6.	BORROWINGS

Bank Facilities

As of September 30, 2012, the Company has outstanding liability of €22.5 million ($29.1 million) from the term loans from Alfa Bank and Zenith Bank drawn by Whitehall:

•

The loan agreement with Alfa Bank, dated July 22, 2008, matures on October 18, 2014. The credit limit under this agreement is €20.0 million ($25.9 million). The loan as of September 30, 2012 consists of seven open tranches released between March 30, 2012 and September 26, 2012, and is repayable between September 30, 2012 and December 28, 2012. As of September 30, 2012, the Company had outstanding liability of €17.0 million ($22.0 million) from this term loan;

•

The loan agreement with Zenith Bank, dated March 29, 2011, matured on June 6, 2012. The original loan was repaid at maturity date. A new loan agreement was signed on August 16, 2012 with maturity date of April 25, 2014. The credit limit under this agreement is €10.0 million ($12.9 million). The loan was released in two tranches on August 16, 2012 and September 10, 2012. As of September 30, 2012, the Company had outstanding liability of €5.5 million ($7.1 million) from this term loan.

The aforementioned loans drawn by Whitehall are guaranteed by Whitehall companies. The both loans are secured by the Company’s inventory.

As of September 30, 2012, the Company has outstanding term loans of 2,371.4 million Russian rubles ($76.6 million) from MKB Bank, Unicredit, Alfabank and JSC Grand Invest Bank, all drawn by Russian Alcohol, as well as, an overdraft facility from Nomos-Bank drawn by Russian Alcohol and an overdraft facility from Sberbank drawn by Bravo Premium:

•

The loan agreement with MKB Bank, dated July 19, 2012, matures on February 25, 2013. This loan has no financial covenants that need to be met. As of September 30, 2012, the Company has outstanding liability of 1,000.0 million Russian rubles ($32.3 million) from this term loan;

•

The loan agreement with Alfabank, dated July 25, 2012, matures on December 31, 2012. This loan has no financial covenants that need to be met. As of September 30, 2012, the Company has outstanding liability of 560.0 million Russian rubles ($18.1 million) from this term loan;

•

The loan agreement with Unicredit, dated May 24, 2011, matures on November 25, 2012. This loan has no financial covenants and is secured by inventory of up to 720 million Russian rubles ($23.3 million) and guarantees given by companies of Russian Alcohol. As of September 30, 2012, the Company has outstanding liability of 600.0 million Russian rubles ($19.4 million) from this term loan;

•

The loan agreement with JSC Grand Invest Bank, dated November 25, 2011, matures on November 23, 2012. This loan has no financial covenants that need to be met. As of September 30, 2012, the Company has outstanding liability of 211.4 million Russian rubles ($6.8 million) from this term loan;

•

The overdraft agreement with Nomos-Bank, dated July 6, 2012, matures on December 29, 2012. The credit limit under this agreement is 500.0 million Russian rubles ($16.2 million). This loan has no collateral. As of September 30, 2012, the loan was utilized in the amount of 173.4 million Russian rubles ($5.6 million).

•

The overdraft agreement with Sberbank, dated February 6, 2012, matures on February 5, 2013. The credit limit under this agreement is 60.0 million Russian rubles ($1.9 million). This loan is secured by fixed assets. As of September 30, 2012, the loan was fully utilized.

Convertible Senior Notes due 2013

On March 7, 2008, the Company completed the issuance of $310 million aggregate principal amount of 3% Convertible Senior Notes due 2013 (the “Convertible Senior Notes”). Interest is due semi-annually on the 15^th of March and September, beginning on September 15, 2008. The Convertible Senior Notes are convertible in certain circumstances into cash and, if applicable, shares of our common stock, based on an initial conversion rate of 14.7113 shares per $1,000 principal amount, subject to certain adjustments. Upon conversion of the notes, the Company will deliver cash up to the aggregate principal amount of the notes to be converted and, at the election of the Company, cash and/or shares of common stock in respect to the remainder, if any, of the conversion obligation. The proceeds from the Convertible Senior Notes were used to fund the cash portions of the acquisition of Copecresto Enterprises Limited and Whitehall.

In the period from May to September of 2012, the Company repurchased $52.1 million principal amount of Convertible Notes in six tranches for $50.2 million.

