Dana Gas misses $920 million Islamic bond deadline
ABU DHABI -- Dana Gas, the Middle East’s first and largest regional private sector natural gas company, said it failed to pay back a $920 million Islamic bond ("sukuk"), that came due on Oct. 31.
The company said it is in ongoing discussions with holders of the debt to amend the terms of the Sukuk and extend its maturity, according to a statement posted on the Abu Dhabi bourse website. The sukuk has been a major source of concern for Dana as it grapples with a large backlog of late payments from governments in Egypt and Iraq's Kurdistan region. Until this date, the Company has consistently honoured its payment obligations.
The terms of the sukuk allow Dana a three-day payment grace period before it can officially be declared in default, according to a person familiar with the matter. The sukuk is secured against Dana LNG Ventures, Sajaa Gas and United Gas Transmissions, according to the company's third quarter financial statements. Dana LNG Ventures is the owner of the company's Egyptian operations. The book value of these assets is greater than the value of the sukuk, the statements said.
Dana hasn't paid back either the $920 million sukuk principal or a profit payment of $18.75 million that came due. Deutsche Bank and Blackstone are serving as financial advisors to Dana Gas in the talks with sukuk holders, which include asset management giant Blackrock and the Ashmore Investment Management.
In a separate statement, Dana Gas said third quarter net profit fell 27% as revenues decreased due to a decline in production in Egypt and lower hydrocarbon prices.
In the meantime, operations continue as normal and unabated. Most recently, the Company has announced a new gas discovery at West Sama-1 in the Nile Delta, and the commencement of production from its joint-venture with Egyptian Government-owned EGAS, to produce NGL at Ras Shukeir.
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