The top shareholder in Dana Gas has ruled out a bailout just days before a US$920 million (Dh3.37 billion) sukuk matures.
Crescent Petroleum, a Sharjah company that owns 21 per cent of Dana Gas, repeated a position first made public in May that it would not consider a cash injection.
"As far as a bailout from the shareholders, no, we ruled that out," said Majid Jafar, the chief executive of Crescent, which also shares concessions with Dana in Iraq and Egypt.
Dana Gas's sukuk, due tomorrow, has been the subject of much speculation in recent months.
Uncertainty about the company's ability to repay the bond climbed so high last Thursday that its yield exceeded the ability of the Bloomberg news wire's calculation matrix to compute. The day before it was listed at 9,530 per cent.
That behaviour is commonly seen when illiquid debts approach their maturity dates, said a trader at a specialist investment house that tracks such credit. "If the yield goes beyond 10,000 per cent the Bloomberg calculator crashes," he said.
"But quite frankly the yield is meaningless at this juncture."
Bloomberg confirmed that the figure was the result of the impending maturity.
If the company is unable to repay bondholders, Dana's creditors could seize part of the company's estimated $3.39bn in assets.
Dana Gas's problems stem from operations in Egypt and Iraqi Kurdistan, where a political dispute between Baghdad and Erbil have prevented regular payments for production.
A deal struck with Iran's state oil company to supply gas to the UAE has also failed.
"It's had some cash flow issues due to receivables from Iraq and the Kurdistan region in the north and Egypt as well as, of course like any publicly listed company, the challenges of the capital markets worldwide brought about by the European debt crisis," said Mr Jafar. "But we are confident that it will get through this. It's been prudent financially. It's not an issue of insolvency by any means, it's an issue of liquidity."
Yesterday Dana Gas's shares traded flat on the Abu Dhabi Securities Exchange at 47 fils for the sixth consecutive trading day, despite being the second most traded stock. The price is less than a tenth of its high after a 2005 initial public offering.
"We're optimistic," said Mr Jafar. "It's a short-term issue and the countries that it has invested in such as Egypt, such as Iraq, are very promising long-term."
Deutsche Bank, Blackstone Group and Latham & Watkins are advising Dana on the debt.
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Someone illegally obtains your confidential information, through various ways, such as theft of your wallet, bank and utility bill statements, computer intrusion and social networks.
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Fraudsters claiming to be authorised representatives from well-known organisations (such as Etisalat, du, Dubai Shopping Festival, Expo2020, Lulu Hypermarket etc) contact victims to tell them they have won a cash prize and request them to share confidential banking details to transfer the prize money.
The years Ramadan fell in May
At a glance
- 20,000 new jobs for Emiratis over three years
- Dh300 million set aside to train 18,000 jobseekers in new skills
- Managerial jobs in government restricted to Emiratis
- Emiratis to get priority for 160 types of job in private sector
- Portion of VAT revenues will fund more graduate programmes
- 8,000 Emirati graduates to do 6-12 month replacements in public or private sector on a Dh10,000 monthly wage - 40 per cent of which will be paid by government
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
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