Templeton rejected the offer of Ukraine on the restructuring of Eurobonds


Moscow. December 14. London-based investment company Franklin Templeton, which owns 32% of Eurobonds of Kiev for $250 million maturing in November 2015, has rejected new terms of the restructuring securities, reports Bloomberg citing a source close to the negotiations.

As reported, Kyiv’s Eurobonds are included in the perimeter of a debt liability operation under the program of extended Fund facility (EFF) of the International monetary Fund. The two Eurobond issues: $250 million with a maturity of up to 6 November 2015 and a coupon rate of 8% per annum and $300 million with a maturity of 11 July 2016 and a coupon rate of 9,375% per annum.

Kyiv city Council in March 2015 approved restructuring, and the decision of 8 October adopted 6 November a temporary moratorium on payments on Eurobonds of the capital. Terms of conversion of Eurobonds of Kiev comply with the conditions of the restructuring of sovereign Eurobonds, except that the percentage of securities convertible into state derivatives, increased from 20% to 25%.

Holders of Eurobonds of Kiev suggested to redeem sovereign Eurobonds Ukraine, maturing in 2019-2020 and state derivatives. For one security with face value $1 thousand offers two similar sovereign Eurobonds maturing in 2019 and 2020 each with a par value of $0,375 thousand and interest rate of 7.75% per annum and also the state derivatives notional value of $0,25 thousand

In early December a meeting of holders of Eurobonds of Kiev for $300 million maturing in 2016, supported the proposal to exchange for sovereign Eurobonds Ukraine, maturing in 2019-2020 and state derivatives.

The mechanism for restructuring release of $250 million does not provide for meetings of holders. The owners of Eurobonds will need to apply for conversion of the securities. Of paper on which the exchange filed the application will remain in circulation. However, the income thereon will not be awarded because of the Kiev-imposed moratorium on payments on external debts.

An earlier proposal on restructuring of Eurobonds of this issue supported 57,07% of the holders of securities.

The Kyiv authorities were forced to extend the deadline for conversion of these bonds from 8 to 16 December due to weak support of restructuring its securities holders.