Rustam Tariko will share the bank. Rustam Tariko now
One of the key priorities for Rustam Tariko's Roust holding in 2017 will be work on expanding the wine portfolio in Russia: it is planned to include, in particular, products from Georgia and South Africa. In the future, the company expects to become one of the leaders in import wine sales in the mass segment.
For Roust, 2017 will be the year of mass market wine in Russia, the company announced in a report published over the weekend for last year. It says that the market for imported wine continued to decline in 2016, so projects in this category were funded on a residual basis. However, at the end of the year, Roust noticed an improvement in consumer sentiment. In addition, the stability of the exchange rate allowed the company to be more flexible in its pricing policy. “In 2017, we will change the situation significantly: wine has become one of the key priorities,” writes Roust.
As follows from the reporting, now Roust in Russia accounts for less than 10% of sales in physical terms. The company's portfolio includes brands such as the North American Gallo and Carlo Rossi, the French JP Chenet, as well as its Italian Gancia wines. According to customs statistics available to Kommersant, in 2016 Roust imported 1.28 million liters of still and 0.7 million liters of sparkling wines to Russia. The total volume of imports of these categories last year increased by 4.5%, respectively, to 174.73 million liters and by 4.8%, to 34.85 million liters (see Kommersant of January 20). At the same time, Rosstat recorded that sales of all still wines (Russian and imported) in 2016 decreased by 2.3%, to 849 million liters, and sales of sparkling wines - by 6.9%, to 220 million liters.
The main volume of Roust sales in Russia — 77% — is occupied by vodka: the company produces the brands Zelenaya Marka, Russian Standard, Parliament, etc. In 2016, its total sales in the Russian market decreased by 19.5%, to 57 .16 million liters, but, according to reports, in the first quarter of 2017 they showed an increase of 42% compared to the same period last year. The main owner of Roust is the founder of the company, Rustam Tariko.
This year, Roust is going to expand its wine line to include products from the Australian producer Yellow Tail. The company also announced the start of work with wines from South Africa and Georgia. In the category of inexpensive imported wine, Roust expects to achieve a leading position, the report said. Yesterday, the company was unable to answer Kommersant's questions.
Alexander Tkachev, head of the Ministry of Agriculture, in an interview with Kommersant in September 2015
We want wine to be our pride. After all, when a tourist comes to France, will he order Italian wine in a restaurant?
According to Vadim Drobiz, director of CIFRRA, products at the price of 200-400 rubles are presented in the mass segment of imported wine in Russia today. per bottle, the leaders in it are the companies "Mistral Alco" (the main volume falls on wine from Abkhazia) and "Luding". Both companies also became the largest importers of wine in 2016 - 19.86 million liters from Mistral Alco and 15.89 million liters from Luding.
There are no Russian wines in Roust's portfolio today. Mr. Drobiz considers the desire of the company to expand the lineup due to imported products justified. “Sales of domestic wine, which boomed in 2015 due to a surge of patriotic sentiments, are now falling: the consumer, feeling more confident, began to give preference to imported products again,” the expert explains. According to Rosstat, in 2016 the production of domestic table wines decreased by 7.7%, to 368.48 million liters, sparkling wines — by 8%, to 147.35 million liters.
Of the imported still wines in 2016, in terms of growth in supplies to Russia, one of best performance was in products from Georgia: the volume of its imports increased by 46.7%, to 19.69 million liters (11.27% of all imported table wine, fourth after Spain, Italy and France). Other Russian companies are also showing interest in working with Georgian wines. In February, RBC wrote that Abrau-Durso was exploring the possibility of starting distribution of Georgian wines or acquiring wine-making assets in the country, and Simple was going to increase the area of vineyards it owns in Georgia. The volume of deliveries from South Africa also grew last year - by 29.8%, to 3.27 million liters (12th place in terms of imports).
