Dana Gas

English court rules in favour of Dana Gas bondholders in key Islamic bond case

An English High Court judge has ruled in favour of Dana Gas’s bondholders, reported the Financial Times.

More details at the source.

Dana Gas profit boosted by financial settlement with Kurdistan Regional Government

Dana Gas reported a steep rise in third-quarter profit, benefiting from a $1 billion payment as part of a settlement agreement with the Kurdistan Regional Government (KRG). The agreement boosted Dana’s third-quarter earnings and net profit for the nine-month period ending on September 30, which amounted to $125 million against $26 million during the same period one year earlier. The settlement led to a reversal of the provision for payments to the KRG, with the balance of unpaid receivables booked to new petroleum costs. The company is at the centre of a legal dispute after having refused to redeem $700 million in outstanding Islamic bonds claiming they are no longer sharia compliant. It has started legal actions in UK and UAE courts to avoid redeeming the sukuk. Dana claimed being confident pursuant to independent legal advice of prevailing in its interpretation of the outcome.

British judge to issue ruling on $700 million Dana Gas #sukuk case soon

British High Court judge George Leggatt said that he would not further adjourn a trial in the Dana Gas case and would issue a judgement soon. Dana is claiming it does not need to redeem its $700 million sukuk, which matured at the end of last month, because the instruments became invalid under UAE law. Dana had asked for further postponement of the trial pending developments in a UAE court, where motions in the case have also been filed.

#UAE's Dana Gas profit boosted by financial settlement with KRG

Dana Gas reported a steep rise in third-quarter profit, benefiting from a $1 billion payment as part of a settlement agreement with the Kurdistan Regional Government (KRG). The agreement boosted Dana’s third-quarter earnings and net profit for the nine-month period ending on September 30, which amounted to $125 million against $26 million during the same period one year earlier. The settlement led to a reversal of the provision for payments to the KRG, with the balance of unpaid receivables booked to new petroleum costs. The company is at the centre of a legal dispute after having refused to redeem $700 million in outstanding Islamic bonds claiming they are no longer sharia compliant. It has started legal actions in UK and UAE courts to avoid redeeming the sukuk. Dana claimed being confident pursuant to independent legal advice of prevailing in its interpretation of the outcome.

Dana Gas Is Said to Miss Payment on $700 Million #Sukuk Today

Dana Gas has no plans to repay the two mudaraba sukuk of $350 million in size each due Oct. 31. The company shocked the Islamic finance industry when it said it no longer considered its sukuk Shariah-compliant. The missed payment will be the second time in five years the company fails to settle bonds at maturity. In June Dana Gas offered to replace the existing sukuk with four-year bonds that pay less than half the current rate. It retracted that offer in July, adding that it will seek a court-driven solution. A UAE injunction has barred Dana Gas from taking part in the trial in London, but British judge George Leggatt will hand down a ruling on the 13th of November.

#UAE’s Dana Gas leaves maturing #sukuk unpaid but no default declared

Dana Gas will not redeem $700 million (Dh2.57 billion) of its sukuk, as the dispute on the validity of the sukuk drags on in British and UAE courts. Dana claims changes in the interpretation of Islamic finance over recent years means the securities are no longer Sharia-compliant and have become unlawful in the UAE. The case is closely watched by the global Islamic finance industry because some investors think it could set a precedent for other sukuk issuers. Dana asked the Sharjah court for an early hearing date for an appeal which would allow it to participate in the London court case. Proceedings in London are expected to resume by Nov. 13, a ruling on the case could be issued on that date or shortly afterwards.

#UAE court postpones judgment at Dana Gas #sukuk hearing - source

A judge at a United Arab Emirates court has postponed the ruling in the Dana Gas sukuk case. Dana is refusing to make payments on the sukuk, which will mature this month. It argues that changes in Islamic finance over recent years have made the bonds unlawful in the UAE. The postponement means the next major development in the dispute may occur in a London High Court, where fund manager BlackRock and Deutsche Bank are representing the sukuk holders. In late September, High Court judge George Leggatt said he would adjourn the London trial until October 12.

#Sukuk market great hope may never recover from Dana

Dana Gas is an independent natural gas supplier based in Sharjah. Its dispute with investors is now making its way not only through UAE courts, but through English courts as well. Dana’s gone so far down the road to avoid its debt repayments that the affair could easily scare international investors away from the sector. The fallout can be seen in the new issue market. While sovereign sales are carrying on, the broader corporate and financials market in the Middle East has been awaiting resolution of this dispute. In June Dana claimed that its $700mn outstanding sukuk were non-compliant with Shariah law and the money it paid out to holders of the bonds should be returned. Bondholders objected and suggested an immediate payment of half of the $700mn face amount outstanding and the due date for the balance extended for three years. The case is now disputed in Sharjah and London, where it stays until October 12, to allow court proceedings in Sharjah to conclude.

