04 April 2016, 23:53 / Business

Rustam Tariko's alcohol holding hopes to restructure credit notes

In 2018, he will have to pay $664.6 million for them Maria Kunle

Rustam Tariko will dilute the vodka debt / S. Porter / Vedomosti

Roust's net debt is almost 11 times higher than annual EBITDA, and the ruble continues to depreciate - Roust has no choice but to offer note holders a restructuring, agrees BCS analyst Leonid Ignatiev. The probability of success, in his opinion, is high - in a similar situation in 2015, Tariko's bank " Russian Standard " was in a similar situation, and in October he managed to persuade the holders of subordinated bonds to early withdraw in cash 18% of their par value, and issue new seven-year Eurobonds for the remaining amount at 13% per annum. So far, Roust pays regularly and fulfills all obligations, says a source at the creditor bank. A representative of another lender of the group, Alfa Bank , also assured that loans were serviced in a timely manner.

Rustam Tariko's Roust Group hopes to restructure the debt on the credit notes, which are scheduled to mature in 2018. "We will need to refinance this debt," the group's 2015 report said in the risk section.

We are talking about securities placed in 2013, when Rustam Tariko acquired the alcohol producer and distributor Central European Distribution Corporation (CEDC, later renamed Roust). At that time, the company was in a difficult situation: it had to pay off bonds, but there were no funds, so it even initiated its own bankruptcy. But then Tariko arrived in time: he acquired CEDC, after which the company settled with some of the paper holders (paid them $172 million in cash), and issued new papers to others - credit notes with maturity in 2018. The holders of these papers are owed $664.6 million, the representative says Roust. And the group may have problems with these payments, according to its report.

The price is rising

At this price, Roust credit notes are currently trading at $60 on NASDAQ, with a yield of 24.4% per annum. This is a historical maximum - shortly after their release, in the summer of 2013, one security cost $24.9, and the rate was 11.4% per annum

The group's revenue in 2015 decreased by 30.8% to $584.2 million, and the total debt as of December 31 was $960.2 million. The ability to service it, refinance, and invest in development depends on Roust's ability to generate cash flow, indicates group, and he is “put under significant pressure” by the “negative situation” in Russia and Ukraine and the devaluation of the ruble. There is no guarantee that Roust's cash flows will remain at least at current levels, the report said. The company is also not sure that it will be able to raise funds to pay off debts, including notes, especially since most of its revenue and profits are tied to the ruble (which, according to the Central Bank, depreciated against the dollar in 2015 by 29.6%), and notes – to the dollar. In 2015, rubles accounted for 45% of Roust's total revenue.

Poland becomes the largest vodka market for Rustam Tariko’s group

Business / Agroprom

Since 2015, the Tariko alcohol holding has been considering various options for debt settlement. Among them, according to two of Tariko's acquaintances, were an IPO, or private placement, on the NASDAQ. One of the interlocutors talked about plans to combine and place on the stock exchange the foreign assets of Roust, as well as the Russian Standard Vodka company, which produces the drink of the same name, whose export sales in 2015 exceeded those of Finlandia. There was also the option of directly selling a stake in Roust, three interlocutors told Vedomosti: two of them know that the share was offered to the owner of SPI Group (Stolichnaya vodka) Yuri Shefler, but the parties did not agree on the price. Shefler's representative did not answer Vedomosti's questions, and it was not possible to contact the holders of the credit notes.