UAE’s Dana Gas appoints advisers for $700m sukuk restructuring

UAE energy firm Dana Gas appointed Houlihan Lokey as financial adviser and Squire Patton Boggs as legal adviser for the restructuring of its $700m sukuk maturing in October, sources said on Sunday.

The company, which has been facing a cash shortage because of missed payments from its assets in Egypt and Iraq’s Kurdistan, announced in early May its intention to hold discussions with the sukuk holders.

Dana and New York-listed Houlihan Lokey did not immediately respond to requests for comment.

Abu Dhabi-listed Dana’s creditors have appointed New York-based bank Moelis and U.S. legal firm Weil, Gotshal & Mangers as financial and legal advisers to negotiate the restructuring of the Islamic bonds.

Dana said at the beginning of May that it needed to focus on “medium-term cash preservation” because of the challenges it faced over cash collections. As of the end of March, the company’s cash balance was $298m.

The company announced on May 18 that it had received a $50m payment from the Egyptian government, representing 18 per cent of the company’s total overdue receivables from Egypt as of the end of the first quarter of this year.

A few days later it received an additional partial repayment of $20m from Egypt.

The cash price of the company’s sukuk with a 9 per cent profit rate jumped by over 3 points on the news of the Egyptian payments, from 84.9 cents to 88 cents.

Dana says it is also owed $714m from the Kurdistan Regional government.

This would be the second time Dana has had to engage its creditors to amend the terms of its outstanding debt. In 2012, the firm was the first UAE entity to fail to repay a bond on time. That technical default led to a consensual restructuring.