x Abu Dhabi, UAEMonday 24 July 2017

Dana Gas wins confidence of major shareholder in sukuk talks

Dana Gas, the Sharjah producer, is making progress on renegotiating a US$920 million sukuk due next month and could soon begin receiving payments from regional concessions, said a top shareholder.

Dana Gas, the Sharjah producer, is making progress on renegotiating a US$920 million (Dh3.37bn) sukuk due next month and could soon begin receiving payments from regional concessions, said a top shareholder.

Fears of a default on the convertible Islamic bond maturing October 31 have pushed yields to 321.25 per cent.

"I have a lot of faith and I'm very optimistic about the professionalism and the savvy of management and the board to reach a comfortable resolution with bondholders and investors alike," said Badr Jafar, the president of Crescent Petroleum.

Crescent owns a fifth of Dana, and together they operate core concessions in Egypt and Iraqi Kurdistan.

But government payments for oil and gas production have slowed with political upheaval in Egypt and a disagreement between Kurdistan and the Iraqi federal government.

The sukuk is secured against the company's Egyptian assets and a scheme to transport Iranian gas to the UAE.

A deal struck last week that would have Baghdad paying Kurdistan producers for past oil production will help Dana's prospects, said Mr Jafar.

"Definitely we expect to receive a share of those payments" through Crescent, he said.

Meanwhile talks are progressing with officials in Egypt, where the company is owed $198.5m, according to its last report, he said.

Payments have been piecemeal since the revolution that ousted Hosni Mubarak last year.

"There are discussions ongoing with the ministry for scheduled payments to recover all the receivables," said Mr Jafar.

Yesterday, shares of Dana remained unchanged at 41 fils in Abu Dhabi.

They have fallen to less than a 10th of highs reached when the company launched its initial public offering in 2005.

Investor appetite - so great in 2005 that Abu Dhabi hotels were fully booked the week of the IPO - dropped sharply after the deal for the National Iranian Oil Company to supply gas to the UAE failed to bear fruit.

Earlier this year Dana hired Deustche Bank, the Blackstone Group and Latham & Watkins to help it restructure its debt.

ayee@thenational.ae

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