Nov 03 2012
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Dana Gas Misses $920M Sukuk Deadline; Talks Ongoing
Saturday, Nov 03, 2012
(This story was originally published on Thursday.)
-- Dana misses deadline to repay its Islamic bond on Wednesday
--Discussions continuing over amending the terms and extending sukuk maturity
By Asa Fitch
DUBAI (Zawya Dow Jones)-- Dana Gas , a Sharjah-based energy company with operations in the United Arab Emirates, Iraq and Egypt, said it failed to pay back a $920 million Islamic bond, or sukuk, that came due on Wednesday.
The company said it is in ongoing discussions with holders of the debt to amend the terms of the sukuk and extend its maturity, according to a statement posted on the Abu Dhabi bourse website on Thursday. The sukuk has been a major source of concern for Dana as it grapples with a large backlog of late payments from governments in Egypt and Iraq's Kurdistan region.
Hammering out an agreement to amend the sukuk's terms and extend its maturity was in the interests of all stakeholders amid challenges including political upheaval and "extensively reported problems of payment delays where the company operates," the statement said.
The terms of the sukuk allow Dana a three-day payment grace period before it can officially be declared in default, according to a person familiar with the matter. The sukuk is secured against Dana LNG Ventures, Sajaa Gas Company and United Gas Transmissions Company, according to the company's third-quarter financial statements. Dana LNG Ventures is the owner of the company's Egyptian operations. The book value of these assets is greater than the value of the sukuk, the statements said.
Dana hasn't paid back either the $920 million sukuk principal or a profit payment of $18.75 million that came due on Tuesday, according to Thursday's statement. The company's struggles with late payments were short-term, while the Egyptian government had made "significant efforts" to remedy a payment backlog, it said.
Dana Gas shares last traded flat at AED0.41 on Thursday. It has lost 13% in value over the past three days.
Deutsche Bank and Blackstone are serving as financial advisors to Dana Gas in the talks with sukuk-holders, which include asset management giant Blackrock and the London-based Ashmore Investment Management. Law firm Latham & Watkins is Dana 's legal advisor.
In a separate statement, Dana Gas said third quarter net profit fell 27% as revenues decreased due to a decline in production in Egypt and lower hydrocarbon prices.
Write to Asa Fitch at email@example.com
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