Dana Gas, in talks to restructure USD 920 million Islamic bond is offering bondholders cash and an average 8 per cent coupon on two new sukuks to replace the existing one.
Two sources said that the natural gas producer became the first UAE Company to miss a bond redemption when the sukuk matured on October 31. Dana reached the restructuring deal on November 7 potentially averting the seizure of its Egyptian assets.
Bondholders will be paid between USD 80 million and USD 90 million in cash and the new bonds will be equally split between a sukuk and a convertible bond.
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% on the original sukuk but on a lower amount of debt.
The sources said that Bondholders are quite happy with the offer which does not include a hair cut as the market had previously expected. The other alternative of seizing the underlying assets wasn't the bondholders' best option.
In 2008, Dana repurchased about USD 80 million of the 5 year sukuk. 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 source said that 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. Dana, in which Crescent Petroleum has 20% stake had AED 516 million cash at September 30th 2012 its Q3 earnings statement showed.
But receivables delays continued to soak up cash. The company is owed USD 350 million from the Kurdistan government and USD 200 million from Egypt. The company has 3% stake in Hungarian group MOL worth close to USD 280 million.
London based investment firm Exotix said that the announced restructuring terms were creditor friendly and a sharp turnaround from Dana's previously harsh stance towards creditors.
