Dana Gas moves to lift injunction in sukuk case
Sharjah company had moved to restrain bondholders from taking legal action over $700m Islamic bonds
Dana Gas, the Sharjah-based oil and gas company, has filed an application with the emirate’s Federal First Instance Court to lift an injunction, protecting it against claims related to its US$700 million Islamic bonds.
Dana, which is embroiled in a row with its bondholders on restructuring of the outstanding sukuk, had received the Sharjah court injunction on June 13, but moved to discharge it in compliance with a London court order, the firm said yesterday in a statement to Abu Dhabi Securities Exchange (ADX), where its shares are traded.
The injunction by the Sharia court in Sharjah restrained the trustee, the delegate, the principal security agent and others from taking any legal action against the company until pronouncement of final judgment by the court in relation to the sukuk.
None of the respondents appeared to contest the injunction granted by the court, according to the Dana statement.
A judge at London’s high court, who upheld the interim injunction blocking bondholders from enforcing claims on the company, ordered Dana to cancel the Sharjah injunction and seek a stay of proceedings there. The full hearing on the case will begin in London in September.
Dana wants to restructure the sukuk, saying the paper in its current form was unlawful because of the changes in Islamic finance since the bonds were issued four years ago. Dana has proposed to cut profit on the replacement security by more than 50 per cent. It has been trying to engage with the bondholders to find an amicable solution.
The case is being watched closely by Islamic finance professionals and fixed-income investors as the decision could influence how the Islamic paper will be structured and priced in the future.
Dana, which has assets in the UAE, Egypt and the Kurdish region of Iraq, last week reported a 71 per cent jump in its second-quarter net income on the back of falling operational expenses.
The company’s net profit climbed to US$12 million in the three months to June 30. However, the numbers are expected to remain flat for the rest of the year, the company’s chief executive, Patrick Allman-Ward, said at the time. Gross revenue rose by 8.3 per cent to $104m for the quarter from $96m, according to its bourse filing.