Dana Gas places $875m sukuk

DUBAI — Dana Gas yesterday placed a convertible sukuk of $875 million instead of an initial $1 billion issue it planned a few months ago.

By Issac John (Deputy Business Editor)

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Published: Mon 8 Oct 2007, 8:48 AM

Last updated: Sat 4 Apr 2015, 11:24 PM

The issue is being offered at a higher rate of 7.5 per cent instead of an earlier coupon range of 6.5 per cent, market sources said.

JP Morgan is the sole book-runner for the deal, according to Business Weekly. For the initial $1 billion issue planned in June, Citibank and Barclays were the advisers.

A spokesman of the company, however, said the size of the current issue was in fact increased from its initial amount of $750 million following strong market interest. The issue, the third largest convertible sukuk to be completed in the region, is part of Dana Gas' strategy to put in place the most efficient capital structure. Dana Gas' Dh2.06 billion IPO in late 2005 was oversubscribed 140 times collecting a total of Dh288 billion.

Neeraj Agarwal, Finance Director, said the bond is one of the most sophisticated equity-linked structures to be issued. It has a combination of features including Shariah compliant and onward-starting structures as well being the first sukuk with delayed settlement. The issue of the sukuk was approved by the company's shareholders at an extraordinary general meeting held in July.

"This is a landmark transaction that will propel the company through its next phase of growth, as well as successfully position Dana Gas in international capital markets," said Agarwal.

"We are pleased to have launched this sophisticated and innovative transaction, and are also pleased with the strong investor interest in the unique identity of Dana Gas as a regional company focused on the Middle East's rapidly growing natural gas sector."

Structured as Sukuk Al-Mudarabah, the bond will mature in 2012. The terms of the sukuk grant rights to sukuk holders to exchange them into ordinary shares of Dana Gas subject to certain conditions.

A statement from Dana Gas said the Sharjah-based company is currently active in all aspects of the natural gas business across the region, with major projects in the UAE, Egypt and most recently in the Kurdistan Region in Northern Iraq. It also has new projects under development in other countries in the Middle East.

"The company's $1.1 billion acquisition of Centurion Energy earlier this year placed Dana Gas as the sixth largest gas producer in Egypt, with further recent gas discoveries made as part of an active drilling programme.

In April, Dana Gas also concluded important agreements for gas projects with the Kurdistan Regional Government, with a first phase investment of approximately $400 million.

Worldwide Islamic banking assets growing at over 15 per cent per annum, currently total around $500 billion. Islamic banks and financial institutions manage over $250 billion of assets.

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