Dana Gas, sukukholders committee reach restructuring terms agreement

By Caroline Salls

Pittsburgh, May 14 – Dana Gas PJSC reached an agreement with a committee of sukukholders on the terms of an offer for the restructuring and refinancing of its $700 million of sukuk Al-Mudarabah, according to a news release.

As of Monday, the company said sukukholders representing in excess of 52% of the total amount of the existing exchangeable certificates and in excess of 30% of the existing ordinary certificates had entered into a binding lock-up and standstill agreement with Dana Gas in connection with the mutually agreed proposed restructuring.

Dana Gas and members of the committee currently involved in litigation also entered into a litigation dismissal agreement, the release said.

Restructuring terms

Under the proposed restructuring, for holders wishing to exit their principal, the company is offering an opportunity to tender their claims at $0.905 per $1 of the face value of their holdings, which includes an early participation fee of $0.025 if elections are received within seven days from the date of launch of the tender offer and consent solicitation.

For holders electing to receive a partial paydown and exchange into a new instrument, there is a path to full recovery that includes a significant repurchase obligation at par in connection with new certificates.

These holders will also receive arrears of profit distribution as per the existing certificates up to Oct. 31 and a 4% profit rate from Nov. 1 till closing of the transaction.

If elections are received within seven days from the date of launch of the tender offer and consent solicitation, holders will receive the early consent fee.

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% profit rate and three-year term.

The consensual agreement is contingent on payment of costs of specified parties and termination of all current litigation, which Dana Gas said has been value-eroding to all stakeholders, as well as a release of specified claims.

Improved position

Dana Gas said it believes that the offer reflects its 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.

“We are pleased to have amicably reached a consensual solution with the AHC, 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,” chief executive officer Patrick Allman-Ward said in the release.

“The proposed new sukuk instrument to be issued to sukukholders has been legally verified to be lawful without question.”

In order to successfully complete the transaction, the company said it will seek the consent of its shareholders and existing sukukholders. The transaction is currently expected to be completed by the first half of July.

Dana Gas said it intends to schedule a general assembly meeting in June to request shareholder approval of the terms of the transaction, and the company will seek consent from remaining sukukholders as part of the tender offer and consent solicitation, which is expected to be launched this month.

Dana Gas is a private sector natural gas company based in Sharjah, the United Arab Emirates.

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