Trade Arabia reported that UAE based Dana Gas has reached a lock-up and standstill agreement with bondholders to restructure USD 920 million Islamic bond by reducing the debt to USD 850 million via USD 70 million cash.
Dana said that the agreement was signed with the Ad Hoc committee of sukukholders which represents majority of outstanding principal amount of the existing sukuk. The shareholders are set to vote on sukuk deal in the Q1 of 2013.
Dana, which was floated on the Abu Dhabi bourse in 2005 by parent Crescent Petroleum had USD 1 billion sukuk maturing on October 31. It repurchased about USD 80 million of the sukuk in 2008 leaving USD 920 million outstanding.
The Sharjah based firm could not repay the sukuk upon its October 31 maturity. The company and bond holders then entered into a so called standstill, valid for up to six months in early October to allow talks to continue.
As per the terms of the agreement, Dana Gas will cut the outstanding debt from USD 1 billion to USD 850 million via USD 70 million cash pay down and cancellation of another USD 80 million of the existing sukuk already owned by the company. The USD 850 million will be split into two tranches USD 425 million ordinary sukuk and USD 425 million convertible sukuk each with 5 year maturity to ensure long term financing.
Dana said that the average combined profit rate on the two sukuks is 8% representing a slight increase over the existing sukuk profit rate of 7.5%. This average profit rate of 8% together with the lower debt amount of USD 850 million constitutes a lower debt servicing obligation on the company compared to the debt servicing obligations under the existing sukuk.
Dr Adel Khalid Al Sabeeh chairman of Dana Gas board said that the terms being announced today represented a comprehensive, long term solution which balances the interests of all stakeholders. The board plans to secure necessary stakeholder consents for implementation of the transaction, while the company continues to focus on achieving its growth potential over the coming years and continue to realise value."
Dr Al Sabeeh said that the security package available to holders of the new sukuks will be enhanced by USD 300 million of value. However it is restricted to the company’s Egyptian assets and certain UAE assets. The conversion price of the convertible sukuk has been set at 50% premium to the 75 calendar day volume weighted average price measured over a period commencing on December 1st 2012.
He said that Dana has the option to pay down the outstanding principal amount of the new sukuks prior to the new maturity date of October 31st 2017, subject to the applicable call premia on the ordinary sukuk and the soft call provisions on the convertible sukuk.
Mr Rashid Al Jarwan the executive director and acting CEO said that Dana Gas has a robust asset base and has successfully grown revenues, production, reserves and asset values consistently over the last 5 years in line with its strategy. The company's liquidity constraints were caused by well known external factors and we believe that these revised terms of the New Sukuks place Dana Gas on a firm foundation for further growth and progress.
