Dana Gas’s sukuk holders say firm’s offer “repudiation” of English law

An ad hoc committee representing holders of $700m of Sukuk issued by Abu Dhabi-listed Dana Gas said on Thursday the company’s decision to halt payments on the Islamic bonds appeared to be a “repudiation” of the English law governing the instruments.

In a brief statement seen by Reuters, the committee said it was analysing the impact of Dana’s decision and at present did not intend to exchange the Sukuk for new instruments on materially less favourable terms.

Dana said on Tuesday it had received legal advice that its Sukuk, which mature in October, were not compliant with the Islamic sharia code and had become “unlawful” in the United Arab Emirates.

Read: Abu Dhabi’s Dana Gas sees shares soar after announcing $700m Sukuk restructuring

The firm said it would therefore halt payments and proposed that creditors exchange the Sukuk for new Islamic instruments offering profit distributions which are less than half those promised by the existing Sukuk.

Dana’s Sukuk are governed by English law, while the gas production assets backing the Sukuk fall under United Arab Emirates law, according to its prospectus. The company is seeking to have a UAE court declare the Sukuk unlawful.