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THREE-YEAR SECURITY AGREEMENT

Dana Gas reaches deal on $700m sukuk restructuring

SHARJAH, May 12, 2018

 Dana Gas, the Middle East's largest regional natural gas company, said it has reached an agreement with key holders of $700 million of its Islamic bonds to restructure the securities, in what is possibly seen as an end to a legal battle that has unnerved the Islamic finance industry.

A committee representing sukukholders has agreed to accept an immediate cash payout of 20 cents to the dollar and to roll the rest into a three-year security.

As of today, sukukholders representing in excess of 52 per cent of the aggregate amount of the existing exchangeable certificates and in excess of 30 per cent of the existing ordinary certificates have entered into a binding lock-up and standstill agreement with the company in connection with the mutually agreed proposed restructuring, said a statement from Dana Gas.

The company and members of the committee, currently involved in litigation, have also entered into a litigation dismissal agreement that provides a mechanism for the dismissal of all pending litigation and a release of certain claims, it stated.

The consensual transaction represents a means to resolve amicably all current issues and disputes facing the parties, it added.

Key transaction highlights are
•For holders wishing to exit their principal, Dana Gas is offering an opportunity to tender their claims at 90.5 cents per $1 of the face value of their holdings, which includes an early participation fee of 2.5 cents (if elections are received within 7 days from the date of launch of the Tender Offer and Consent Solicitation process).
•For holders electing to receive a partial pay down and exchange into a new instrument, there is a path to full recovery including a significant repurchase obligation at par with respect to the new certificates. Such holders will also receive arrears of profit distribution as per the Existing Certificates up till October 31, 2017, and a 4 per cent profit rate from November 1, 2017 till closing of the transaction. If elections are received within 7 days from the date of launch of the Tender Offer and Consent Solicitation process, holders will receive an early participation fee of 2.5 cents.  

•The new certificates will be constituted of a Wakala Sukuk instrument (based on an underlying Ijara and deferred payment obligation structure) which has a 4 per cent profit rate and three-year tenor.

•The consensual agreement is contingent on various conditions being satisfied, including payment of costs of certain parties and termination of all current litigation, which has been value-eroding to all stakeholders, as well as a release of certain claims.

Dana Gas believes that the offer reflects the company’s significantly improved financial position at about 0.3 times net leverage, and removes the risk to all parties of continuing lengthy legal disputes in multiple jurisdictions.

The board plans to secure the necessary stakeholder consents for the implementation of the transaction, while the company continues to focus on achieving its growth potential over the coming years and continue to realise increasing value of its assets.

Dana Gas is inviting shareholders and all the remaining sukukholders to communicate their support of the transaction as will be detailed in the tender offer and consent solicitation memorandum and shareholder notices that will be issued by the company.

CEO Patrick Allman-Ward said: "We are pleased to have amicably reached a consensual solution with the committee, as indeed was always the company’s publicly-declared intention from the outset, which offers sukukholders the opportunity to cash out at a premium to current market prices or – individually solely at their election – to achieve a path to full repayment of the face value of their existing holdings."

"The proposed new sukuk instrument to be issued to sukukholders has been legally verified to be lawful without question," he noted.

In order to successfully complete the transaction, Dana Gas will seek the consent of its shareholders and existing sukukholders. The transaction is likely to be completed in July, he added.-TradeArabia News Service




Tags: Dana Gas | sukuk | Islamic bond | restructuring |

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