The Russian Standard alliance, which was finalized in July 2012, should improve the Company's results. RS has already provided a lifeline, using its subsidiary Roust Trading Limited to purchase $100 million in common stock and exchangeable notes to exhaust the Company's 2013 debt. The "New debt deal" between Roust and CEDC involves backstop and rollover notes due 2016.
"The synergies created in the alliance between CEDC and RS should be significant. Roust is the largest distributor of premium products in Russia. RS's other affiliate, Russian Standard Bank, should help with short term financing and banking needs moving forward.
The owner of RS, Rustam Tariko, is a chairman of the board and will undoubtedly play a role in the firm's strategy. Tariko is an entrepreneurial genius, becoming a billionaire from nothing. In 1992 he started Roust, by 1994 it was Russia's largest importer of premium products. Tariko was doing business with Diagio, an alcoholic industry leader, until 2005 when Diagio terminated its contract with RS alcohol. Many have said that this act frustrated Tariko to a high degree. We believe that Tariko will have a strong positive impact on CEDC results.
For CEDC shareholders and prospective shareholders, this alliance could not get much better. Nothing more than an outright tender would provide more value in our view."