Dana shareholders approve sukuk restructuring
Dubai, April 23, 2013
Shareholders in Abu Dhabi-listed energy firm Dana Gas approved a plan to restructure its $920 million Islamic bond, the company said.
Last October Dana became the first company in the UAE to miss repayment of a maturing bond, but it subsequently agreed new terms with a creditor committee representing bondholders, including investment firms Ashmore Group and BlackRock.
Under the plan, the company will repay $70 million in cash, with the remaining $850 million split equally between two new five-year sukuk - an ordinary Islamic bond and a convertible sukuk - which will pay an average coupon of 8 percent. The new sukuk will be issued on May 8.
Dana Gas was hit by delays on payments for its supplies of natural gas to Egypt and Iraq's Kurdistan region.
Shareholder approval of the debt restructuring had been expected after Majid Jafar, chief executive of Crescent Petroleum, the biggest shareholder in Dana Gas, told Reuters in January that he supported the scheme. Crescent, based in the UAE, owns 22 per cent of Dana.
Shareholder meetings to vote on the restructuring did not meet the required quorum on March 14 and March 21.
"The restructuring will allow the company to have a 'breather' for five more years, and we believe in its ability to meet the restructuring repayment schedule relying only on its own resources," Quantum Investment Bank said in a research note on Tuesday.
It initiated coverage of the Dana Gas sukuk with a "buy" recommendation and estimated fair value for the company's shares at 0.84 dirhams, above its last market price of 0.48.
"Dana Gas can now move forward from a solid position - with a focus on receivables collection and strengthening the top management team, while selectively pursuing new growth opportunities," Jafar said.
Dana Gas, which posted a 20 per cent increase in 2012 net profit on higher oil prices and lower costs, said last month it had collected a total of $73.7 million in receivables from its operations in Egypt and the Kurdistan region of Iraq in 2013.
Those payments are equal to 12.5 per cent of the $589 million outstanding receivables owed to Dana at the end of 2012. Of that total, about $353 million was owed by the Kurdistan Regional Government.
Dana said on Monday that it had won a bid in Egypt to develop an offshore block in the Nile Delta, and had pre-qualified in Lebanon's first offshore licensing round to explore for gas in deep-water exploration blocks.-Reuters