Bondholders push back on Dana Gas #sukuk invalidation claims in London court

Dana Gas sought to have US$700 million worth of Islamic bonds declared unlawful so it could avoid repaying its investors. The bondholder group, led by Blackrock, demanded in court that Dana Gas repays millions of pounds, or hand over stock in a subsidiary that runs its operations in Egypt. It also wanted the court to ban Dana Gas from issuing any new sukuk. The courtroom battle is notable for the absence of Dana Gas, which has been prevented from taking part because of an injunction in the UAE. Any prospect of an early conclusion has been disputed by Dana Gas, which has claimed that litigation could continue in the UAE and could last up to ten years. The trial in London, which is expected to last up to two weeks, is due to hear evidence from the former general counsel of Dana Gas.

Creditors tell High Court that Dana Gas #sukuk get-out is "absurd"

According to creditors, Dana's claim that it does not have to pay back its Islamic bonds because they are no longer sharia-compliant is "absurd" as repayment under such a scenario is covered in the original paperwork. United Arab Emirates energy producer Dana Gas said in June that its $700 million sukuk were unlawful and began proceedings to have this confirmed in British and UAE courts. The case could set a precedent for other sukuk issuers to refuse to redeem their debt obligations. Legal representatives for the creditors have asked the court to dismiss the Dana Gas claim and asked for permission to serve an exercise notice so they would be able to take action. Dana Gas and Deutsche Bank were not in court because of a last minute injunction obtained from a UAE court preventing them from taking part. Judge Leggatt said he would adjourn the trial until Oct. 12 to see if the Sharjah court in the UAE would lift the injunction preventing Dana Gas and Deutsche from participating in the UK proceedings.

London judge postpones decision on Dana Gas #sukuk hearing

A London High Court judge will decide on Friday whether to continue proceedings on the validity of $700 million sukuk issued by Dana Gas. United Arab Emirates producer Dana Gas started proceedings in June to have its sukuk declared invalid and unlawful because of changes in the interpretation of Islamic finance. A last-minute injunction obtained by some shareholders prevented Dana Gas from participating in the trial. High Court judge George Leggatt on Tuesday adjourned the trial and decided to reserve judgement until Friday. The outcome of the trial could have significant repercussions for sukuk issuers and investors worldwide, as it could set a precedent for other issuers. The case is being disputed in UK and UAE courts because while the purchase undertaking is regulated by English law, the mudarabah agreement underlying the sukuk structure is regulated by UAE law.

Dana Gas and partners start arbitration case against MOL over #Kurdistan settlement

Dana Gas and its partner Crescent Petroleum have begun arbitration proceedings against Hungary's MOL Group over Dana's settlement agreement with the Kurdistan Regional Government (KRG). The KRG agreed to pay $1 billion to the consortium and to reclassify some additional $1.24 billion from debt to outstanding costs. MOL is unsatisfied with the way Dana Gas, Crescent Petroleum and the Pearl consortium handled the settlement and would have pursued a final litigation and enforcement outcome against KRG instead. Dana and Crescent Petroleum own a combined 70% stake in the Pearl consortium, while Austria's OMV, Germany's RWE, and MOL each own 10%. The KRG settlement boosted Dana's cash balance and lifted the company's stock on the Abu Dhabi stock exchange by 14%. Last week Dana bondholders requested a $300 million cash paydown, but Dana refused the proposal and the case is now being disputed in a London High Court.

#UAE to reopen, #Kurdistan #deal to boost #Dana #Gas

The stock markets in the United Arab Emirates look likely to trade softly as they reopen on Monday after the Eid holidays, although Abu Dhabi's Dana Gas might just rise sharply after it reached an agreement on overdue payments from the government of Kurdistan.
The markets in the UAE are the only ones open in the Gulf. Others, like Egypt, will pick up trading later this week. There is no fresh, major corporate news in the UAE except Dana's settlement, which will see Kurdistan immediately pay Dana's consortium $1 billion, including $400 million that will be used for investment in the region. Dana will receive 35 percent of the money. In addition to Dana's share of the $600 million payment, "Future benefits to Dana Gas should be much larger, given the massive resource potential of the two fields, Khor Mor and Chemchemal. Dana Gas's share of 2P reserves in the two fields amounts to close to 1 billion barrels of oil equivalent, with huge upside", said Allen Sandeep, head of research at Cairo-based Naeem Brokerage. He continuid: "Overall, we view this as a major positive development for Dana Gas."

