CEDC Signs Definitive Agreements for Strategic Alliance with Russian Standard Corporation

Central European Distribution Corporation

announced today that CEDC and Russian Standard Corporation (via Roust Trading Limited have signed definitive agreements for a strategic alliance. Russian Standard has agreed to invest US$100,000,000 in CEDC by purchasing a combination of newly issued shares of CEDC common stock and exchangeable notes (exchangeable into common shares of CEDC upon shareholder approval) to be issued by CEDC. In addition, Roust Trading has agreed to purchase up to US$210,000,000 principal amount of newly issued, unsecured CEDC senior notes due July 31, 2016 at a blended interest rate of 6.00%. The proceeds of these investments are required to be used to retire CEDC's 3.00% Senior Convertible Notes due 2013. This strategic alliance between Russian Standard Corporation and CEDC will create a powerful player in the Russian and Polish alcohol markets with best-in-class portfolios of own vodka brands and partner brands distributed worldwide. The investment by Roust Trading is expected to provide CEDC with the financial resources and capital to repay or repurchase all of its outstanding 3.00% Senior Convertible Notes due 2013. Following completion of these transactions and assuming CEDC receives the shareholder approval described below, Roust Trading and its affiliates may in the future hold approximately 28% of CEDC's outstanding common stock. Pursuant to a securities purchase agreement, Roust Trading will make its investment in CEDC in three stages, subject to typical closing conditions. First, Roust Trading will acquire 5,714,286 shares of CEDC common stock for an aggregate purchase price of US$30 million, or US$5.25 per share, and US$70 million aggregate principal amount of senior notes due March 18, 2013, bearing an interest rate of 3.00% to be issued by CEDC. Subject to approval by CEDC shareholders, CEDC or Roust Trading may cause Roust Trading to purchase from CEDC a number of shares of CEDC common stock at a purchase price of US$5.25 per share (which amount will be sufficient to pay the principal amount outstanding of the New Debt plus some or all of the then accrued and unpaid interest thereon) totaling approximately 13,333,333 CEDC shares plus additional shares representing such accrued and unpaid interest on the New Debt. In addition, if shareholder approval is obtained, then (subject to typical closing conditions), Roust Trading will purchase US$102,554,000 aggregate principal amount of senior rollover notes due July 31, 2016 (the "Rollover Notes"), from CEDC in exchange for US$102,554,000 of CEDC's 3.00% Convertible Notes due 2013 then held by Roust Trading, and, CEDC, at its option, may issue to Roust Trading senior backstop notes in an aggregate principal amount of up to US$107,500,000 due July 31, 2016 (the "Backstop Notes") to be used by CEDC to pay the remaining principal amount of 3.00% Convertible Notes due 2013 then outstanding. Each of the Rollover Notes and Backstop Notes will bear a blended interest rate of 6.00% over the term of each note. Roust Trading and CEDC, and Roust Trading and each of the members of the CEDC's Board of Directors, have agreed to customary agreements to vote in favor of the transactions described above.