In the 2000s, the creator of one of the most popular Russian Standard vodka brands, Rustam Tariko, elbowed the raw materials magnates of the 1990s in the Forbes rating and set the tone for Moscow nightlife. Now a businessman who has dropped out of the list of the richest businessmen in Russia is rarely seen in restaurants and clubs, and more and more often - in a depressed mood. However, once Tariko was seen in high spirits at the Sibieria restaurant, where, according to eyewitnesses, champagne flowed like a river in the good old days. It was in September 2015, just then Tariko agreed with the holders of Russian Standard Eurobonds for $550 million on restructuring, pawning 49% of the bank on them.
Later, he had to sell his yacht, the 56-meter Annaeva - according to a Vedomosti source, in order to help the bank. But it did not help. In November 2017, the SPV-company Russian Standard, which issued bonds, defaulted. “It's simple. Previously, they had a bank and the word Tariko, now he has taken this word. It remains to take the bank,” the head of one of the investment companies then described in a conversation with Forbes the situation in which bondholders found themselves. By February, they gathered an initiative group and, having consolidated 25% of the issue, announced their readiness to collect 49% of Russian Standard. Now Tariko wants to sit down at the negotiating table again. Last week, he sent creditors an offer: either they will receive 25% of the Eurobond face value (about $136 million), or 20% plus a share in the bank's profit. Investors rejected the offer. The press service of the alcohol holding Tariko Roust assured Forbes that they learned about the existence of the initiative group from the media, they still do not know who is in it, but they hope to meet at an informal meeting in London on March 6.
Broken cache machine
Bank "Russian Standard" for a long time formed the basis of the state of Rustam Tariko. In the early 2000s, he was one of the pioneers in the high-margin unsecured lending market. The business model was extremely simple: huge losses from non-repayment of loans issued to customers directly in the household appliances store were more than outweighed by impressive commissions and the hard work of the Debt Collection Agency, the collection service at Russian Standard. In 2006, the bank, which turned into a real cash machine, earned Tariko 14.5 billion rubles in profit. In 2007, the fortune of the vodka tycoon, according to Forbes, reached its highest point of $ 5.5 billion. True, already in the summer of that year, Tariko was sitting in the prosecutor’s office in the building on Bolshaya Dmitrovka, where he was shown dozens of complaints from clients of Russian Standard about hidden commissions, impracticable conditions for loans and regular bank collectors. There were even letters addressed to the president.
Tariko understood everything. He canceled all commissions, as a result, the profit of Russian Standard fell to 9.5 billion rubles in 2007 and to 7.5 billion rubles in 2008. The real test awaited the bank in 2014, when a crisis occurred in the Russian consumer lending market. Russian Standard showed a loss of almost 16 billion rubles that year. By the first half of 2015, the level of delinquency reached 28% of the portfolio, at the end of the year the bank recorded a loss of 14 billion rubles.
Profit "Russian Standard" began to receive only in 2017, having earned 1.4 billion rubles in January-September. However, analysts surveyed by Forbes do not express much optimism about the bank. Olga Ulyanova from Moody's doubts that, within the current business model, Russian Standard can move towards sustainable healthy growth and says that in recent years the bank has lost most of its competitive advantages in the traditional segment. “Outside of retail, the bank's business is significantly concentrated on transactions with related parties, which makes the overall financial result volatile and unpredictable,” the analyst believes.
The bank not only lends to the alcohol business of Tariko (in the report of the alcohol holding Tariko Roust for the first half of 2017, loans from related parties for $68 million are indicated), but also acts as the owner of 30% of the holding. The shares were listed on the balance sheet in 2015. Then Tariko, in order to support the bank, pulled off an elegant operation. Russian Standard bought Roust shares and then invested the money spent on the purchase into capital in the form of grant assistance.
Do Roust shares make a stake in Russian Standard more attractive for bondholders? Unlikely. Partner Tertychny Agabalyan Ivan Tertychny says that 49% of the bank's shares does not give the right to dispose of its assets. Moreover, as holders of essentially subordinated bonds, Tariko's creditors should be more interested than others in the bank's stable position and the absence of claims against it regarding the composition and quality of its loan portfolio. “If a bank has problems such as license revocation, reorganization, bankruptcy, these creditors get nothing,” says Tertychny. - If anyone would say that the bank was lending excessively to related parties, issuing non-market loans to Rustam Tariko's companies, then it is unlikely that they will be the owners of Russian Standard bonds. If they go for it, it will be only after they lose hope of receiving money from the issuer of bonds - in order, for example, to make claims personally to Tariko. But even this is hardly possible without serious grounds and evidence.”
