The Royal Courts of Justice in London. AP
The Royal Courts of Justice in London. AP

Bondholders push back on Dana Gas sukuk invalidation claims in London court



Sharjah-based Dana Gas sought to have US$700 million worth of Islamic bonds declared unlawful so it could avoid repaying investors next month, London’s High Court heard on Monday, a charge the company has denied.

The company’s claim that a huge 2013 financing deal was invalid owing to subsequent changes in Islamic financial practice was “absurd”, according to documents filed by bondholders with the court.

The bondholder group, led by Blackrock, the world’s largest asset manager, was in court on Monday demanding that Dana Gas repays millions of pounds, or hand over stock in a subsidiary that runs its operations in Egypt.

It also wanted the court to ban Dana Gas from issuing any new sukuk to secure further funds for the company. Dana Gas stunned the Islamic finance community in June by declaring the $700m sukuk Sharia non-compliant just four months before it was due to repay bond-holders.

The courtroom battle is notable for the absence of Dana Gas, which has been prevented from taking part because of an injunction in the UAE.

Lawyers for Blackrock claim that the injunction had been a deliberate attempt by the company to frustrate the court hearing, but a high court judge ruled last week that the trial in London would go ahead as planned.

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The complex case is being keenly watched by the Islamic finance industry, with both London and the UAE seeking to position themselves as world leaders within the sector.

“Obviously if there is an adverse judgement out of the London court it will raise a lot of questions particularly in the minds of non-Sharia investors and there are a fair amount of non-Sharia investors who invest in sukuk,” said Abdul Kadir Hussain, the head of fixed-income asset management in Dubai at Arqaam Capital, which holds some of the Dana Gas sukuk.

Any prospect of an early conclusion to the case has been disputed by Dana Gas, which has claimed that litigation could continue in the UAE whatever the ruling in London and could last up to ten years, according to court documents.

“While markets have short memories, I think this case has already negatively impacted international investor appetite for Sukuk - most likely in the corporate (Vs bank and sovereign) sector,” said Khalid Howladar, the managing director of the risk and ratings Islamic finance advisory Acreditus.

“The complexity of the sukuk industry was already an inhibitor to growth and these recent events will cause some investors to avoid the sector completely and drive up the profit rates demanded by remaining investors. Regulatory intervention is needed to restore confidence.”

Dana Gas secured $850m from international investors in May 2013 via the restructuring of an earlier $1 billion deal secured that had been due to mature in 2012. The company was unable to repay that deal because of payment delays from operations in Egypt and the Kurdish region of Iraq.

“If all had gone well, the value … would be sufficiently large that the investments would be liquidated for an amount that was at least as large” as the money invested, said Richard Handyside QC, for the BlackRock-led group of investors, which also includes investment bank Goldman Sachs.

Dana Gas made quarterly payments according to the terms of the agreement until April 2017, but announced in May that it would embark on new restructuring talks with sukuk holders because of continued cash collection problems.

The following month, it sought a court order in Sharjah arguing that it should no longer make payments because Islamic finance standards had changed making them unlawful under UAE law. The company also took legal action in the UK and the British Virgin Islands, where its Egypt subsidiary was registered, to prevent further payments to investors.

It was clear that Dana Gas’s challenge to the lawfulness of the agreement struck between the company and investors was “in order to avoid its obligations upon maturity of the sukuk” on October 31, according to court papers.

It said claims by an expert witness on UAE law for the company that the investors had deliberately sought to introduce illegal elements to the agreement was “nonsense”.

The company – which had redeemed $150m of the sukuk - outlined a new four-year plan on “materially worse” terms to the investors, according to the documents on behalf of the investors.

On an investor call in July, Dana Gas chief executive Patrick Allman-Ward said that the new terms reflect material changes in the global high yield environment since 2012, the company’s improved credit position, and increased gas production.

The complexity of the case is linked to the multiplicity of contracts signed in both UK and UAE jurisdiction before the company secured the $850m investment. The company contends that it received legal advice that made part of the sukuk illegal under the laws of the UAE, bringing down the whole deal.

The investors claimed that part of the agreement was struck under UK corporate law, to ensure that their payments would be protected in the event of a change in Islamic financial practice. It claimed that the agreement was “lawful and enforceable under UAE law” and the company had to pay up.