As of September 30, 2012 and December 31, 2011, the Company had accrued interest of $0.5 million and $2.7 million, respectively, related to the Convertible Senior Notes, with the next coupon due for payment on March 15, 2013. Total obligations under the Convertible Senior Notes are shown net of deferred finance costs, amortized over the life of the borrowings using the effective interest rate method as shown in the table below:


	September 30, 2012			December 31, 2011

Convertible Senior Notes	$	257,858		$	310,000
Unamortized debt discount		(320	)		(1,070	)
Debt discount related to ASC 470-20		(416	)		(4,285	)


Total	$	257,122		$	304,645

For the three and nine months ended September 30, 2012, the additional pre-tax non-cash interest expense recognized in the condensed consolidated statement of operations was $1.5 million and $4.1 million, respectively and for three and nine months ended September 30, 2011 $1.1 million and $3.2 million, respectively. Pre-tax increase in non-cash interest expense on our condensed consolidated statements of operations and comprehensive income to be recognized until 2013, the maturity date of the Convertible Senior Notes, amounts to $0.4 million.

Senior Secured Notes due 2016

On December 2, 2009, the Company issued $380 million 9.125% Senior Secured Notes due 2016 and €380 million ($491.9 million) 8.875% Senior Secured Notes due 2016 (the “2016 Notes”) in an unregistered offering to institutional investors. The Company used a portion of the net proceeds from the 2016 Notes to redeem the Company’s outstanding 2012 Notes, having an aggregate principal amount of €245.4 million ($317.7 million) on January 4, 2010. The remainder of the net proceeds from the 2016 Notes was used to (i) purchase Lion Capital’s remaining equity interest in Russian Alcohol by exercising the Lion Option and the Co-Investor Option, pursuant to the terms and conditions of the Lion Option Agreement and the Co-Investor Option Agreement, respectively (ii) repay all amounts outstanding under Russian Alcohol credit facilities; and (iii) repay certain other indebtedness.

On December 9, 2010, the Company issued an additional €50.0 million ($64.7 million) 8.875% Senior Secured Notes due 2016 (the “2016 Notes”) in an unregistered offering to institutional investors. The Company used the net proceeds from the additional 2016 Notes to repay its term loans and overdraft facilities with Bank Handlowy w Warszawie S.A and Bank Zachodni WBK S.A.

As of September 30, 2012 and December 31, 2011 the Company had accrued interest of $28.0 million and $7.0 million, respectively related to the Senior Secured Notes due 2016, with the next coupon due for payment on December 1, 2012.


	September 30, 2012			December 31, 2011

Senior Secured Notes due 2016	$	936,635		$	935,296
Unamortized debt discount		(2,764	)		(3,207	)


Total	$	933,871		$	932,089

Senior notes due March 18, 2013 (“the Debt Security”)

As described in Note 3 above, on May 7, 2012, the Company issued $70 million principal amount of senior notes due March 18, 2013, bearing an interest rate of 3.00% to Russian Standard Bank. Pursuant to the Amended SPA, upon approval of the Company’s shareholders, and after the satisfaction of certain other conditions including the receipt of certain Polish regulatory waivers, Roust Trading will purchase such number of shares of common stock at a purchase price of $5.25 per share sufficient to repay the then-outstanding principal amount of the Debt Security, totaling approximately 13.3 million shares of common stock and sell to CEDC the entire principal amount of the Debt Security. In addition, interest payable on the Debt Security prior to the Second Closing may, at the option of Roust Trading and after the Second Closing, be effectively paid in shares of common stock at a price $3.44 per share of common stock. Pursuant to the Amended SPA, the final maturity date for the Debt Security will be extended to July 31, 2016.


	September 30, 2012		December 31, 2011

Senior Notes due 2013	$	70,000	$	0


Total	$	70,000	$	0

As of September 30, 2012, the Company had accrued interest of $0.7 million, related to the Debt Security, with the next coupon due for payment on March 18, 2013.

Total accumulated unamortized debt discount related to the Company’s debt was $18.7 million and $16.5 million as of September 30, 2012 and December 31, 2011, respectively.

The following is a schedule by years of the future principal repayments for borrowings as of September 30, 2012:


	September 30, 2012		December 31, 2011
Principal repayments for the following years
2012	$	53,203	$	78,504
2013		389,114		304,645
2014		0		0
2015		0		0
2016 and beyond		933,871		932,089


Total	$	1,376,188	$	1,315,238