Loan for vodka
The alcohol business, on which the state of the bank now largely depends, also caused Tariko a lot of problems. In 2013, his Roust became the owner of the bankrupt Polish alcohol holding Central European Distribution Corporation (among the brands are Parliament, Talka and Green Mark). Tariko has been fighting for CEDC since 2011, buying shares and bonds of the company. In total, Tariko spent $450 million. Investments were made mainly on dividends from Russian Standard, which in 2011-2012 still felt good and paid the owner 4.9 billion rubles. In a 2013 interview with Forbes, Tariko called the CEDC deal "difficult but beautiful." It really allowed Roust to become the second largest vodka producer in the world. True, Tariko inherited about $650 million of debt from CEDC, converted into Roust credit notes maturing in 2016 and 2018.
Also in 2013, Roust's revenue began to fall. The entire alcohol market had problems then. Director of the CIFRRA project Vadim Drobiz recalls that until 2010, in every store in Russia, including all federal retail, illegal vodka was sold at half the price of legal one. In 2010, it was squeezed out of federal and large regional retail, but it disappeared from other stores only in 2016 thanks to EGAIS. Other problems were superimposed, for example, the excise reform, which doubled the price of the cheapest vodka - for a significant part of the population, the prices turned out to be unaffordable.
Roust also faced other difficulties, for example, a ban on the import of Russian products to Ukraine and the entry into the Russian market of the seller of cheap vodka Status Group, which became the absolute leader in the wholesale market in 2015.
Now the situation has changed. Vadim Drobiz notes that over the past two years, the legal vodka market in Russia has grown by 30% and Roust was able to take advantage of this by increasing production. Back in 2010, the Tariko holding bought the Buinsky distillery from the Tatar Tatspirtprom for 632 million rubles and invested another 900 million rubles in modernization. Now it is one of the largest private distilleries in Russia. In 2017, Tariko was able to solve the problem with Ukraine by launching the production of Green Mark vodka in the country.
Alcohol holding Tariko continues, according to its own data, to remain the second producer of vodka in the world. But not in Russia, where in 2017 Roust took only third place, spilling 8.36 million deciliters of vodka and losing to Tatspirtprom (8.58 million) and Beluga Group (9.58 million). In 2017, the holding's net revenue increased by 15.1% to $681 million. This is more than Roust himself predicted in 2016: then the holding promised to show $673.6 million in 2017. True, EBITDA will not exceed $72 million (according to preliminary data) , although it was planned to receive $125 million. However, the management of Roust does not lose optimism and plans to receive $824.5 million in net proceeds in 2018 - a year and a half ago, they planned to show such a figure to investors no earlier than 2020.
“In my opinion, the company has overcome all the main problems of the alcohol direction,” says Drobiz. - Tariko's policy is to be on the edge. It bears fruit for those who have strong nerves and a constant readiness to overcome a possible crisis. Tariko has it. That's why he usually wins in the end."
Rustam Vasilyevich Tariko is a successful entrepreneur who managed to go from a janitor to a big businessman without connections and initial capital. He now owns a group of companies valued at between $5.4 billion and $10 billion. Rustam Tariko's holding "Russian Standard" combines a bank that became famous thanks to express lending, as well as companies involved in the production of vodka, insurance, pensions, etc.
Childhood
The future billionaire was born in the city of Menzelinsk, Tatar ASSR, on March 17, 1962. Rustam's parents divorced when the boy was one year old. The mother of the entrepreneur, Roza Nazipovna, worked in the district committee of the party, often went on business trips, from which she brought toys and sweets to her son. From childhood, the boy learned to be independent, knew how to clean, cook and do laundry.
At school, Rustam was a diligent student, and was also fond of music. The boy learned to sing and play the guitar. Soon Tariko created an ensemble and performed at school events. With the support of his mother, Rustam achieved the official status of the group at the local Palace of Culture, and the guys were paid official salaries for performing at discos.
