UAE-based Dana Gas is struggling to cope with the payment delays owed from Egypt and Kurdistan. The company’s outstanding debt of $1billion Sukuk (Islamic bonds) has significantly strained the company’s ability to progress its expansion plans in Egypt.
Moreover, investors are growing anxious as to the company’s liquidity problems and the risk of defaulting on the outstanding debt once the bond reaches maturity next October.
A company’s spokesman stated, “With reference to its Convertible Sukuk which are not due until 31 October 2012, the Company has been proactive in taking the initiative to mandate advisors including an international financial advisor and will update the market with its plans in good time and due course.”
“Dana Gas maintains strong positive relationships with its host Governments, and is progressing constructive discussions with the Egyptian Government covering the delayed payments due from government owned entities owing to the unrest in that country over the past year. In 2011, a total of US$177 million in cash attributable to its share of receivables was collected from Egypt and Kurdistan,” the statement added.
On January 8th, Investment Bank Exotix stated, “We have little confidence in Dana’s ability to repay the US$920 million sukuk.” Therefore, Dana Gas may have to resort to restructuring its bonds if this fiscal quandary is not resolved before the end of next October.