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UAE's Dana Gas asks sukuk investors to disclose holdings: sources

2020-07-07

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SULAIMANI — United Arab Emirates’ Dana Gas has asked owners of its bonds to provide information on their holdings, three sources said and a document reviewed by Reuters showed, a move that some investors fear may be a step towards another debt restructuring.

Dana Gas shook the global Islamic finance industry in 2017, when it said it would not redeem its $700 million sukuk, or Islamic bonds, arguing they were no longer valid under UAE law because of changes in Islamic financial practice.

After a protracted legal battle, it reached an agreement with creditors in 2018. That restructuring followed an earlier one in 2012.

Dana, which now has nearly $380 million in outstanding sukuk due on Oct. 31, this week has asked investors to disclose their holdings, according to an information request seen by Reuters.

“This information is vital for our corporate communications with our bondholders,” the company said in the document.

Some investors, who asked not to be named, said the request was possibly a prelude to another amendment of the firm’s debt.

“Normally you try to see if the bondholder group is concentrated, you identify the big holders, find out who they are ... then you formulate your restructuring strategy,” one of them said.

Dana Gas did not respond to a Reuters query on the information request and its purpose.

Dana Gas had $425 million in cash and cash equivalents at the end of 2019. In April, it approved around $95 million in dividends.

“You don’t blow $100 million in cash on a dividend when you think in a few months you’re going to come to sukuk holders and tell them, ‘we can’t pay you par’,” a second investor said.

Dana has said it would use the proceeds from its Egyptian assets, which it has been trying to sell, to pay down the sukuk.

Sources told Reuters in April that the company had delayed a decision on the sale because of the coronavirus crisis.

(NRT Digital Media/Reuters)