Dana Gas creditors reject $700 mln sukuk restructuring plan

Creditors of UAE-based energy producer Dana Gas have rejected the company’s new proposal to restructure its $700 million sukuk, seeking improved terms, Reuters reported on Tuesday, citing sources familiar with the matter.

Dana Gas refused to redeem the Islamic bonds when they matured last year, saying that the “instruments were no longer sharia-compliant”.

The new restructuring proposal was submitted by the company to sukuk holders about two weeks ago, said a source.

It offered to redeem 10 percent of the sukuk in cash and to roll over the remaining 90 percent over four years at an annual profit rate of 4 percent. It also offered to buy back up to half of the bonds at a 15 percent discount.

However, the creditors' committee, advised by investment bank Moelis, rejected Dana's proposal.

Creditors would be ready to accept an offer to exchange the sukuk for new instruments but on more favourable terms, the sources told Reuters, adding that they would want the Sharjah-based company to buy back the bonds at par.

Sukuk holders have asked Houlihan Lokey, a financial adviser to Dana, to come up with a new proposal, it was reported.