DUBAI: Dana Gas, the first UAE group to default on an Islamic bond, is offering bondholders $70m in cash and an average eight percent coupon on the remaining $850m of debt in a move to buy time to fix its finances.
The Abu Dhabi-listed natural gas producer, hit by payment delays on supplies to Egypt and Iraq’s Kurdistan region, missed a bond redemption when the $920m sukuk matured on October 31.
It reached a restructuring deal on November 7, potentially averting the seizure of its Egyptian assets.
The sukuk is said to be held by large global firms such as Ashmore Group and BlackRock. Dana, in which Crescent Petroleum has a 20 percent stake, said a lock-up and standstill agreement has been signed with creditors as part of the deal. It expects the debt restructuring to be completed by the second quarter of 2013.
“We believe that the terms being announced today represent a comprehensive, long-term solution which balances the interests of all stakeholders,” Chairman Adel Khalid Al Sabeeh said in a statement.
Bondholders will be paid $70m in cash.
In addition Dana will cancel $80m of the sukuk which it repurchased in 2008 from the original $1bn issue in 2007.
The remaining $850m portion of the bond will be split equally between a normal sukuk and a convertible Islamic bond.
The average combined profit rate on the two debt instruments, both with a maturity of five years, is eight percent, Dana said. The conversion price on the $425m tranche has been kept between 75 fills to one dirhams a share, Dana said.
Dana’s restructuring agreement with its ad-hoc committee of creditors gives it time to sort out its finances.
Dana, based in the emirate of Sharjah, had Dh516m ($140m) cash at September 30, its third-quarter earnings statement showed.
Reuters
