Following five months of intense and complex negotiations, Ukraine and 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., have agreed Indicative Heads of Terms (“IHT”) for the restructuring of 14 sovereign and sovereign-guaranteed Eurobonds for an outstanding principal of c. US $18 billion. Weil advises the AHC.
The agreement was achieved after numerous meetings with Ukrainian officials, the IMF and US Treasury officials. The agreement is of significant political importance and has high political visibility in the EU and US. It will allow Ukraine to fulfil a key element of the implementation of the IMF-supported Extended Fund Facility (“EFF”) agreed in March 2015. The EFF anticipates that Ukraine will re-enter the capital markets in 2017.
The terms of the IHT include, in return for a reduction of the principal debt, a value recovery instrument in the form of a GDP growth warrant, providing potential upside to holders from 2021 to 2040.
The terms of the IHT are non-binding and will be subject to extensive legal documentation. The Ukrainian authorities have agreed to procure necessary implementing legislation. Weil will now play a leading role on the implementation of the restructure, expected to consist of 14 parallel exchange offers to be launched in September.
The AHC holds approximately half of the Notes under consideration and will, together with Ukrainian authorities, actively promote the exchange offers.
Negotiations on the IHT and the Weil team are led by Andrew Wilkinson and Alex Wood with lead associates Kirsten Erichsen and Robert Peel. The team has included Paul Bromfield and others in Business Finance & Restructuring and has drawn on a large cross-disciplinary and international team including litigation (Jamie Maples, Jonathan Polkes, Eric Ordway, Gregory Silbert), Finance (Patrick Bright, Todd Chandler) and Structured Finance (Steven Ong).
The AHC is also advised by Blackstone (head of restructuring Martin Gudgeon and others) as financial adviser.
Ukraine is advised by Lazard as financial advisor and global coordinator and White & Case LLP as international legal counsel.
Additional information regarding Weil’s representation on this matter can be found here.