After school, Tariko moved to Moscow, where he graduated from the Institute of Transport Engineers. During this period, music faded into the background, because the capital offered other opportunities for earning.
Business
As a student, Tariko got a job as a janitor to provide for himself. He did not accept money from his mother, but sent it back. and Later, Rustam Tariko got a job at the travel company Business Tour, which was managed by Emanuela Carboncini. The Italian mainly booked hotels for businessmen from Italy, but often faced bureaucratic difficulties. Tariko established cooperation with hotels and already earned $5,000 with the first group of tourists.
Tariko worked actively in a travel agency until 1990, while getting acquainted with influential businessmen. With the opening of the "border", the young guy got a job as a consultant for Martini & Rossi and Ferrero. So, he suggested that Ferrero SpA sell Kinder Surprises in regular stores. The Russian market accepted foreign chocolates with enthusiasm, which brought income to Rustam.
Rustam Tariko with a bottle of Russian Standard Original elite vodka / Photo from the personal archive of Rustam Tariko The company noted Tariko's entrepreneurial abilities and offered the guy to become a full-time employee. To do this, Rustam had to go to Luxembourg for one year to study. But the guy returned home much earlier due to the collapse of the USSR. The change in the political situation opened up new opportunities for Tariko, which he hastened to take advantage of.
Upon returning to Russia, Tariko invested the accumulated money in the import of expensive brands of alcohol. In 1992, he became the founder of ROUST Inc., which specialized in the distribution of premium quality alcoholic beverages, primarily Martini.
Entrepreneurial talent helped the young businessman sell large quantities of alcohol and supplement the assortment with Bailey's liquor, whiskey, etc. Soon, Roust Inc. has become the largest importer of elite alcohol in Russia.
The crisis of 1998 stopped the development of the elite alcohol market. Tariko soberly assessed the current situation and decided to start creating his own alcohol brand. The target audience of the new brand called "Russian Standard Original" was patriotic Russians of the middle class.
Rustam Tariko in the cellar of his enterprise / Photo from the personal archive of Rustam Tariko Immediately after the default (August 1998), Russian Standard vodka appeared on store shelves. Soon this product took a leading position among high quality alcoholic products. Expanding the range, Tariko released the brand "Russian Standard Platinum" and "Empire". Gradually, the entrepreneur ensured the sale of Russian Standard vodka in 40 countries of the world.
The young businessman dreamed that Russian Standard was associated with Russia in the same way that Sony was associated with Japan, and Coca-Cola was associated with the United States. At first, vodka of this brand was produced at the Liviz plant (St. Petersburg). But in 2006, Tariko opened his own factory, and also acquired domains to promote the product to the international market.
In 2011, Tariko bought a 9.9% stake in Central European Distribution Corporation, a large Polish holding producing vodka products. Soon, part of the shares of the Russian entrepreneur increased to 19.5%. However, CEDC filed for bankruptcy in 2013. When restructuring the debt of the holding, Tariko bought 100% of the shares. As a result, Russian Standard included more than ten famous alcohol brands in its portfolio: Absolwent, Zubrowka, Parliament, etc.
Rustam Tariko has three children - twin daughters Anna and Eva and son Rustam.
The entrepreneur is engaged in charitable activities. So, the most famous charitable organization of Tariko was the Russian Standard social support fund, which helps people who find themselves in difficult situations - victims of disasters, the unemployed, the disabled and low-income citizens.
The “Gifted Children of Menzelinsk in Moscow” Foundation, which helps talented children from the entrepreneur’s hometown to receive higher education and get a prestigious job.
State
Tariko earned his first million in 1994 on the import of elite alcohol. The capital of a talented entrepreneur increased every year. In 2006, the Finance magazine ranked the richest people in Russia. Then Rustam Tariko with a capital of 1.16 billion dollars (as of December 31, 2005) took 45th place among ruble billionaires. In March of the same year, Forbes (Russian version) estimated Tariko's capital at $ 2 billion and ranked him 31st among the hundreds of richest people in Russia.
