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Dana Gas strikes deal on sukuk restructuring
Abdul Basit / 8 November 2012
DUBAI — Dana Gas on Wednesday announced that the company reached an agreement with sukukholders for restructuring of nearly $1 billion Islamic bond.
The Sharjah-based natural gas company, which was hit by payment delays from Egypt and Iraq’s Kurdistan region, missed the bond payment deadline that was due on October 31.
Dana Gas has reached an in-principle agreement on the restructuring terms of the $1 billion Sukuk-al-Mudarabah due on October 31, 2012 with the ad hoc committee of sukukholders, the company said in a statement.
“The agreement envisages that $80 million of the sukuk currently held by the company will be cancelled and that sukukholders will receive a partial paydown from the company’s balance sheet cash. The remaining sukuk will be reinstated as two pari passu instruments comprising a new ordinary sukuk and a new convertible sukuk which will have revised economic terms,” the statement explained.
The natural gas company confirmed that the profit payment due on October 30, 2012 had been paid. The company also confirmed that it had entered into a standstill agreement with the ad hoc committee.
Dana Gas is being advised by the Blackstone Group International Partners, Deutsche Bank and Latham & Watkins. The ad hoc committee is being advised by Moelis and Company UK and Linklaters.
“In the meantime, the parties are working in good faith to agree a lock-up agreement. Detailed terms of the restructuring and implementation details will be announced by the company upon signing of the lock-up agreement and will be subject to approval by the relevant regulatory authorities, company’s shareholders, and sukukholders …,” the statement added.
“The outcome is positive and reassuring to shareholders and also important on the implication of the credibility of the debt capital market in the UAE,” Mohammed Ali Yasin, managing director of Abu Dhabi Financial Services Company told Bloomberg, the brokerage unit of National Bank of Abu Dhabi.
“If that failed, it would have had a huge negative implication on the future of companies coming to market,” added Yasin,
Dr Adel Khalid Al Sabeeh, Chairman of the Board of Dana Gas said: “We are very pleased to have reached an agreement, which we believe best preserves the interests of all stakeholders. We now have a clear way forward that will allow the management of Dana Gas to concentrate on building value from our very promising interests in Egypt and the Kurdistan region of Iraq.”
Dana Gas declared a 27 per cent decline in net profit in the third quarter as the company suffered from delayed payments from Egypt, where it produced natural gas in the Nile Delta, and Iraq’s Kurdistan region, where in a partnership with Crescent Petroleum it is producing some 80,000 barrels of oil equivalent of gas and condensate from the Khor Mor field.
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