UAE's Dana Gas loses UK appeal over $700m Islamic bonds

Energy firm receives another setback in the six-month old legal battle to invalidate bonds
UAE's Dana Gas loses UK appeal over $700m Islamic bonds
By Bloomberg
Mon 18 Dec 2017 04:46 PM

Dana Gas received another setback in the six-month old legal battle to invalidate its $700 million Islamic bonds.

The English Court of Appeal refused the United Arab Emirates energy company’s application to appeal an order by the High Court in London that allowed bondholder BlackRock to join the case and for proceedings to continue in Dana Gas’s absence, according to a statement on Monday. Sharjah-based Dana Gas couldn’t participate in the trial due to a court injunction at home.

The English High Court in September allowed BlackRock to join the trial over the validity of a purchase agreement that is part of the sale of the securities. Dana Gas contended that sukukholders are "expressly prohibited" from pursuing a claim in relation to the purchase undertaking involving the sukuk al mudaraba, as the bonds are called.

The dispute between the company and bondholders began after Dana Gas said in June it no longer considered its sukuk to be complaint with Islamic Shariah laws. It didn’t repay two $350 million mudaraba sukuk due October 31, the second time in five years it failed to settle bonds at maturity.

Dana Gas, whose bondholders also include Goldman Sachs Group Inc, said Monday it’s applying to set aside an English High Court judgment of November 17 since it couldn’t participate in the trial. If the application is unsuccessful, it’ll appeal against the judgment.

If the appeal is successful, the issue and related matters will be re-heard by the English High Court over a three-day period from January 30, the company said.

Dana Gas also said it will take steps to have the UAE proceedings dealt with as quickly as possible. The company said earlier this month that the Sharjah Court of Appeal lifted the anti-suit injunction, allowing it to participate in all matters before the UK court.

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