* Failed to redeem $920 mln sukuk last Wednesday
* First UAE company to miss bond redemption
* Company says sukuk restructuring talks continuing
* Sukuk holders have not revealed their intentions
* No impact on wider debt market
DUBAI, Nov 5 Dana Gas, a natural gas
producer based in the United Arab Emirates, formally ackowledged
on Monday that it had failed to redeem a $920 million Islamic
bond and asked holders of the sukuk to decide on their course of
Privately-owned Dana, headquartered in the emirate of
Sharjah, did not repay the five-year sukuk on maturity last
Wednesday, becoming the first UAE company to miss a bond
In Monday's statement to the London Stock Exchange, where
the sukuk is listed, the special purpose vehicle administering
the bond declared a "dissolution event" had occurred.
This is a legal step that leaves the holders with a choice
between liquidating the bond and claiming the assets backing it,
or agreeing to restructure the sukuk in the hope of obtaining
In an earlier statement in the UAE on Monday, Dana said its
talks with a committee of bondholders to amend and extend the
terms of the sukuk "continue to progress constructively". It did
not say when any restructuring deal might be reached.
Dana has been hit by delays in recovering revenues from
operations in Egypt and Iraq's Kurdistan.
Although indebted firms in the UAE have restructured
billions of dollars of bank loans, no UAE company before Dana
has failed to repay a maturing bond, conventional or Islamic.
Holders of the Dana sukuk include big international
investment firms such as BlackRock Inc and Ashmore Group
. They have declined to comment on their stance toward
the restructuring talks.
A September report by London-based investment firm Exotix
estimated a liquidation of Dana's sukuk assets could yield a
recovery value of 47 percent of par for investors.
A five-year extension of the sukuk at the current 7.5
percent profit rate is most likely, Exotix said.
Although Dana's failure to redeem the sukuk is unprecedented
in the UAE, it has not damaged prices in the larger debt market,
because the company is not believed to be strategically
important to the UAE economy and its troubles are seen as an
isolated case, debt traders said.