The World’s Leading Islamic Finance News Provider (All Cap) 1300 North and West Ethmar 1MDB Uzbekistan to 1250 African Islamic for Islamic time bomb: set up Islamic 0.39% 1,194.43 1200 banks tapping Microfi nance The plot development bank 1,189.77 1150 the SME seeks funding thickens...7 as part of plans 1100 market...6 ahead of to accommodate TMSSFTW expansion...6 Shariah fi nance...8 Powered by: IdealRatings® COVER STORY 23rd May 2018 (Volume 15 Issue 21) Digesting Dana Gas: Lessons learned Almost exactly a year ago, Dana Gas Gas in June 2017, with a few minor Sukukholders and 30% of ordinary declared its maturing Sukuk to be improvements. Sukukholders. The Sukukholders “unlawful and unenforceable” — committ ee also entered into a litigation sett ing in motion a series of convoluted The original deal off ered an exchange of dismissal agreement with Dana Gas that and controversial claims and the 2013 Sukuk in favor of a new four- provides for the dismissal of all pending counterclaims that limped litigiously year instrument with profi t distributions litigation and a release of certain through the courts for 11 long months. at “less than half” of the current profi t outstanding claims. Last week, the company fi nally reached rates, without a conversion feature, and a tentative agreement with its creditors with profi t payments comprising both “We are pleased to have amicably – but will it work, is it fair and, most cash and payment in kind. The company reached a consensual solution with importantly, what implications could also refused to pay the two outstanding the ad hoc committ ee, as indeed was it have for the wider Sukuk market? profi t distributions of July and October always the company’s publicly-declared LAUREN MCAUGHTRY looks at the 2017 on the grounds of unlawfulness, intention from the outset, which off ers lessons to be learned from one of the although it promised that they would Sukukholders the opportunity to cash biggest scandals to hit the industry in be “accounted for” as part of the new out at a premium to current market almost a decade. Sukuk. prices or — individually solely at their election — to achieve a path to full A done deal? The new deal of May 2018 off ers a repayment of the face value of their On the 13th May 2018, Dana Gas similar structure but with some key existing holdings,” said Dana Gas CEO announced an agreement with an ad hoc diff erences in phrasing. Sukukholders Patrick Allman-Ward. committ ee of Sukukholders regarding can immediately redeem their an off er to restructure and refi nance investment at 90.5 cents to the dollar, So is this a positive resolution? its disputed US$700 million Sukuk or they can convert their holdings into Mudarabah, which at issue in May 2013 a new three-year Sukuk instrument “From a commercial perspective, the was split between a US$350 million paying a coupon of 4%, with arrears investors would not have accepted this ordinary Sukuk tranche at 7% and paid at the original profi t rate up until if it did not make sense for them,” thinks a US$350 million convertible October 2017. The new Sukuk Rizwan Kanji, a partner and debt capital Sukuk tranche at 9%, each due will be structured as a simple markets specialist at King & Spalding. in October 2017. Wakalah instrument, based on an But not everyone agrees. underlying Ijarah and a deferred So is it a fair deal, and what payment obligation contract. “I don’t think it is a good outcome for will it mean for investors? In addition, the agreement is creditors,” said Khalid Howladar, the contingent on the termination of founder and CEO of boutique advisory At fi rst glance, the off er looks all current litigation. fi rm Acreditus. “They don’t really substantially similar to the seem to have changed much from the th original restructuring As of the 13 May, the off er sett lement that was proposed this time suggestion made by Dana had received the approval of 52% of convertible continued on page 3 IFN RAPIDS Volume 15 Issue 21 ready to commence talks agreement with Lycee DEALS with Malaysia on scandal Francais Jean Mermoz IFN Rapids ................................................... ..2 Indonesia privately places Otoritas Jasa Keuangan IFN Reports: new Sukuk series; reopens admits shares of Guna TAKAFUL • North and West African Islamic banks auction for six existing Timur Raya onto list of Al Ahlia Cooperative series Shariah securities tapping the SME market • Ethmar for Islamic Insurance Company Microfi nance seeks funding ahead of expansion • Matrix Concepts raises Amana Bank establishes receives Saudi Arabian RM50 million (US$12.63 1MDB time bomb: The plot thickens • Company third self-banking center in Monetary Authority’s million) through the Thihariya approval for proposed Focus: Bank Al Yousr • Uzbekistan to set up issuance of Islamic merger with Gulf Union Punjab government Islamic development bank as part of plans to commercial paper Cooperative Insurance introduces Islamic crop accommodate Shariah fi nance • PODCAST: Company Sabah Credit Corporation insurance Moody’s bullish on Saudi Arabia’s Vision 2030; issues Islamic commercial Takaful Emarat establishes Punjab University Hailey papers new brand to complement targets corporates as part of expansion strategy • College of Banking & acquisition of Al Hilal Sovereign Sukuk: Only the usual suspects .... 