Dana Gas pursues restructuring of $1 billion 7.5% convertible sukuk

By Angela McDaniels

Tacoma, Wash., Feb. 19 - Dana Gas PJSC will ask its shareholders to approve the restructuring of its $1 billion of 7.5% convertible sukuk due Oct. 31, 2012 at a meeting on March 14, according to a company announcement.

In December, the company announced a lock-up and standstill agreement with an ad hoc committee of sukukholders. The committee represents the majority of the outstanding principal amount of sukuk.

According to a Dec. 10 company news release, under the refinancing:

• The company planned to pay down $70 million of the sukuk and cancel another $80 million of the sukuk already owned by the company;

• The remaining $850 million would be split into $425 million of ordinary sukuk with a 9% fixed profit rate and $425 million of convertible sukuk with a 7% fixed profit rate. Each would mature Oct. 31, 2017;

• The convertible sukuk would become convertible on Oct. 31, 2013;

• The conversion price of the convertible sukuk would been set at a 50% premium to the 75 calendar day volume-weighted average price measured over a period beginning on Dec. 1, subject to a floor of AED 0.75 and cap of AED 1.00;

• The ordinary sukuk could be redeemed in each of the five years of its term at a premium to par that ranges from zero to 9%. The call option for the convertible sukuk would be substantially similar to that of the existing sukuk;

• The security package available to holders of the new sukuks would be enhanced by $300 million (inclusive of security over receivables of the company's Egyptian assets), but it is restricted to the company's Egyptian assets and certain United Arab Emirates assets; and

• The covenant package for the new sukuks would be substantially similar to that of the existing sukuk.

For the period from Oct. 31, 2012 to closing, the holders of the existing sukuk will receive a profit payment of 8%, payable at closing.

In addition to shareholder and sukukholder approval, the company needs regulatory approval. It expects to complete the transaction in the second quarter.

Dana Gas is a natural gas company based in the United Arab Emirates.

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