Sobieski
Belvedere, french vodka maker, files for bankruptcy
Belvedere SA, the French maker of Sobieski vodka whose shares have dropped 70 percent in the past year, received bankruptcy protection from a French court.
The Tribunal de Commerce of Beaune, where Belvedere is based, granted the company protection from creditors on July 16, Olivier Balva, Belvedere's head of investor relations, said in an interview today. The six-month protection may be extended, he said. Philippe Dufouleur, the court's president, confirmed the comments by telephone.
Belvedere breached a bond covenant last year by buying back more of its stock than it was allowed, Chief Executive Officer Jacques Rouvroy said June 23. That led KPMG LLP to express reservations about the company's 2007 accounts. Standard & Poor's cut its debt ratings on June 19, triggering a 30 percent slump in the shares the following day. The stock hasn't resumed trading since its suspension on June 20.
“Our only goal is to have more time to restructure the company,” Balva said by phone.
Belvedere's floating-rate bonds due in 2013 were quoted at about 32 cents on the euro in early afternoon trading in London, according to HBOS Plc, down from about 50 cents yesterday. They fell to as little as 10 cents on the euro earlier.
Without the protection, holders of 375 million euros ($595 million) in Belvedere bonds could have demanded early repayment as soon as two months from now, Balva said. Belvedere has 570 million euros in outstanding bonds, according to Bloomberg data.
Needs Cash
The company had 130 million euros of cash at the end of March and a “similar” amount at the end of June, said Balva, adding he couldn't give a more precise figure as Belvedere hasn't yet completed its second-quarter accounting.
“In a move that may be seen as cheeky by bondholders, management have preempted the resolution process by seeking legal protection in the French courts,” said Clark Nicholls, a credit analyst at HBOS in London.
Belvedere needs about 100 million euros in cash for its operations, Balva said.
“There haven't been any payment defaults and the company has enough cash to run,” he said. “We did this for reasons of prudence.”
The French “sauvegarde” bankruptcy protection system is similar to Chapter 11 protection in the U.S. It calls for an "observation period'' of as much as six months, which may be extended, according to the court's Web site. Interest payments are suspended during the period.
Buying Time
“Nothing that I see today makes me believe that this company is destined to disappear,” Dufouleur said in an interview today.
Belvedere is examining ways to restructure its debt, either globally or partially, Rouvroy said last month. The spirits maker also may sell “non-strategic assets,” such as a plot of land in Krakow, Poland, to help lower debt, he said at the time.
“If we had to do so in two months it would put too much pressure on us,” Balva said. “This gives us time to restructure the company in an orderly fashion.”
Belvedere has lost 58 percent of its value this year in Paris trading, cutting the company's market value to 140.6 million euros.
(Published by Bloomberg - july 18, 2008)