‘DANA GAS WILL FAIL IN BID’
CIMB Islamic CEO says UK court likely to dismiss case
THE head of the sukuk industry’s biggest underwriter says a bid by a Middle Eastern energy company to nullify US$700 million (RM3 billion) of its own bonds is bound for failure.
What’s more, Dana Gas PJSC’s case will leave the US$2 trillion global Islamic finance industry relatively unscathed.
That is the view of Mohamed Rafe Mohamed Haneef, chief executive officer of CIMB Islamic Bank Bhd, which has underwritten more sukuk deals this year than any other company worldwide, according to data compiled by Bloomberg.
Dana Gas said last month it no longer considered its two securities due in October as compliant with Islamic principles under United Arab Emirates (UAE) law.
The claim exploits one of the weaknesses of the syariah financing industry in the Arab world, where unlike Malaysia, most countries have no centralised syariah boards to approve deal structures.
The company has proposed restructuring the notes due in October on terms that are less advantageous to investors and plans to explain the legal action on a conference call with investors on July 6.
Given that the sukuk agreement is subject to laws in both the UAE and the United Kingdom, and judging by the fate of similar claims made by other companies, Dana Gas’s case would probably be dismissed, he said.
“What the issuer failed to realise is that under English law, the UK court has consistently stated they would only look into the intention of the parties as set out in the legal documents,” said Rafe. Bloomberg