#Kurdistan pays $1 billion to Dana Gas, partners to settle London case

#Iraq’s Kurdistan region will immediately pay $1 billion to UAE-based Dana Gas and its partners to settle a long-running London court case. The full and final settlement of the $2.24 billion case is the latest effort by the semi-autonomous region to put its finances in order ahead of a referendum seeking independence from the government in Baghdad. Kurdistan has ramped up oil sales independent from Baghdad and is hoping to raise gas exports. The settlement is significant for both parties, with Kurdistan settling the dispute at a time it is working on reshaping public finances. For Dana, the Kurdish settlement will be eagerly watched by its bond holders which are disputing Dana's move to restructure its $700 million sukuk on the grounds it is no longer sharia-compliant.

Dana Gas bondholders could be liable for ‘unlawful’ #Sukuk

Holders of Dana Gas’s sukuk could be liable to repay the company excess on account profit payments. The company said it had sought legal advice on the matter. Advisers said that the terms of the Sukuk are not compliant with Shari’a principles and are unlawful under the laws of the United Arab Emirates (UAE). The company is now pursuing the litigation route to resolve the matter and is confident pursuant to independent legal advice of prevailing in its interpretation of the outcome.

Dana Gas #Sukuk: A red herring or cause for concern?

The recent move by Dana Gas to declare its approximately US$700 million of outstanding trust certificates unlawful has been a troubling development for the Islamic finance industry. Dana Gas has initiated proceedings in the UAE to declare the sukuk illegal and has secured a series of injunctions preventing enforcement by creditors, but the key question remains unanswered. That is whether non-compliance with Shari'a principles would have any bearing on the legal enforceability of these instruments. Any judgment in favour of Dana Gas could have wide ranging implications on the sukuk market. White & Case LLP argue that the concept of Shari'a-compliance should be treated as distinct from legal enforceability. Dar Al Sharia Legal & Financial Consultancy issued a pronouncement on the Shari'a-compliance of Dana Gas' sukuk at the time the sukuk were issued. Pronouncements of such nature are generally not open to retroactive invalidation as is being sought by Dana Gas.

#Dana #Gas takes offer to #creditors off the table in $700m #sukuk row

Dana Gas has withdrawn an offer to creditors to exchange its debt of $ 700 million Islamic bond for new notes. Thereby ending the chance of a consensual resolution to a case that could shape the future of the global Islamic finance industry. The gas company is refusing to repay holders of its Islamic bond which matures in October. It said last month it had received legal advice that the bond was no longer Sharia-compliant in the UAE because of changes in Islamic finance interpretations over the recent years, and was therefore not lawful. But creditors say Dana has to pay them back and argue if the sukuk was legal when the deal was struck, it holds, and if it was illegal then it would mean the company is in default.

Dana #sukuk: why the market is overreacting

The sukuk issued by Sharjah-based Dana Gas and recently denounced as non-shariah compliant will not damage confidence in the Islamic debt markets, as some have claimed. The gas provider's announcement in June that $700 million worth of its bonds are not compliant with shariah law in the United Arab Emirates (UAE) perplexed the market. The firm’s chief investment officer, Mohieddine Kronfol, said that the impact of this restructuring will be insignificant to the wider industry in the long-term. He added that Dana Gas is owed around $1 billion from Iraq and Egypt, Dana Gas is only one issuer in a global sukuk market with over 90 issuers. In his opinion, the media and public attention spent on Dana Gas is out of proportion with what has transpired so far.

Dana Gas describes UK court decisions on #sukuk as favourable

Dana Gas described decisions by the High Court of Justice in London as favourable, as the company seeks to restructure $700 million of outstanding sukuk. On July 5 the High Court upheld an injunction blocking holders of the bonds from enforcing claims related to the securities against Dana. The court ordered Dana to cancel an injunction in a court in Sharjah and to seek a stay of proceedings there. The company remains keen to engage with sukuk holders and reach an agreement on a consensual basis, which is not prevented by the injunctions in place.

Dana gas saga far from over

Last month, Dana Gas tried to impose on investors a restructuring of the payment of its two outstanding sukuk tranches totalling US$700 million. The company got an injunction in the High Court in London restraining sukuk holders from taking any hostile action against Dana. The overriding concern is that if the High Court in London rules against Dana Gas, the matter goes to trial and Dana Gas wins, it would set an appalling precedent that can undermine the integrity of sukuk as a fundraising instrument. Syariah advisories agree that the only solution would be the introduction of a world sukuk standard supported by local laws, an Apex Sukuk Standard, which would give legal and syariah certainty. Any dispute could either be subject to arbitration or recourse to law. Dana Gas re-scheduled yet another conference call with sukuk holders to discuss the matter. The High Court in London scheduled a hearing for September. This saga is far from over.

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