Investors in $700 million sukuk issued by UAE’s Dana Gas propose restructuring

Dana Gas’s dispute with creditors over its $700 million sukuk due to mature in October remains contentious. (Courtesy WAM)
Updated 13 September 2017
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Investors in $700 million sukuk issued by UAE’s Dana Gas propose restructuring

DUBAI: Holders of about $700 million of Islamic bonds issued by Abu Dhabi-listed Dana Gas have submitted a restructuring plan to the company’s management, a committee for the holders said on Wednesday.
The sukuk are due to mature this year but Dana has refused to redeem them on the grounds that changes to Islamic financial practice in recent years make them unlawful in the United Arab Emirates — a claim which the holders reject.
Dana argues that the sukuk’s mudaraba structure — a form of investment management partnership — has become obsolete since 2007 when the company originally issued the debt. At that time the structure was common but Dana says many of its features have been discredited.
The company and sukuk holders have gone to courts in Britain and the UAE to fight the case, which is being closely watched by the global Islamic finance industry because it could set a precedent for other such disputes. London’s High Court is due to begin a major hearing of the case next week.
The creditors’ committee said on Wednesday that it hoped its proposal, which had the support in principle of over 70 percent of sukuk holders by value, would be the basis for discussion of a restructuring.
Dana did not immediately issue a statement responding to the proposal but a source close to the natural gas producer described it as “unrealistic” and “unacceptable”.
As a result, Dana will continue to pursue litigation over the sukuk in UAE and British courts, the source told Reuters.
The committee’s proposal includes a cash paydown to sukuk holders of $300 million, split equally between the two tranches of the bonds, half of which are exchangeable into equity.
The firm has faced financial pressure in recent years as it has struggled to obtain payments from Iraqi Kurdistan and Egypt. But at the end of last month it reached a deal with Kurdish authorities, who agreed to pay Dana’s consortium $1 billion.
Dana received $350 million of that amount, although nearly half was earmarked under the deal for investment in Kurdistan.
Other terms in the committee’s proposal include extending the maturity of the sukuk by three years, and keeping the sukuk’s current rates of periodic profit distribution to investors: 9.0 percent for the ordinary sukuk and 7.0 percent for the exchangeable bonds.
The effective conversion price for the exchangeable sukuk would be kept unchanged at Dh0.75 under the proposal. The current market price of Dana’s shares is Dh0.81, up 27 percent since the Kurdistan deal was announced.
The sukuk holders said a requirement of their proposal was that Dana should try to obtain a dual listing on the London Stock Exchange, because that would increase liquidity in its shares and raise its profile.
Dana has previously said sukuk holders are likely to have to repay it a “significant” amount of money if it succeeds in having the bonds declared illegal in the courts.


Dubai Aerospace signs $480 million loan deal

Updated 21 May 2018
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Dubai Aerospace signs $480 million loan deal

DUBAI: Dubai Aerospace Enterprise (DAE), one of the world’s largest aircraft lessors, said on Monday it had signed a four-year loan deal for $480 million.
DAE, a government-controlled company set up in 2006, has become one of the world’s largest aircraft lessors after acquiring Dublin-based AWAS last year.
The acquisition tripled the Dubai aircraft leasing and maintenance company’s portfolio to about 400 aircraft worth more than $14 billion.
The $480 million loan, which includes both conventional and Islamic finance tranches, has a so-called “accordion facility” allowing it to be increased to up to $800 million.
With the loan, the company’s unsecured revolving credit facilities increase to between $1.125 billion and $1.445 billion, depending on final size of the latest deal, Firoz Tararpore, DAE’s chief executive, said in a statement.
“On a pro forma basis as of December 2017, if this facility is fully drawn and if the proceeds are used to pay down secured indebtedness, DAE’s percentage of unsecured debt would increase from 26 percent to a range of 31-34 percent.”
Last year, the company issued $2.3 billion in senior bonds split across three tranches last year, partly to finance the AWAS acquisition.
Tarapore said in an interview last week that DAE was in talks to buy a near-record total of 400 jetliners from Airbus and Boeing in an order that could be worth more than $40 billion at list prices.
Al Ahli Bank of Kuwait coordinated the latest loan deal and was also the lead arranger and joint bookrunner together with First Abu Dhabi Bank, while Noor Bank joined the deal as lead arranger.