U.S. Bankruptcy Court confirmed a $1.1 billion reorganization plan by Roust Corp., a European vodka producer with executive offices in White Plains, on Jan. 6, just one week after the case was filed.
U.S. Trustee William Harrington had filed an objection, describing Roust’s request for expedited approval of a prepackaged plan as an unprecedented attempt to avoid scrutiny and procedural protections.
But Judge Robert Drain noted that Roust had notified creditors a month before the case was filed, and they are sophisticated enough to know what to do.
Roust is one of the world’s largest vodka producers, with 3,500 employees working mostly in Poland and Russia. Most of its revenues are made in Europe. The U.S. connections are a small office at 777 Westchester Ave., White Plains, where CEO Grant Winterton is based, and two Delaware subsidiaries, CEDC Finance Corporation LLC and CEDC Finance Corporation International.
Roust is controlled by Russian oligarch Roustam Tariko. He owns Russian Standard Group, a private company that owns other liquor enterprises, a bank and an insurance business. He had invested in Roust’s predecessor company, Central European Distribution Corp., and gained control after that company filed for bankruptcy in Delaware in 2013.
Roust’s reorganization lets bond holders swap debt for equity. Holders of $497 million in senior secured notes will recover an estimated 100 percent of their claims, according to the plan, and holders of $284 million in convertible notes will recover about 27 percent of the face value of their claims. Creditors holding another $376 million in bank loans and other debt are expected to get back all they are owed.
Tariko sweetened the deal by contributing assets and intellectual property from his Russian Standard vodka brands. He will retain majority interest in the reorganized company.
The company is expected to emerge with its capitalization strengthened by more than $500 million, its balance sheet deleveraged by at least $462 million and its equity enhanced by $55 million.
Roust will be positioned for faster revenue and profit growth in the global alcohol market, according to the plan, and could be ready for an initial public stock offering in two to three years.
The court approval enables Roust to complete the reorganization by the end of January.
Now, “it’s essentially paperwork,” said Roust attorney Jay Goffman, of Skadden, Arps, Slate, Meagher & Flom.