Debt fears loom over Dana Gas

One month after the United Arab Emirates’ Dana Gas issued its preliminary 2011 financial results, the crucial question of how the company plans to address serious liquidity problems remains unanswered.

A $1 billion sukuk (Islamic bond) taken out by Dana Gas in 2007 is due for repayment in October. But the combination of a poor cash position with delays in payments to the company from government clients in Egypt and the semi-autonomous region of Kurdistan in northern Iraq has left markets concerned that the company may default on the debt.

Dana’s failure to announce a strategy to deal with the situation has not helped to calm market nerves. The company missed the latest in a series of deadlines it had set itself to inform markets of a plan of action when it published its preliminary annual results for 2011 on 30 January.

A meeting of Dana’s board of directors on 22 February offered another chance for a strategy to emerge. But a statement issued by the company after the meeting left investors in the dark, saying only that the board had “considered” matters related to the sukuk. The company’s share price on the Abu Dhabi Securities Exchange fell by 4% on the news, or lack thereof.

“I don’t know what they’ve been thinking,” a trader of Middle East bonds at one leading financial services firm told Interfax. “They should have sorted all of this out long ago, not leave it till the last six months.”

As the months before the repayment deadline ebb away, analysts are divided on the likely fate of the company. Even at this late stage though, Dana still has a number of options.

To read the article in full, please visit the Interfax Natural Gas Daily

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Richard Nield is a freelance journalist, photographer and filmmaker covering the Middle East and Africa. In 10 years covering the region, he has been published and broadcast by clients including the BBC, Reuters, Al Jazeera, The Economist, The Financial Times, The Independent and Foreign Policy magazine. He has reported from throughout the region, including Algeria, Egypt, Libya, Morocco, Tunisia, South Sudan, Jordan, Lebanon, Syria, Kuwait and Saudi Arabia.