$1bn Sukuk refinancing approved by Dana Gas stakeholders

$1bn Sukuk refinancing approved by Dana Gas stakeholders
Rahid Al Jarwan, executive director and acting chief executive of Dana Gas
Published: 23 April 2013 - 11:43 p.m.
By: Arabian Oil & Gas Staff

Dana Gas has announced that Sukuk-holders have approved the refinancing of the US$ 1 billion Trust Certificates (Sukuk-al-Mudarabah) issued by Dana Gas Sukuk Limited.

Sukukholders with an aggregate holding of $692.77 million voted, representing a quorum of 75.3% (minimum required to constitute the quorum was 51%). Sukukholders representing $692.39 million voted in favour of the transaction,comprising 99.95% of the holdings of those present and voting (a minimum of 75% was required to approve the refinancing transactions). Shareholders present at the AGM also voted unanimously in favour of the Sukuk refinancing.

The successful approval of the Sukuk refinancing puts the Company in a strong financial position from which to pursue our growth strategy,” said HE Dr. Adel Al-Sabeeh, chairman of the board of Dana Gas. “The agreement creates a more flexible and sustainable financial structure and balances the interests of all stakeholders. This is an excellent outcome for the Company and its shareholders and is a sign of the confidence from the international investor community in the future of Dana Gas.”

The transaction is expected to close on or about 8 May 2013.

The terms of the transaction will lead to a reduction in the Company’s outstanding debt from $1 billion to $850 million as a result of a $70 million cash pay-down and the cancellation of $ 80 million of the existing Sukuk already owned by the company.

The remaining $850 million will be split into two tranches: a $425 million Ordinary Sukuk and $425 million Convertible Sukuk, each with 5-year maturity to ensure long-term financing. The average combined profit rate of 8%, together with the lower debt amount of US$ 850 million, constitutes a lower debt-servicing obligation on the Company as compared to the debt servicing obligations under the existing Sukuk.

Dana Gas saw net profit growth increase by 20% to approximately $177 million in 2012. “The Company’s strategy enabled it to capture increased value from existing assets and with improved cost management, further strengthening the foundations for sustainable growth in the years ahead,” said a statement released by the Dana Gas.

Cash flow from operations increased by $78 million in 2012, primarily as a result of the higher level of collections in Egypt and Kurdistan when compared to 2011. The Company collected over $300 million from its share of receivables of which $162 million was collected in Egypt and around $143 million in Kurdistan, Iraq. Recently, Dana Gas announced further significant progress in receivables collections in the first quarter 2013, amounting to $74 million following positive discussions with relevant authorities in both countries.

Rahid Al Jarwan, executive director and acting chief executive said: “2013 has started with increasing production and growth in demand for gas in our core markets, including Kurdistan Region of Iraq. Strong market fundamentals and an improved balance sheet and cash position would allow us to pursue new opportunities in Egypt and Lebanon. We are also looking to further enhance our performance by focusing on our value-enhancing core assets, while pursuing growth opportunities.”

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