CEDC drops investment in Russian vodka producer

Published: 23 July, 2008

The Central European Distribution Corporation (CEDC) has ceased its investment in Russia's leading vodka producer, the Russian Alcohol Group.

CEDC's equity investment of $181.5 million in Russian Alcohol will provide the Company with an initial stake of approximately 42% in the Russian Alcohol business.

This transaction is in connection with Lion Capital LLP's acquisition of a controlling stake in Russian Alcohol.

In addition to the equity investment, CEDC purchased $103.5 million of exchangeable notes which bear interest from 8.3% to 10.5% and can be fully exchanged into additional shares of Russian Alcohol starting in 2010.

Russian Alcohol is the largest vodka producer in Russia with over a 10% market share, and produces leading vodka brands such as Green Mark, which is the number one vodka brand in Russia and Zhuravli, a top selling premium vodka brand behind CEDC's Parliament, which is the top selling premium vodka brand in Russia.

Lion Capital is a London-based investment firm that is recognized as a leader in investing in the consumer sector, with over euro 4 billion of equity capital invested in consumer businesses across Europe and North America.

William Carey, President and CEO commented, "We look forward to working with Lion Capital to improve the operational performance of the business as well as continue to build on the solid fundamentals that the existing management team has put in place.

"We believe that the Russian consumer continues to trade into the mainstream and premium vodka sectors from lower priced sectors and that the Russian Alcohol Group and Parliament are well positioned to capture these strong growth trends. As we move into the strongest half of the year for spirit sales, we look forward to working with Lion Capital and the management team of Russian Alcohol to identify synergies between our companies."

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