September 24, 2015
Weil continues to advise the Ad Hoc Creditors’ Committee (AHC), which comprises Franklin Advisers, Inc., BTG Pactual Europe LLP, TCW Investment Management Company, and T. Rowe Price Associates, Inc., in the ground-breaking restructuring of Ukraine’s sovereign debt. The restructuring plays a critical role in securing Ukraine’s ongoing stability and economic recovery.
On September 22, Ukraine successfully launched exchange offers in relation to 14 sovereign and sovereign-guaranteed Eurobonds with outstanding principal amounts of c.US$18 billion. This follows less than one month after Ukraine and the AHC agreed to Indicative Heads of Terms (IHT), following months of intense negotiations.
The Financial Times reported: “Ukraine’s deal showcases two important evolutionary steps: a rare case of successful investor-state coordination and the latest application of equity principles in sovereign finance.” (September 17, 2015)
Creditor meetings in relation to the 14 Eurobonds will be held on October 14. In addition to new notes, creditors will receive a value recovery instrument in the form of a GDP growth warrant which was carefully structured to avoid certain flaws which had become synonymous with these types of instruments. It incorporates distinct mechanisms for value preservation and investor protection.
In February 2015, Ukraine formally requested further funding from the International Monetary Fund and cancellation of its existing funding arrangements. In March 2015, the IMF announced the approval of a four year Extended Fund Facility for Ukraine. As a condition of that loan, Ukraine was required to procure additional savings through the restructuring of its sovereign and quasi-sovereign debt held by the private sector.
The August 2015 agreement of IHT was achieved after numerous meetings with Ukrainian officials, the IMF and U.S. Treasury officials. The agreement is of significant political importance and has high political visibility in the European Union and United States.
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