Dana Gas has announced the detailed terms, conditions and implementation information for the refinancing transaction in relation to its USD 1 billion 7.5% Sukuk al Mudarabah due on October 31.
The lock up and standstill agreement has been signed by the ad hoc committee of sukuk holders which represents the majority of the outstanding principal amount of the existing sukuk. Subject to the terms of the agreement, the members of the ad hoc committee have undertaken to vote in favor of the transaction
There has been reduction in the company's outstanding debt from USD 1 billion to USD 850 million via USD 70 million cash pay down and cancellation of another USD 80 million of the existing sukuk already owned by the company. The remaining USD 850 million has been split into two tranches to ensure potential dilution for shareholders remains substantially similar to current levels USD 425 million ordinary sukuk and USD 425 million convertible sukuk each with 5 year maturity to ensure long term financing.
Combined profit rate - The average combined profit rate on the two new sukuks is 8% representing a slight increase over the existing sukuk profit rate of 7.5%. This average profit rate of 8% together with the lower debt amount of USD 850 million constitutes a lower debt servicing obligation on the company as compared to the debt servicing obligations under the existing sukuk.
Dana Gas statement said that the security package available to holders of the new sukuks will be enhanced by USD 300 million of value but is restricted to the company's Egyptian assets and certain UAE assets. The conversion price of the convertible sukuk has been set at 50% premium to the 75 calendar day volume weighted average price measured over a period commencing on December 1st 2012.
Outstanding principal - Dana Gas has the option to pay down the outstanding principal amount of the new sukuks prior to the new maturity date of October 31st 2017 subject to the applicable call premia on the ordinary sukuk and the soft call provisions on the convertible sukuk.
Dr Adel Khalid Al Sabeeh chairman of the board of Dana Gas said that "We believe that the terms being announced represent a comprehensive, long term solution which balances the interests of all stakeholders. The board plans to secure necessary stakeholder consents for implementation of the Transaction, while the Company continues to focus on achieving its growth potential over the coming years and continue to realize value."
Robust asset base - Mr Rashid Al Jarwan executive director and acting CEO of Dana Gas said that "Dana Gas has a robust asset base and has successfully grown revenues, production reserves and asset values consistently over the last five years in line with our strategy. The company's liquidity constraints were caused by well known external factors and we believe that these revised terms of the new sukuks place Dana Gas on a firm foundation for further growth and progress."