Dana Gas Comes To Agreement With Its Sukukholders On Disputed $700 Million Sukuk

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Monday 14, May 2018 by William Mullally

The deal should be completed by July, according to a statement from the company.

Dana Gas, the Sharjah-based natural gas company, has announced that it has come to an agreement with it Sukukholders, represented by an ad-hoc committee, on terms and conditions to restructure and refinance its Mudarabah Sukuk valued at $700 million.

According to Dana Gas, the group of Sukukholders represent more than 52 per cent of the aggregate amount of the existing exchangeable certificates, as well as more than 30 per cent of existing ordinary certificates. The agreement between the Sukukholders is binding, and the members of the committee who are involved in litigation have moved to terminate all pending litigation and release the claims therein.

Dana Gas also noted in its note, released on Abu Dhabi Securties Exchange’s website, that the transaction is consensual, amicable, and covers all the current issues between the parties.

The agreement is as follows: For holders wishing to exit their principal, the Company is offering an opportunity to tender their claims at 90.5¢ per $1 of the face value of their holdings, which includes an early participation fee of 2.5¢ (if elections are received within seven days from the date of launch of the Tender Offer and Consent Solicitation process). For holders electing to receive a partial pay down and exchange into a new instrument, there is a path to full recovery including a significant repurchase obligation at par with respect to the new certificates. Such holders will also receive arrears of profit distribution as per the Existing Certificates up till 31 October 2017, and a four per cent profit rate from 01 November 2017 till closing of the transaction.

If elections are received within seven days from the date of launch of the Tender Offer and Consent Solicitation process, holders will receive an early participation fee of 2.5 cents. The new certificates will be constituted of a Wakala Sukuk instrument (based on an underlying Ijarah and deferred payment obligation structure) which has a 4 per cent profit rate and three year tenor.

Dana Gas believes that the offer reflects the Company’s significantly improved financial position at about 0.3 times net leverage, and removes the risk to all parties of continuing lengthy legal disputes in multiple jurisdictions. The Board plans to secure the necessary stakeholder consents, according to Dana Gas’ statement, for the implementation of the transaction, while the company continues to focus on achieving its growth potential over the coming years and continue to realise increasing value of its assets. 

 “We are pleased to have amicably reached a consensual solution with the AHC, as indeed wasalways the Company’s publicly-declared intention from the outset, which offers Sukukholders the opportunity to cash out at a premium to current market prices or – individually solely at their election – to achieve a path to full repayment of the face value of their existing holdings. The proposed new Sukuk instrument to be issued to Sukukholders has been legally verified to be lawful without question,” Patrick Allman-Ward, CEO of Dana Gas, commented.

 A member of the AHC also commented on the transaction. “We are now pleased to have reached an agreement with the Company and provide our support to the settlement,” said the anonymous Sukukholder. 

According to Dana Gas, the transaction should be completed in the first half of July 2018. The company will also be seeking the consent of the remaining Sukukholders for the proposed transaction this month.