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Crescent Won’t Provide Cash to DANA for Sukuk Payment

Source: Bloomberg 5/14/2012, Location: Middle East

Crescent Petroleum Co., Dana Gas PJSC (DANA)’s biggest shareholder, has no plan to provide cash to the United Arab Emirates-based natural gas producer to help pay a $1 billion Islamic bond due in October.

Any “speculation around Crescent injecting further capital to support the Dana Gas sukuk is incorrect,” Majid Jafar, Sharjah-based chief executive officer of Crescent, said in a phone interview yesterday. Dana Gas “is facing external macro- economic and political events outside its control” in Iraq’s Kurdistan region and in Egypt, which have led to unpaid bills, and “these are the economic realities that all the stakeholders need to take into account,” he said.

Concern that Dana Gas will default drove up yields on the 7.5 percent notes by 24 percentage points this month to 91.8 percent at 11:23 a.m. in Dubai, according to data compiled by Bloomberg. The company will be unable to repay the sukuk and there is high probability the liability will be reorganized, investment bank Exotix Ltd. said in a research note May 10.

Dana Gas, in which Crescent Petroleum holds a 20.1 percent stake, said in March customers owed $501 million to the company at the end of December, up from $255 million in 2010. Still, its profit advanced to $138 million in 2011 from $43 million the previous year, helped by higher gas production and prices. The company produces most of its gas in Egypt and Kurdistan and political upheaval in these regions have held up payments.

Dana Gas has “an excellent track record” and has boosted gas reserves, production, revenue and profit, Jafar said.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 

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