Wednesday, Oct 31, 2012

--Dana Gas shares tumble again as $920 million sukuk matures today

--Dana says it has been in discussion over sukuk restructuring

--Prominent Dana Gas sukuk holders include Blackrock and Ashmore

(Recasts lead. Adds details, background and analyst comment.)

By Tim Falconer and Asa Fitch

Of ZAWYA DOW JONES

DUBAI (Zawya Dow Jones)---Dana Gas (DANA.AD) shares tumbled again on Wednesday amid heightened uncertainty about the fate of the Sharjah-based firm's $920 million Islamic bond, or sukuk, that matures today.

In a brief statement published on the Abu Dhabi stock exchange website on Wednesday, Dana said it has been "engaged in discussions with the ad-hoc committee of Sukuk Certificate holders to reach a consensual solution to the restructuring of the Sukuk, which it believes to be in the best interests of all stakeholders". No further details were provided by Dana.

Dana Gas shares last traded down 8.9% at AED0.41, adding to the 4.3% slide chalked up on Tuesday.

There has been growing concerns about the bond repayment, with many observers saying Dana doesn't have sufficient cash or access to new credit to repay in full by today's deadline.

A member of the company's board of directors last week said Dana Gas was still in negotiations about repayment of the bond. Dana has been taking about an extension with its sukuk-holders, which include two large asset management firms, Blackrock Inc. (BLK) of the U.S. and the U.K.'s Ashmore Investment Management, part of Ashmore Group PLC (ASHM.LN).

Ahmad Alanani, the Dubai-based senior executive officer at Exotix, a boutique investment bank, said the fact Dana hasn't clinched an agreement by the maturity date "resets the negotiations and effectively takes it back to square one." He noted that there's a three-day grace period during which Dana can repay investors without going into default.

"If Dana wants to salvage its reputation they have to come with something more credible by the expiry of the grace period," said Mr. Alanani.

Since being founded in 2005, Dana has faced a major challenge with collecting money from its customers in Iraq and Egypt, two major centers of operations. The company had $561 million in receivables on its books at the end of the second quarter.

Dana has given few details on its debt negotiations in recent months. In one of its last public statements on the issue, the company said in May that it was "committed to finding a consensual solution" to address its financing issues.

Earlier this year, Dana said it hired Deutsche Bank, Blackstone and law firm Latham & Watkins to advise in its talks with investors in the bond.

Write to Tim Falconer at tim.falconer@dowjones.com

Copyright (c) 2012 Dow Jones & Co.

(END) Dow Jones Newswires

31-10-12 0853GMT