Sale of Accounts Receivable

6 Months Ended

Jun. 30, 2011

Sale of Accounts Receivable

Sale of Accounts Receivable

5. SALE OF ACCOUNTS RECEIVABLE

On February 24, 2011, two subsidiaries of the Company, namely CEDC International Polska sp. z o.o. ("CEDC International") and Polmos Biaystok S.A ("Polmos Bialystok"), entered into factoring arrangements ("Factoring Agreements") with ING Commercial Finance Polska ("ING Polska") for the sale up to 290.0 million Polish zlotys (approximately $102.8 million) of receivables. The Factoring Agreements are ongoing agreements, which provide for two types of factoring, recourse and non-recourse factoring.

As of June 30, 2011 the total balance of receivables under factoring amounted to 177.4 million Polish zlotys (approximately $64.5 million) of the 290 million Polish zlotys limit available.

For the three and six months ended June 30, 2011, the Company sold receivables in the amount of $122.2 million and $179.4 million respectively and recognized a loss on the sale in the statement of operations in the amount of $0.8 million and $1.0 million in respect of the non-recourse factoring. The Company has no continuing involvement with the sold non-course receivables.

In May 2011, Russian Alcohol started factoring receivables under a factoring agreement ("Factoring Agreement") with Gazprombank OJSC to factor up to 1,022 million Russian rubles (approximately $36.5 million) of receivables. The Factoring Agreements is an ongoing agreement, which provide for factoring with recourse.

During the second quarter of 2011, the Company factored receivables amounting to 248.4 million Russian rubles (approximately $8.9 million) and recognized a loss on the sale in the statement of operations in the amount of 0.9 million Russian rubles (approximately $0.03 million).

As of June 30, 2011, the liabilities from factoring with recourse amounted to $11.8 million and are included in the short term bank loans in the balance sheet. Receivables from factoring with recourse are presented under accounts receivable in the balance sheet.