Businessman Rustam Tariko / Photo from the personal archive of Rustam Tariko
In 2008, according to the Finance magazine, Tariko ranked 33rd among 500 Russian billionaires. The capital of the entrepreneur amounted to 5.7 billion dollars. However, Forbes magazine estimated Rustam's fortune at 3.5 billion and placed the businessman in 307th place in the ranking of billionaires around the world. In 2015, Tariko entered the "200 richest businessmen in Russia" in the ranking of the same "Forbes".
Rustam Tariko now
Today, the Russian Standard holding is a single group of companies with offices in Moscow, Warsaw, London, Toronto and New York. Tariko's alcoholic products are sold in 85 countries, and the annual sales volume is almost 40 million boxes. This makes the holding the second largest producer of vodka in the world.
Russian Standard Bank continues to develop an innovative direction - biometrics, online service from anywhere in the world, cash withdrawals at the cash desks of stores and one-click transfers between clients of different banks. Russian Standard entered the top 45 European banks that accept cards in offline stores. The bank has 12,000 employees.
Russian Standard Insurance provides life and health insurance services. The company's client portfolio includes 2 million individuals, for the entire existence of the company 20 million insurance contracts have been concluded.
This week Rustam Tariko's Eurobonds of Russian Standard Ltd should be recognized as a real default, which threatens the businessman with the loss of 49% of the shares of Russian Standard Bank. The technical default came on October 30, but the holders of securities have not received any payments or explanations so far. The Russian Standard group assures that "negotiations with the largest bondholders" are continuing. However, representatives of the holders of securities argue the opposite and develop a strategy for the recovery of collateral.
Since the technical default on Russian Standard Ltd Eurobonds for $451 million, which was recorded on October 27 (payments were to be made on October 30), according to international practice, no more than a month should pass before the announcement of a real default. Thus, if the coupon payment does not follow, a real default will take place this week, which is very likely. “There are still no proposals, and Rustam Tariko’s “explanations” are actually that “why should I spend money paying off my debts?” Eric Kraus, a representative of a group of Eurobond holders, told Kommersant.
The securities, among the holders of which are Pioneer Investments and Ashmore, were placed as part of the restructuring of Russian Standard Bank's subordinated Eurobonds maturing in 2020 and 2024. The restructuring plan involved paying investors 18% of the face value of the securities and exchanging them for a new, seven-year issue of Russian Standard Ltd, a company specially created for this. Coupon payments were expected to be capitalized until Russian Standard Bank, 49% of whose shares are pledged in the transaction, becomes profitable under International Accounting Standards (IFRS) for two consecutive quarters. As of the expected coupon payment date, October 27, the bank met this condition.
Russian Standard Bank is wholly owned by businessman Rustam Tariko. According to the Interfax rating, following the results of the third quarter, the bank ranks 28th in terms of assets (331.5 billion rubles) and 21st in terms of capital (47.2 billion rubles). The bank's profit under IFRS in the first half of 2017 amounted to 304 million rubles. The company Russian Standard Ltd, registered in Bermuda, is not included in the perimeter of the Russian Standard group, but, as follows from the documents of its structures, it is also controlled by Rustam Tariko.
The bond issuer Russian Standard Ltd is currently continuing negotiations with their largest holders, Oleg Egorov, a representative of the Russian Standard Group, told Kommersant in a telephone conversation. He refused to respond to Kommersant's request in writing. “We believe that the negotiations are going on constructively,” said Mr. Yegorov. However, according to Erik Kraus, he "does not know that there are negotiations at the moment." "The bondholders are currently negotiating with several law firms to evaluate a strategy to recover collateral," he said. "The bondholders want a 49% stake in the bank, a seat on the board of directors, and an opportunity for forensic accounting." Under a pledge agreement, in the event of a default, the bank's shares can be left to the investors themselves, which is unlikely to be of interest to them, and also sold at auction or directly to a third party (for this, the bank must be assessed by a company of the big four auditors), lawyers point out.
