Dr Adel Khalid Al-Sabeeh
Dana inks $920m debt restructuring deal
Dubai, December 10, 2012
UAE-based Dana Gas said it has reached a lock-up and standstill agreement with bondholders to restructure $920 million Islamic bond by reducing the debt to $850 million via $70 million cash.
One of the largest private sector natural gas company in Middle East, Dana said the agreement was signed with the Ad Hoc committee of sukukholders, which represents majority of outstanding principal amount of the existing sukuk. The shareholders are set to vote on sukuk deal in the first quarter of 2013.
Dana, which was floated on the Abu Dhabi bourse in 2005 by parent Crescent Petroleum, had a $1 billion sukuk maturing on October 31. It repurchased about $80 million of the sukuk in 2008, leaving $920 million outstanding.
The Sharjah-based firm could not repay the sukuk upon its October 31 maturity. The company and bond holders then entered into a so-called standstill, valid for up to six months, in early October to allow talks to continue.
As per the terms of the agreement, Dana Gas will cut the outstanding debt from $1 billion to $850 million via $70m cash pay-down and cancellation of another $80 million of the existing sukuk already owned by the company.
The $850 million will be split into two tranches - a $425 million ordinary sukuk and $425 million convertible sukuk, each with 5-year maturity to ensure long-term financing, said the UAE company.
Announcing the detailed terms, conditions and implementation information for the refinancing transaction with regard to its 7.5 per cent Sukuk-al-Mudarabah due October 31, Dana said the average combined profit rate on the two sukuks is 8 per cent, representing a slight increase over the existing sukuk profit rate of 7.5 per cent.
This average profit rate of 8 per cent, together with the lower debt amount of $850 million, constitutes a lower debt servicing obligation on the company compared to the debt servicing obligations under the existing sukuk, it stated.
Commenting on the deal, Dr Adel Khalid Al-Sabeeh, the chairman of Dana Gas board said the terms being announced today represented a comprehensive, long-term solution which balances the interests of all stakeholders.
"The board plans to secure necessary stakeholder consents for implementation of the transaction, while the company continues to focus on achieving its growth potential over the coming years and continue to realise value," noted Dr Al-Sabeeh.
According to him, the security package available to holders of the new sukuks will be enhanced by $300 million of value (inclusive of security over receivables of the Company’s Egyptian assets). However, it is restricted to the company’s Egyptian assets and certain UAE assets.
The conversion price of the convertible sukuk has been set at a 50 per cent premium to the 75 calendar day volume-weighted average price, measured over a period commencing on December 1, 2012 (with a floor of Dh0.75 and cap of Dh1)
Dr Al-Sabeeh said Dana has the option to pay down the outstanding principal amount of the new sukuks prior to the new maturity date of October 31, 2017, subject to the applicable call premia on the ordinary sukuk and the soft call provisions on the convertible sukuk.
Rashid Al-Jarwan, the executive director and acting CEO said Dana Gas has a robust asset base and has successfully grown revenues, production, reserves and asset values consistently over the last 5 years, in line with its strategy.
"The company's liquidity constraints were caused by well-known external factors, and we believe that these revised terms of the New Sukuks place Dana Gas on a firm foundation for further growth and progress," he added.
The company is being advised by the Blackstone Group International Partners, Deutsche Bank (as dealer manager) and Latham & Watkins. The Ad Hoc committee is being advised by Moelis & Company UK and Linklaters.-TradeArabia News Service