Dana Gas, the first UAE group to default on an Islamic bond, has reached an agreed restructuring of its $920 million sukuk, potentially averting seizure of its Egyptian assets. Although indebted firms in the Gulf Arab state have extended maturities on billions of dollars in bank loans since the financial crisis in 2008-09, no sukuk had been restructured or unpaid on maturity. The Dana Gas sukuk matured on October 31.
Natural gas producer Dana, headquartered in Sharjah, said on Wednesday it will pay its sukuk holders a mix of cash and new bonds - split between a sukuk and a convertible. It did not say what proportion would be in cash under the deal agreed with a group of bondholders. Dana had 516 million dirhams ($140 million) at September 30, according to its third-quarter earnings statement.
"We are very pleased to have reached an agreement, which we believe best preserves the interests of all stakeholders," chairman Adel Khalid Al-Sabeeh said. The terms of the proposed new sukuk instruments have been agreed by bondholders, a source close to the situation said. The parties are working towards an agreement that will detail all commercial aspects of the deal in the next 2-3 weeks, the source said. The parties need to agree on it by the end November, the source said.
"We believe the terms will be more on the creditors side than the market had anticipated," said one bond trader who declined to be identified. Dana Gas shares were up 4.9 percent at 1040 GMT. The sukuk, said to be held by investment firms such as Ashmore Group and BlackRock, was quoted at 66 cents to the dollar on Wednesday according to prices by Nomura.