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Thu 21 Jun 2018 08:36 PM

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Dana Gas agrees deal with shareholders of $700m sukuk

The agreement ends a debt saga that started a year ago, when the company first announced it would restructure the notes due to delays in gas payments from Egypt and Iraq's Kurdish region

Dana Gas agrees deal with shareholders of $700m sukuk

Dana Gas has reached a unanimous agreement with shareholders of $700 million of its Islamic bonds to restructure the securities, the Sharjah-based firm confirmed.

A committee representing sukuk holders, which include Blackrock and Goldman Sachs Group, agreed to accept one of two options - either to cash in the sukuk at 90.5 US cents per dollar of its value or to take a new sukuk over a period of three years.

“We are delighted to have received the approval of all key stakeholders to complete the restructuring of our Sukuk al-Mudarabah, and to have had overwhelming support from both shareholders and certificateholders,” said Patrick Allman-Ward, CEO of Dana Gas.

“The level of support underlines the consensual nature of the restructuring and the continued support of both sukukholders and shareholders of the Company is testimony to our financial strength and our exciting future growth prospects.”

The agreement ends a debt saga that started a year ago, when the company first announced it would restructure the notes due to delays in gas payments from Egypt and Iraq’s Kurdish region.

A month later, the company said it no longer considered its two $350 million mudaraba sukuk to be compliant with Islamic law and proposed replacing them with new securities that yield less than half the average current profit rate of 8 percent.

It then retracted that offer, opting to go to court instead, and didn’t settle the sukuk when they matured in October. The company had a string of rulings against it in the UK, while the British and UAE courts have announced conflicting judgments on its planned dividend payments.

Allman-Ward said Dana Gas is “well placed to deliver value for all stakeholders”.

“We are making good progress in the Kurdistan Region of Iraq and are working hard to deliver a significant expansion program there this year,” he said. 

“To this end we expect drilling to commence soon in both our world-class fields and debottlenecking work is underway to expand our output by 20% in the fourth quarter 2018. In Egypt, we recently received a payment of $40 million from the government which will allow us to proceed with drilling further onshore wells to increase production to plant capacity.”

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