Dana Gas issues new sukuk, drawing earlier dispute to a close

The bond instrument has been reduced in size to a $530 million from a $700m issuance

A Dana Gas gas facility in Egypt. The gas company has received an additional $44.3m payment from Egypt. Wam

Dana Gas, the Sharjah energy company previously embroiled in a $700 million (Dh2.57 billion) sukuk dispute, has completed refinancing the Islamic bond instrument, which has been sized down to $530m.

The issuance of the debt instrument had been completed and listed on the Euronext Dublin, previously known as the Irish Stock Exchange, Dana Gas said in a statement on Tuesday.

The Abu Dhabi-listed company, which reached an agreement in May with its debt holders, including Blackrock, the world's largest asset manager, said it had paid $235m in redemptions, profit payments and early participation fees bringing an end to its legal  battle.

The new sukuk represented a "a fair consensual deal" for all sukuk holders, Dana Gas chief executive Patrick Allman-Ward said.

"The company can now move forward with its exploration and development plans to evaluate and develop its world-class portfolio of assets, both in the Kurdistan Region of Iraq and Egypt," he said.

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The new sukuk will have a three-year life, maturing in October 2020, with a new profit rate of 4 per cent per annum, Dana Gas said in its statement.

The pared-down instrument, relaxed dividend covenants as well as lower profit rate are expected to reduce the company’s annual finance cost by $35m annually, translating into 63 per cent reduction in annual finance cost.

The reduction would provide a “strong improvement” to the firm’s financial position and planned dividend policy.

Legal proceedings in courts in the UK and UAE have been brought to an end by all parties, said Dana Gas.

In June, the company secured the approval of the majority of its shareholders to move ahead with its sukuk restructure programme.

Last month, Dana Gas received about $44m in dividends from Kurdistan Region of Iraq for the first half of the year and expected its output from operations there to rise by 25 per cent in the third quarter.