UPDATE 1-UBS sues Deutsche-Terra Firma owned firm - sources

(Adds detail, comment)

By Olesya Dmitracova and Mathieu Robbins

LONDON, June 19 (Reuters) - UBS AG (UBSN.VX) is suing a company owned by buyout firm Terra Firma [TERA.UL] and Deutsche Bank (DBKGn.DE) over the syndication of buyout debt to new investors, sources familiar with the matter said on Thursday. German motorway service operator Tank & Rast borrowed 2.27 billion euros ($3.54 billion) in September as part of a refinancing. However, the suit says that Tank & Rast prevented UBS from selling on that debt to other institutions as is common practice with leveraged loans.

In the claim, filed with the High Court of Justice in London on May 14, the Swiss bank accuses Tank & Rast of breach of contract in "unreasonably refusing or delaying its consent to the transfers requested by the claimant", the sources said.

UBS, Tank & Rast, Terra Firma and Deutsche all declined to comment.

UBS tried to sell a part of the debt to Australian investment bank Macquarie Group Ltd (MQG.AX), the sources said.

A source close to the defendant said: "Macquarie is a competitor for assets and could be a hostile party for Tank & Rast."

London-based Terra Firma announced a year ago it would sell half of its stake in Tank & Rast to Deutsche Bank's infrastructure division, RREEF.

Before the private sales that took place in the second quarter to private equity firms and other investors, the pipeline of hung European leveraged buyouts from mid-2007 totalled $116 billion, according to Reuters LPC data.

(Editing by Rory Channing)