UPDATE 1-Stolichnaya-owner in talks on rival vodka maker CEDC

Tue Mar 5, 2013 5:19pm EST

MOSCOW, March 5 (Reuters) - Stolichnaya Vodka-owner SPI Group said on Tuesday it was holding talks with Russian financial interests regarding Poland's indebted Central European Distribution Corp, one of the world's largest vodka producers.

Nasdaq-listed CEDC's shares have plunged by over 80 percent so far this year to $0.67, hit by financial problems, the resignation of its chief executive and recent battles with shareholders over control of the company.

The most pressing problem for CEDC, which makes Absolwent and Parliament vodka, is that it has $258 million in convertible loan notes maturing on March 15.

On Tuesday, a the A1 investment arm of Russia's Alfa Group and CEDC shareholder Mark Kaufman presented a restructuring plan to CEDC's board, according to a filing with the U.S. Securities and Exchange Commission.

The plan proposes that a consortium would invest $225 million in exchange for 85 percent of the equity in a reorganized CEDC. The plan would be implemented through a pre-arranged bankruptcy filing, according to the filing.

Russian billionaire and CEDC chairman Roustam Tariko holds a 20.2 percent stake via his Moscow-based vodka to financial services conglomerate Russian Standard Corporation, according to Thomson Reuters data, while Kaufman is CEDC's second-biggest shareholder with 9.22 percent.

SPI, which holds 2013 and 2016 loan notes in CEDC, said on Tuesday it has appointed Nomura Co Ltd to "evaluate alternatives" with regards to CEDC, but did not elaborate on what those alternatives were.

"We are carefully observing the situation around CEDC," said Val Mendeleev, chief executive of SPI in an emailed statement. "We have already begun preliminary discussions with a few strong financial players in Russia who could be interested in considering the CEDC business together with us."

A representative for SPI declined to comment further and no one at SPI's office in Luxembourg had any immediate comment. It was not immediately clear whether SPI and Tariko were acting together in a possible debt-for-equity swap.

CEDC, which has a leading share of the vodka markets in Russia, Hungary and Poland, said in a filing that it was reviewing a proposal from Tariko and certain beneficial owners of its notes, but these were not identified.

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