6 Bank Negara Malaysia Finance and Al Baraka Takaful fl oats Islamic instruments Bank enter into agreement totaling RM63.88 billion to facilitate academic Saudi Indian Cooperative IFN Analyses: (US$16.06 billion) excellence Insurance Company Turkey: Uncertainties threaten development 11 receives Saudi Arabian NASDAQ Dubai admits Indonesian Islamic banks to Treasury: Investing in Islamic liquid assets .. 12 Monetary Authority’s Noor Bank’s US$500 enhance Hajj services Case Study: million fi ve-year Sukuk approval for capital Indonesian Stock reduction Sharjah Islamic Bank’s Sukuk: Strong QIIB waiting for the right Exchange launches new Saudi Takaful fi rms appetite.................................................. 13 time to print fi ve-year Islamic index Sukuk, says CEO announce reduction in Back To Basics: Malaysian government’s capital Arguments against the forbiddance of Kuwait Finance House intention to abolish to establish US$3 billion interest .................................................. 14 highway tolls will impact Sukuk program; receives Sukuk and bond market RATINGS Shariah Standard: provisional rating of ‘(P)A1’ MARC affi rms investment Amana Bank collaborates Controls on Gharar in fi nancial transactions 15 manager rating of IMR-2 on Central Bank of Kuwait with mCash to bring Column: Kenanga Islamic Investors issues KWD160 million easier payment solution to Daud speaks: From awareness to action ........ 16 (US$528.05 million)-worth customers Mashreq Capital’s of conventional bonds and investment manager quality IFN Country Correspondents: Investcorp launches Tawarruq facilities assessment falls one notch Morocco; Qatar; the Philippines; Hong Kong; platform to enter Telekom Malaysia issues to MQ2 Malta; Japan ................................................... 17 Germany’s dental sector Islamic medium-term with two completed initial Projek Lebuhraya IFN Sector Correspondents: note worth RM250 million investments Usahasama’s Sukuk Islamic Leasing; Islamic Microfi nance; SRI (US$62.92 million) Musharakah program Ethical & Green ............................................. 20 AEON raises RM100 affi rmed at ‘AAAIS’ Country Feature: million (US$25.17 million) through the issuance of RESULTS VBI: A new phase for Islamic banking and fi nance MOVES Islamic commercial paper Bank ABC Islamic records in Malaysia ................................................... 23 Five board members of 28.13% increase in net profi t Danajamin Nasional ‘One Belt, One Road’ initiative – what’s in it for for fi rst quarter of 2018 NEWS to retire; Suresh Menon Malaysia’s Islamic fi nance industry .............. 24 Islamic Finance Project appointed as new director Sector Feature: Management Offi ce ASSET Adissadikin Ali now Takaful digital transformation ....................... 26 proposes same tax on president of Association News ............................................................. 27 Islamic fi nance products MANAGEMENT of Islamic Banking and with conventional off erings Deal Tracker .................................................34 Blossom Finance opens Financial Institutions REDmoney Shariah Indexes ...................... 35 Report on 1MDB says enrollment for its fi rst Malaysia publicly available Islamic proceeds raised via many Abdulkader Thomas Eurekahedge Funds Tables ........................37 microfi nance fund sources including Islamic resigns from Meethaq Dealogic League Tables ..............................39 papers not fully used for Equitativa, on behalf of Islamic Banking’s Shariah REDmoney Events ...................................... 43 intended purposes; Swiss Emirates REIT, enters supervisory board Subscription Contact................................... 43 and Singaporean authorities into buy and leaseback Disclaimer: IFN invites leading practitioners and academics to contribute short reports each week. Whilst we have used our best endeavors and eff orts to ensure the accuracy of the contents we do not hold out or represent that the respective opinions are accurate and therefore shall not be held responsible for any inaccuracies. Contents and copyright remain with REDmoney. © 2 23rd May 2018 COVER STORY Digesting Dana Gas: Lessons learned Continued from page 1 last year. I would