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Abu Dhabi, UAESaturday 15 December 2018

Dana Gas to appeal London ruling in $700 million sukuk case

Sharjah-based energy company says the court decision is flawed

Dana Gas said the London court ruling was flawed. AP
Dana Gas said the London court ruling was flawed. AP

Dana Gas, a Sharjah-based energy firm, said it will challenge a ruling by a London court, enforcing the legality of the company’s US$700 million sukuk as the judgement issued on Friday was "flawed".

Dana is arguing that its Islamic bond has ceased to be shariah-compliant, following developments in the Islamic finance and therefore it is not obliged to repay the debt to creditors including the New York-based BlackRock, the world's biggest asset manager.

"Dana Gas reaffirms its belief that the UK trial and decision is flawed as the court refused to adjourn handing down its judgment until the company's application to allow it to appear in the English Court to state its case fully and properly has been decided by the Sharjah Court on November 29 (within sixteen days)," Dana Gas said in a statement to the Abu Dhabi stock exchange, where its shares are traded.

"The company has already appealed to the English Court of Appeal the decision of the English High Court to join BlackRock and to proceed with the case in Dana Gas' absence. The company will also appeal against [Mr Justice] Leggett's Friday judgment made in its absence."

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Dana Gas said there remained critical legal issues under the UAE law, which pertains to the legality and validity of the Mudarabah agreement, a form of Islamic financing.

The saga began after Dana Gas secured $850m from international investors in May 2013. It followed the restructuring of an earlier $1 billion deal that had been due to mature in 2012 because of payment delays from operations in Egypt and the Kurdish region of Iraq.

Mr Justice Leggatt ruled against the company on all counts on the legality of the sukuk, nearly three weeks after bond-holders were due to get their money back or secure stock of a subsidiary that runs its operations in Egypt.

The verdict in favour of the bondholder group does not mean immediate payment. The company has previously warned that litigation could last for a decade whatever the outcome of the London hearing and said that it would appeal Friday’s judgement.

The bondholder group, led by Blackrock called on the company to strike a deal.

“This outcome vindicates the position we have taken from the start,” said Andrew Wilkinson on behalf of the group. “We hope Dana will now come to the table to discuss possible consensual solutions,” said in London.