KHALEEJ TIMES, wednesday, Feb 14, 2018 | Jamadi Al Awwal 28,1439
Dana Gas creditors veto restructuring proposal
Creditors of UAE-based energy producer Dana Gas have rejected a new proposal by
the company to restructure its $700 million of Islamic bonds and are waiting for
improved terms, two sources said on Tuesday.
Dana refused to redeem its sukuk when they matured last year, on the grounds
that the instruments were no longer Shariah-compliant because of changes in
Islamic finance practice.
While legal proceedings between the company and its creditors are continuing in
British and UAE courts, talks to find an out-of-court settlement have so far
produced no concrete result.
The latest restructuring proposal was submitted by the company to sukuk holders
about two weeks ago, said one of the sources.
The company offered to redeem 10 per cent of the sukuk in cash and to roll over
the remaining 90 per cent over four years at an annual profit rate of 4 per
cent, said the sources. It also offered to buy back up to half of the bonds at a
15 per cent discount.
The creditors' committee, advised by investment bank Moelis, rejected Dana's
proposal. Creditors would be ready to accept an offer to exchange the sukuk for
new instruments but on more favourable terms, the sources said. They would want
Dana to buy back the bonds at par.
Other sticking points included the proposed 10 per cent paydown, which creditors
would like to be higher, the sources said. Creditors have also asked for an
amortisation plan and a provision in the new instruments which would allow the
coupon to increase if the bonds were not amortised.
Sukuk holders have asked Houlihan Lokey, a financial adviser to Dana, to come up
with a new proposal. At the beginning of February, a British judge rejected an
attempt by Dana to set aside a previous ruling which established that the
purchase undertaking behind the sukuk was valid and enforceable.