“Issues of UAE law… are not the central issues in this trial,” the document said. The trial, which is expected to last up to two weeks, is due to hear evidence from the former general counsel of Dana Gas.

COMPANY PROFILE

Name: Xpanceo

Started: 2018

Founders: Roman Axelrod, Valentyn Volkov

Based: Dubai, UAE

Industry: Smart contact lenses, augmented/virtual reality

Funding: $40 million

Investor: Opportunity Venture (Asia)

Company Profile

Name: Direct Debit System
Started: Sept 2017
Based: UAE with a subsidiary in the UK
Industry: FinTech
Funding: Undisclosed
Investors: Elaine Jones
Number of employees: 8

UAE athletes heading to Paris 2024

Equestrian
Abdullah Humaid Al Muhairi, Abdullah Al Marri, Omar Al Marzooqi, Salem Al Suwaidi, and Ali Al Karbi (four to be selected).
Judo
Men: Narmandakh Bayanmunkh (66kg), Nugzari Tatalashvili (81kg), Aram Grigorian (90kg), Dzhafar Kostoev (100kg), Magomedomar Magomedomarov (+100kg); women's Khorloodoi Bishrelt (52kg).

Cycling
Safia Al Sayegh (women's road race).

Swimming
Men: Yousef Rashid Al Matroushi (100m freestyle); women: Maha Abdullah Al Shehi (200m freestyle).

Athletics
Maryam Mohammed Al Farsi (women's 100 metres).

Specs: 2024 McLaren Artura Spider

Engine: 3.0-litre twin-turbo V6 and electric motor
Max power: 700hp at 7,500rpm
Max torque: 720Nm at 2,250rpm
Transmission: Eight-speed dual-clutch auto
0-100km/h: 3.0sec
Top speed: 330kph
Price: From Dh1.14 million ($311,000)
On sale: Now

Confirmed bouts (more to be added)

Cory Sandhagen v Umar Nurmagomedov
Nick Diaz v Vicente Luque
Michael Chiesa v Tony Ferguson
Deiveson Figueiredo v Marlon Vera
Mackenzie Dern v Loopy Godinez

Tickets for the August 3 Fight Night, held in partnership with the Department of Culture and Tourism Abu Dhabi, went on sale earlier this month, through www.etihadarena.ae and www.ticketmaster.ae.

Liverpool’s fixtures until end of 2019

Saturday, November 30, Brighton (h)

Wednesday, December 4, Everton (h)

Saturday, December 7, Bournemouth (a)

Tuesday, December 10, Salzburg (a) CL

Saturday, December 14, Watford (h)

Tuesday, December 17, Aston Villa (a) League Cup

Wednesday, December 18, Club World Cup in Qatar

Saturday, December 21, Club World Cup in Qatar

Thursday, December 26, Leicester (a)

Sunday, December 29, Wolves (h)

MATCH INFO

Uefa Champions League semi-final, first leg
Bayern Munich v Real Madrid

When: April 25, 10.45pm kick-off (UAE)
Where: Allianz Arena, Munich
Live: BeIN Sports HD
Second leg: May 1, Santiago Bernabeu, Madrid

Scoreline

UAE 2-1 Saudi Arabia

UAE Mabkhout 21’, Khalil 59’

Saudi Al Abed (pen) 20’

Man of the match Ahmed Khalil (UAE)

The five pillars of Islam

1. Fasting

2. Prayer

3. Hajj

4. Shahada

5. Zakat

COMPANY PROFILE

Company name: Klipit

Started: 2022

Founders: Venkat Reddy, Mohammed Al Bulooki, Bilal Merchant, Asif Ahmed, Ovais Merchant

Based: Dubai, UAE

Industry: Digital receipts, finance, blockchain

Funding: $4 million

Investors: Privately/self-funded

Where the Crawdads Sing

Director: Olivia Newman
Stars: Daisy Edgar-Jones, Taylor John Smith, Harris Dickinson, David Strathairn
Rating: 2/5

MATCH INFO

World Cup qualifier

Thailand 2 (Dangda 26', Panya 51')

UAE 1 (Mabkhout 45+2')

