By Mirna Sleiman
DUBAI Nov 22 Dana Gas, in talks to
restructure a $920 million Islamic bond, is offering bondholders
cash and an average 8 percent coupon on two new sukuks to
replace the existing one, two sources said.
The natural gas producer became the first United Arab
Emirates company to miss a bond redemption when the sukuk
matured on Oct. 31. Dana reached the restructuring deal on Nov.
7, potentially averting the seizure of its Egyptian assets.
Bondholders will be paid between $80 million and $90 million
in cash and the new bonds will be equally split between a sukuk
and a convertible bond, one person familiar with the matter
After the cash payment, the balance on the Islamic bond -
which is mainly held by investment firms such as Ashmore Group
and BlackRock - will be replaced by two equal
tranches that mature in 2017.
The coupon on the combined bond is 8 percent, slightly above
the 7.5 percent on the original sukuk but on a lower amount of
"Bondholders are quite happy with the offer which does not
include a hair cut as the market had previously expected," the
source said. "The other alternative of seizing the underlying
assets wasn't the bondholders' best option."
A Dana spokeswoman declined to comment.
In 2008, Dana repurchased about $80 million of the five-year
Dana's restructuring agreement with its ad-hoc committee of
creditors gives it a breather to sort out its finances. The Abu
Dhabi-listed firm, which is based in the emirate of Sharjah, has
been hit by payment delays on gas it supplies to Egypt and
Iraq's Kurdistan region.
The terms of the proposed new sukuk instruments have been
agreed by bondholders and are expected to be made public as
early as next week, the source said.
Dana, in which Crescent Petroleum has a 20 percent stake,
had 516 million dirhams ($140 million) cash at Sept. 30, its
third-quarter earnings statement showed.
But receivables delays continued to soak up cash. The
company is owed $350 million from the Kurdistan government and
$200 million from Egypt. The company has a 3 percent stake in
Hungarian group MOL worth close to $280 million.
London-based investment firm Exotix said in a research note
on Nov. 8 that the announced restructuring terms were "creditor
friendly" and "a sharp turnaround from Dana's previously harsh
stance towards creditors."