Dana Gas to restructure debt bond due in October
• Energy company asks creditors to discuss $700 million of debt.
• Dana Gas cites difficulty collecting payments in Egypt, Iraq.
Dana Gas PJSC will ask bondholders to accept changed terms on $700 million of debt coming due in October as the energy producer based in the United Arab Emirates seeks to restructure debt for the second time in five years.
Holders of the Islamic bonds, or sukuk, should form a committee to represent them in the planned discussions, Sharjah, U.A.E.-based Dana Gas said Wednesday in a statement to the Abu Dhabi stock exchange. The company, which pumps natural gas at fields in Egypt and Iraq, needs to “focus on short to medium term cash preservation.”
Oil and gas producers are cutting costs and facing pressure on profits after crude fell from an average of almost $100 a barrel in 2014 amid a global supply glut. With oil averaging about $50 a barrel over the past two years, national budgets of producing countries are also getting squeezed.
“The company needs time to realize its full value for the benefit of all of its stakeholders,” Dana Gas said in the statement. It’s owed about $1 billion from Egypt and the self-governed Kurdish region in northern Iraq. It’s also seeking cash from Iran’s National Iranian Oil Co. through an arbitration case about gas supplies as well as in a separate case against the Kurdish region.
Dana Gas previously restructured a $1 billion sukuk that was due at the end of October 2012. Bondholders agreed at the time to extend the maturity on the debt, and Dana Gas replaced it with an ordinary and a convertible sukuk.
Since then, the company has bought back some of the debt and converted part of the rest into shares, cutting the amount outstanding to $700 million, according to company data. Dana Gas had $322 million in cash at the end of last year, according to its website.
“Dana Gas is confident that it will achieve significant cash contributions resulting from these awards over a two- to three-year time frame and beyond,” according to the company statement, referring to recent arbitration awards.