Dana Gas Sukuk Talks Stall as It Seeks 15% Discount on Buyback

Updated on
  • Company suggested buying back about $200 million of the sukuk
  • Dana sought to rollover debt into new bonds with 4% coupon

Talks to resolve a dispute between Dana Gas PJSC and holders of $700 million of Islamic securities broke down after the company proposed a 15 percent haircut on some of the debt, according to two people familiar with the matter.

The Sharjah, United Arab Emirates-based energy company suggested buying back about $200 million at 85 cents to the dollar, and rolling over the rest into new securities with a profit rate of 4 percent, the people said, declining to the identified because the talks are private.

Bondholders, which include Goldman Sachs Group Inc. and BlackRock Inc., want the buyback to be at par and the profit rate to be higher, the people said. Dana Gas declined to comment when contacted by email.

It’s the latest setback in a dispute that began in June, when Dana Gas said it no longer considers its sukuk compliant with Shariah standards. It has since missed profit payments in July and didn’t repay two $350 million mudarabah bonds due Oct. 31. The company initially proposed replacing the securities with four-year notes that pay less than half the current average 8 percent profit rate, but later retracted the offer.

Dana Gas in December said it plans to ask the U.K. court to set aside a Nov. 17 judgment that went against it because the company couldn’t participate in the trial. If its application is unsuccessful, Dana Gas will appeal against the judgment. If the appeal is successful, the issue and related matters will be reheard by the English High Court over a three-day period from Jan. 30, the company said last month.

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