Sharjah proceedings were set to determine the validity of Dana Gas's sukuk, which the firm declared illegal in June
Dana Gas' Sharjah Dec 25 court hearing adjourned, spokeswoman says
Dana Gas, the Sharjah-based energy company currently embroiled in court battles over the legality of its US$700 million sukuk issuance, has had its December 25 hearing at a Sharjah court adjourned, a spokeswoman said.
It is not known when the next hearing will take place.
The Sharjah proceedings are set to determine whether the structuring of the sukuk, which was based on Mudarabah contracts, was valid.
The Abu Dhabi-listed company declared its own sukuk non-Shariah compliant in June, citing recent developments in Islamic finance prior to its maturing in October.
The company said it was not obliged to repay its debt to creditors, who include New York-based BlackRock, the world's biggest asset manager.
Bloomberg reported on Wednesday that Dana Gas and its bondholders could be seeking an out-of-court settlement.
The spokeswoman for Dana Gas declined to comment to The National, saying the company did not respond to market rumours.
The energy firm is being advised by California-headquartered Houlihan Lokey, while New York-based Moelis & Company is the consultant to the creditors.
Last month, an English court of appeal rejected the firm's application to appeal an order that allowed Blackrock to join the proceedings.
London’s high court on November 17 ruled in favour of creditors, further complicating the legal case. Judge George Leggatt found that Dana Gas’s interpretation of legal documents was “untenable and flatly inconsistent.”
This is the second time that Dana Gas has sought to restructure Islamic bonds, following a deal with creditors in 2013 over a $1 billion sukuk that matured in October 2012. The company had faced cash flow issues due to outstanding payments from Egypt and the semi-autonomous Kurdish region of Iraq, where a large portion of its assets and production facilities are located.
In November, Dana Gas posted a 700 per cent increase in its third quarter net profit due to the favourable outcome of its arbitration dispute with the Kurdistan Regional Government (KRG) in August.
The increase in profitability came as the company reversed its provision for payments to the KRG.
Under the terms of the settlement, the KRG agreed to pay the Pearl Consortium — consisting of Dana Gas, its parent Crescent Petroleum, OMV of Austria, Germany’s RWE and Hungary’s MOL — a sum of $600m, together with a $400m payment to be allocated towards the consortium’s further investment in the region’s gas fields.