UAE's Dana Gas seeks consensual deal on Islamic bonds

Reuters, Tuesday 15 May 2012

Abu Dhabi-based natural gas producer says it has hired adviser to weigh up options for repayment

Dana Gas Co said it wanted to find a consensual deal to repay the remainder of a $1 billion Islamic bond maturing in October, and confirmed it had hired advisers to weigh up various options for the repayment.

The Abu-Dhabi-listed natural gas producer's share price has been battered by concerns over how it will find the cash to repay the outstanding $920 million of the sukuk, issued in 2007, on time and in full. Its stock has dropped 40 per cent in the past year.
Dana said on Tuesday it had hired Deutsche Bank, Blackstone Group and law firm Latham & Watkins to advise on options for discussions with sukukholders and their advisers. The bondholders have hired law firm Linklaters, one source familiar with the matter said.
Its shares rose 2.56 per cent on the Dubai bourse. The sukuk rose to 70.938 cents on the dollar according to Thomson Reuters data, up from 70.917 levels earlier in the session.
The sukuk is trading below par as investor confidence in Dana's ability to repay sags and clarity on refinancing or restructuring options remains elusive.
A default or sukuk restructuring would be a significant development in the United Arab Emirates where only bank loans have been restructured or rescheduled, not publicly-listed bonds, in the last four years.
Dana Gas, which has operations in the United Arab Emirates, Egypt and Iraq's Kurdistan region, said on Tuesday that cash flow had been affected by global economic conditions and regional events, including Egyptian unrest last year which delayed payments.
It added political disputes in Iraq had affected payments from the central government to firms operating in Kurdistan. The group's cash balance stood at 524 million dirhams at March 31.
"Although the economic realities outlined above affected Dana's ability to raise new funding, the company is committed to finding a consensual solution that is equitable to all stakeholders," it said.
The 7.5 per cent convertible bond matures 31 October. The next quarterly pay date is 31 July, according to Thomson Reuters data.
The company's quarterly profit more than doubled, it said on Tuesday, helped by high oil prices and increased production in Kurdistan.
First-quarter net profit was 206 million dirhams ($56.08 million), compared with 92 million dirhams for the year-ago period.
Net revenue rose 19.2 per cent to 572 million dirhams in the quarter.
Dana, which owns a 3-per cent stake in Hungarian group MOL , said it collected 192 million dirhams against receivables in the first-quarter.
At the end of the quarter, trade receivables from Egypt stood at 825 million dirhams, it said.
Investments in the Kurdistan region of Iraq stood at 1.3 billion dirhams at 31 March.
Last year, Dana proposed listing some of its assets on the London Stock Exchange and sources close to the matter said the company was still looking to do so this year, although it would not proceed if market conditions were unfavourable.
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