above.