According to Dmitry Konstantinov, a lawyer at Ilyashev & Partners, a default on these Eurobonds will entail consequences primarily for Rustam Tariko himself as a shareholder of Russian Standard Bank, because it is possible that he will receive unwanted partners. “Therefore, it is quite likely that an agreement on restructuring will still be reached,” Mr. Konstantinov believes. In his opinion, if there is a constructive proposal, bondholders will agree to new conditions for fulfilling obligations.
Yulia POLYAKOVA, Evgeny KHVOSTIK
Holders of default Eurobonds Russian Standard Ltd Rustam Tariko hired A1 (an investment division of Alfa Group) to negotiate with the issuer, the owner of Russian Standard shares said and was confirmed by a person close to one of the parties to the negotiations. According to Vedomosti interlocutors, A1 was approached by an initiative group that collected 25% of the issue: they did not agree to the proposed terms of restructuring.
Didn't pay twice
Russian Standard defaulted on $545 million in securities in October 2017 without paying a coupon. They were issued in 2015 for the restructuring of subordinated Eurobonds for $350 million and $200 million of the bank " Russian standard» Rustama Tariko. The holders of the bank's bonds received 18% of the face value and Russian Standard paper.
This issue is secured by 49% of the bank's shares.
Russian Standard offered two options in 2018: to buy back the securities for 25% of the face value or for 20% and the right to payments that will be tied to the results of Russian Standard. Both options are more profitable than withdrawal of collateral, the representative of Russian Standard convinced: 49% of the bank's shares cost $50-70 million, and 25% of the bonds' face value is $136 million. I did not convince.
The Central Bank didn't help.
Bond holders turned to Central Bank Chairman Elvira Nabiullina for support. They presented the entire debt for repayment and demanded the return of $ 623.6 million from Tariko, threatening to recover the pledged shares of the bank. The group viewed bail collection as a last resort, they said in the letter. Requests to the foundations that signed Nabiullina's letter remained unanswered. A spokesman for Pala Assets declined to comment.
Option with foreclosure on the pledge of bank shares " Russian standard"is still a last resort, says one of Vedomosti's interlocutors, but creditors can use it if Russian Standard's debt cannot be settled otherwise. The bonds are issued under English law, but the bank's pledged shares are governed by Russian law, the bondholder points out.
New Hope
A1 was hired to protect the rights of creditors, says one of the interlocutors of Vedomosti. “If the committee of creditors decides to resort to foreclosing shares, it may need the help of a strong Russian partner,” he explains.
A1 has extensive experience in dealing with complex corporate cases, the so-called special situations, notes Matrix Capital partner Pavel Teplukhin: these are conflicts between shareholders, inefficient management, and, of course, the settlement of bad debts, and not only in Russia. “Often such proceedings are not limited to Russian jurisdiction, and A1 are those who can just help with finding assets and collecting debts abroad,” he said. It was A1 Deposit Insurance Agency, the bankruptcy trustee of Vneshprombank (VPB), who entrusted the prosecution in the London court of the co-owner of the bank, Georgy Bedzhamov. The collapse of this bank in January 2016 was the largest case of falsified reporting in Russian history, the Central Bank estimated the hole in the bank at 216 billion rubles. At the end of March, the High Court of Justice of England and Wales, at the suit of the VPB, arrested Bedzhamov's assets for $ 1.75 billion.
The representative of the holding Russian standard» had not heard of the bondholders hiring A1. A1 did not contact them, but the holding is in contact with bondholders, he said. A1 representative declined to comment.
The initiative group with a share of 25% is not the only one who is trying to return the funds invested in Russian Standard bonds: the Myriad Rus company, which unites the owners of another 9.8% of the bonds, wants to recover the pledge on the papers through the courts. Bondholders were going to apply to the Moscow Arbitration Court at the end of last year, but decided to postpone filing a claim until they find a buyer for collateral, says a representative of Miriad Rus: perhaps by selling it directly to a known investor at a pre-agreed price rather than through an auction. If the court upholds the suit and forecloses on the bond, we will not have much time to find a buyer, so we would like to find an interested investor in advance.” According to him, the company is now consulting with foreign and Russian investment houses, trying to find buyers for the bank's shares.
