Dana Gas shareholder backs restructuring

Reuters/DubaiCrescent Petroleum, the biggest shareholder in Dana Gas, said the terms of Dana’s planned $920mn debt restructuring deal are fair and protect shareholders. Crescent chief executive Majid Jafar, who is also a board member of Dana, described the deal as “an optimum balance to serve interests of all stakeholders”. Abu Dhabi-listed Dana, hit by delays on payments for its supplies of natural gas to Egypt and Iraq’s Kurdistan region, reached an agreement with creditors in December to amend terms of a $920mn Islamic bond, which it had failed to pay at maturity in October. Dana offered bondholders $70mn in cash and agreed to refinance the remaining $850mn of debt through two new five-year Islamic bond issues - one an ordinary sukuk and the other convertible into equity - paying an average return of 8%. The company has not yet obtained official shareholder approval of the deal. Its shareholders are expected to meet to discuss the matter in the first quarter of 2013. “Having it all equity-linked would have resulted in too much of a potential dilution for the existing shareholders, and that’s the reason it was split to minimise the dilution of shareholders,” Jafar said in an interview yesterday. Crescent, based in the UAE, owns 22% of Dana. Dana’s outstanding sukuk is held by large global firms such as Ashmore Group and BlackRock, trader say. It is trading at about 86 cents on the dollar, up from 82 in early December before the restructuring was announced, according to investment bank Exotix. In a report last month, Exotix said the restructuring deal would dilute shareholdings only to a minor degree. “Under a maximum dilution scenario where the conversion price is set and exercised at 0.75 dirhams per share, we calculate that our stock fair value will only fall by 3% to 0.87 dirhams per share,” Exotix said. The stock currently trades at 0.49 dirhams. Dana said in December that it expected the debt restructuring to be completed by the second quarter of 2013. Jafar said Dana would hope to pay down some of its restructured debt before maturity. The restructuring deal “is a five-year recommitment to the company from the sukuk holders and gives us the flexibility to pay it down earlier”, he said.