March 15, 2015 / 8:46 PM / 5 years ago

UPDATE 1-Franklin Templeton hires Blackstone to advise on Ukraine debt restructuring talks

(Adds second source, quote, detail)

LONDON, March 15 (Reuters) - Ukraine’s largest creditor, Franklin Templeton, has hired investment and advisory firm Blackstone to advise a creditor group during debt restructuring negotiations with Kiev, sources familiar with the situation told Reuters on Sunday.

The sources confirmed an earlier report by the Financial Times, which quoted sources as saying Franklin Templeton had organised a group of creditors holding 50 percent of outstanding Ukrainian international bonds.

Blackstone represented Greece’s creditors in 2012.

“A significant bondholder of Ukraine’s foreign debt has appointed Blackstone as adviser and Weil (Gotshall) as legal adviser to assist in creditor discussions with Ukraine,” one person familiar with the situation said.

The bondholder is understood to be Franklin Templeton, the person added.

The Financial Times quoted another person close to the talks as saying the creditor group was unwilling to accept a haircut, or writedown, on the bonds’ principal, and viewed the debt relief targeted by Ukraine as too high.

Ukraine wants the restructuring to involve principal writedowns as well as maturity extensions and coupon reductions, Finance Minister Natalia Yaresko told investors on Friday.

Kiev is aiming for the restructuring to save over $15 billion in order to plug a financing gap left after the International Monetary Fund approved a bailout package.

Aside from a $17.5 billion loan from the IMF, the bailout envisages $15.3 billion to be raised by restructuring debt.

Ukraine has set itself a June deadline to have a restructuring deal in place but this could prove tricky if investors indeed balk at accepting a writedown, a danger the IMF had highlighted in a report a day after it released the loan.

Franklin Templeton holds around $6.5 billion of Ukraine’s bonds or well over a third of Ukraine’s Eurobonds, while PIMCO, Blackrock, Fidelity and Stone Harbor are also among bondholders. Significantly, Russia holds another $3 billion worth of the bonds and has already said it will not restructure.

Ukraine, like Greece a few years ago, is being represented at its debt talks by Lazard, and has also hired White & Case to act for it. Yaresko is due to travel to Europe and the United States in coming weeks to hold talks with bondholders. (Reporting by Anjuli Davies and Sujata Rao; Writing by Sujata Rao; Editing by Alison Williams)

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