The company of Rustam Tariko agreed on the extension of Eurobonds for $25 million


Delayed for six months

Thursday, July 14, a group of “Russian Standard” Rustam Tariko has announced details of the concluded transaction by rolling over three-year Eurobonds one of the holding companies (Roust Trading Limited) for a total of $25 million of Securities was extended until November 2016, and investors who previously agreed to the proposal of the company, received a Commission in the amount of 5% of the original nominal value of bonds and accrued on the maturity date interest payments.

As previously mentioned, 31 may Roust Trading Ltd made on this bond issue, a technical default. Four days before him, on 27 may, the company offered the investors to approve the plan renewal papers.

The remaining amount of debt will be partially repaid monthly, beginning in August 2016, and will be fully paid before 30 November 2016, the report said the group “Russian standard”. The conditions proposed by the company, supported by 91% of the bondholders. Investors who choose not to renew the term of redemption of bonds until November, the bonds were fully repaid, they also paid all amounts due on the closing date of the transaction interest, however, the special 5% Commission paid, it is marked in the company message.

“Rollover of bonds is one of the tools that will enable the group “Russian Standard” to invest additional funds in working capital-growing alcohol business, which is especially important given the growth in sales of legal vodka in effective state action to combat the “underground producers” and preparation for high sales season,” — said in a statement.

In the financial statements for the first quarter of 2016 Roust Corporation warned investors about what can be asked about debt restructuring. “If we are not able to service its debt or be faced with significant liquidity, we will be forced to reduce or delay planned capital expenditures, sell assets, restructure or refinance its debt or seek additional equity capital”, — stated in the document.

The bonds in question, got Tariko inherited from the Polish alcoholic holding Central European Distribution Corporation (CEDC), which the Russian billionaire bought in 2013. The transaction Roust became the second largest vodka producer in the world after the British Diageo. CEDC was then in a state of preddefoltnom and could not pay the bondholders $1.3 billion Tariko, acquiring the holding company, was calculated with the part of the holders of securities, paying $172 million in cash and the remaining amount of debt issued new securities — credit-linked notes maturing in 2016 and 2018. Now the debt Roust Corporation under the loan notes is nearly $750 million, of which $718 million will need to repay in 2018.

Thursday, July 14, the senior credit notes Roust Corporation for $465 million were traded on the Berlin stock exchange for 71% of the nominal value Junior loan participation notes for $200 million for 24.9% of the nominal value.

Poland or Russia

Two key business divisions Roust — Russian and Polish — in 2014-2015, showed different results. The share of divisions in 2015, the company’s revenue were almost identical — 43.7% of the Russian, 43% Polish, wrote “Vedomosti” in 2015, citing company materials. But the contribution to operating profit the Polish division was much higher — 64,7% vs. 33.5%, respectively. The company explained the higher cost in Russia, logistics and distribution.

In the same period, the company decreased the volume of production of Russian products. The production volume of the largest brand of the company, “Green stamps” from 2013 to 2015 has decreased from 54 million litres to 22.5 million liters, according to the magazine Drinks International. Of Russian brands holding’s growth in these years showed only “Russian standard”, but also this increase was primarily due to the foreign markets — great Britain, Germany and several other countries.

Against the background of Russian problems, foreign business Roust and RSV showed growth, as the company increased shipments of products becoming the market leader in Poland and Hungary. Vodka “Russian standard” became the third in terms of sales in the UK.

The decline in production in Russia Roust explained by the growth of illegal vodka market. According rosalkogolregulirovaniya (PAP), the volume of the illegal market in 2014 was 22%. Illegal vodka is produced without paying excise duty (100 RUB in the bottle 0,5 l), sold in the lower price segment, at the level of the minimum allowed state of the retail price 185 rubles per 0.5 liter. Major Federal producers – Roust, “synergy” Alcohol Siberian group stated that it is not able to supply the network at such a low price – then vodka would be sold below cost.

The market for large

The situation changed in late 2015, after law enforcement agencies with the participation of the FSB and the Federal tax service opened a criminal case against the leaders of the 11 companies in Kabardino-Balkariya — the region’s largest producer of unaccounted vodka. The plants were deprived of their licenses and stopped. Another positive factor for legitimate producers was the introduction of compulsory use of electronic system of USAIS in the wholesale and retail level from 1 January 2016. Before Rosstat annually reveals a huge discrepancy in the statistics between the produced in Russia vodka is sold and the second was much more.

As a result, in 2016, according to Rosstat, accounted for the production of vodka in Russia began to grow that experts directly associated with the whitewashing of the market. In the first five months of 2016, the budget was 123.3 billion rubles from excise duties on alcohol, 17.4% more than the year before, reported to journalists by Vice-Premier Alexander Khloponin. “The introduction of EGAIS scared retail, — the Director of branch Agency FIGURE Vadim Drobiz. – Before they could close their eyes to the origin of cheap vodka, and now we have to fix in the system all the volumes. Cheap vodka, released on the market using schemes, is the production of the largest manufacturers and its own brands (STM) retailers”.

“All these changes [the whitewashing of the market] allowed the brands of “rust” to become more competitive and increase sales,” — said the representative of the Roust. “We have every reason to expect continued growth in financial and operational performance and further, — has transferred through a press-service of Rustam Tariko. — We are pleased with the continued growth in sales in the world market, stable profitability of our business and positive cash flow. All of these positive changes allow me to seriously consider consolidation of Roust Corporation’s business and the company “Russian Standard Vodka”, which will lead to a significant increase of EBITDA and, as a result, to further improve the ratio of debt to EBITDA, a significant reduction in the debt burden on the company.” Now to Roust Corporation reporting sales of “Russian standard” are not considered.

According to Tariq, the total sales of the holding in all the countries in the second quarter of 2016 increased by 4% over the same period last year and reached the results of the 1st half 11.7 million desyatiletnij boxes (to 105.3 million liters). The biggest sales growth was recorded in the UK – 18%, in Poland – 20%, Germany 34%, Hungary – 38%, and in Israel, 70%. Sales growth, a key brand of the group “Russian standard” was 16%, added Tariq.

Grow all

In total, according to Rosstat, in January-may 2016 the production of vodka in Russia increased by 9.8% to 228,1 million L. “the Growth would have been even greater, because in April and may, the production parameters up to 30% on a monthly basis, – says Vadim Drobiz. “However, January and February turned out to producers, “minus”: retailers cautious attitude to the introduction of EGAIS, a traded stocks from last year, but since March, when it became clear that the system is functioning normally, no one will cancel, they began to take a fully legal vodka, starting the process of whitewashing of the market.”

Sales growth in 2016 is confirmed by other major manufacturers. The company “synergy” grew in sales in the first half of 2016 by 16% to 47.7 million L. According to the Chairman of the Board “Synergies” Alexander Mechetina, the growth has been achieved thanks to the struggle of the state against illegal manufacturers of vodka — the revocation of licenses, seizure and destruction of machinery, the introduction of yegais in the wholesale-retail link. An even greater increase of 59% in volume and 49% in money terms in the first half of 2016 has recorded the largest Russian manufacturer of vodka “Tatspirtprom”. The company sold 51 million liters of vodka and alcoholic beverage products by 19.6 billion rubles, which allowed the Prime Minister of Tatarstan Ildar Khalikov called the beginning of 2016 the best in the history of the company.

According to the forecast Drobeta, at the end of 2016 the volume of legal vodka production in Russia will increase by 150 million litres (+23,6% to the results of the 2015 and 2017 will grow by 200 million liters, reaching 1 billion liters of vodka per year.