Iraq negotiating over Iran sanctions impact
  • US sanctions on Iran’s energy industry and exports took effect on Monday, November 5.
  • Washington issued formal waivers to eight buyers of Iranian oil, allowing them to continue limited imports. Iraq did not receive a waiver.
  • Iraq’s government is cooperating with the US to contain Iranian influence in the country, and increased Iraqi oil production is helping to make up for Iranian crude that sanctions are blocking from markets, US officials say.
  • Iraq, the second-biggest producer in the Organization of Petroleum Exporting Countries, pumped last month at a record 4.78 million barrels a day, former Oil Minister Jabbar Al-Luaibi said on Oct. 20. Iraq exported 3.83 million barrels a day last month, according to tanker tracking and data from port agents.
  • Iraq has been working to restore production at its northern Kirkuk oil field. Kirkuk could add 200,000 barrels a day of oil to Iraq’s total output, Hook said.
  • The country stopped trucking Kirkuk oil to Iran about three weeks ago, in line with U.S. sanctions, according to four people with knowledge of the matter who asked not to be identified because they aren’t allowed to speak to media.
  • Oil exports from Iran, OPEC’s third-largest supplier, have slumped since President Donald Trump announced in May that he’d reimpose sanctions. Iran shipped about 1.76 million barrels a day in October out of 3.42 million in total production, data compiled by Bloomberg show.
  • Benchmark Brent crude fell 47 cents to $72.70 a barrel in London trading at 7:26 a.m. local time. U.S. West Texas Intermediate was 25 cents lower at $62.85 a barrel in New York. WTI held near the lowest level in seven months as concerns of a tightening market eased after the U.S. granted its waivers to buyers of Iranian crude.
Biography

Favourite book: Zen and the Art of Motorcycle Maintenance

Holiday choice: Anything Disney-related

Proudest achievement: Receiving a presidential award for foreign services.

Family: Wife and three children.

Like motto: You always get what you ask for, the universe listens.

Anna and the Apocalypse

Director: John McPhail

Starring: Ella Hunt, Malcolm Cumming, Mark Benton

Three stars

The bio

Favourite book: Kane and Abel by Jeffrey Archer

Favourite quote: “The world makes way for the man who knows where he is going.” - Ralph Waldo Emerson, American essayist

Favourite Authors: Arab poet Abu At-Tayyib Al-Mutanabbi

Favourite Emirati food: Luqaimat, a deep-fried dough soaked in date syrup

Hobbies: Reading and drawing

COMPANY PROFILE

Company: Eco Way
Started: December 2023
Founder: Ivan Kroshnyi
Based: Dubai, UAE
Industry: Electric vehicles
Investors: Bootstrapped with undisclosed funding. Looking to raise funds from outside

Bharatanatyam

A ancient classical dance from the southern Indian state of Tamil Nadu. Intricate footwork and expressions are used to denote spiritual stories and ideas.

Sweet Tooth

Creator: Jim Mickle
Starring: Christian Convery, Nonso Anozie, Adeel Akhtar, Stefania LaVie Owen
Rating: 2.5/5

Essentials

The flights

Emirates and Etihad fly direct from the UAE to Geneva from Dh2,845 return, including taxes. The flight takes 6 hours. 

The package

Clinique La Prairie offers a variety of programmes. A six-night Master Detox costs from 14,900 Swiss francs (Dh57,655), including all food, accommodation and a set schedule of medical consultations and spa treatments.

COMPANY PROFILE

Company name: Almouneer
Started: 2017
Founders: Dr Noha Khater and Rania Kadry
Based: Egypt
Number of staff: 120
Investment: Bootstrapped, with support from Insead and Egyptian government, seed round of
$3.6 million led by Global Ventures

So what is Spicy Chickenjoy?

Just as McDonald’s has the Big Mac, Jollibee has Spicy Chickenjoy – a piece of fried chicken that’s crispy and spicy on the outside and comes with a side of spaghetti, all covered in tomato sauce and topped with sausage slices and ground beef. It sounds like a recipe that a child would come up with, but perhaps that’s the point – a flavourbomb combination of cheap comfort foods. Chickenjoy is Jollibee’s best-selling product in every country in which it has a presence.
 


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