Abu Dhabi – Mubasher: Dana Gas’ stock is likely to resume its decline this week to below AED 0.45 and AED 0.50 after the London High Court’s ruling in favour of sukuk holders and against the company, an analyst told Mubasher.

On Friday, the London High Court ruled in favour of Dana’s sukuk holders in the $700 million-sukuk case.

By the end of last week, Dana Gas’ stock was among the top decliners on the Abu Dhabi Securities Exchange (ADX), falling 1.4% to AED 0.72.

Dana Gas described the London Court’s ruling as “flawed”, citing the court’s refusal to adjourn the judgement until Dana Gas had submitted its application “to allow it to appear in the English Court to state its case fully.

Dana Gas’ financial position will not enable it to repay sukuk holders under the Friday decision, commented Menacorp financial analyst Issam Kassabieh, who added that the ADX-listed gas company’s liquidity amounts to $562 million, which was significantly lower than the $700 million the company would have to repay to its sukuk holders.

Dana Gas will have a few alternatives, such as borrowing, should it have to carry out the repayment, that is until the company can increase the rate of its money collection from the Egyptian and Iraqi governments, Kassabieh told Mubasher.

The Menacorp analyst said that Dana Gas investors on the ADX may begin to liquidate their holdings of gas firm’s stock, prompting a drop towards 40 fils until the company’s situation becomes clearer.

Another option, which was previously suggested by sukuk holders, is to convert the sukuk into shares; however, Dana Gas had refused to do so when the issue began.

The analyst now wonders if Dana Gas will consider this alternative following the latest development in its sukuk case.

Following the London High Court’s decision, Dana Gas said the decision did not come as a surprise and appealed it to the English Court of Appeal.

Dana Gas said in a statement that there were “fundamental critical legal issues under UAE law relating to the legality and validity of the Mudarabah agreement which remain before the Sharjah Court and need to be determined.”

The ADX-listed firm added that it will take the necessary steps to have the UAE proceedings “dealt with as quickly as possible.”

The issue began in June when Dana Gas announced that its $700 million sukuk were not compatible with the rules of the Islamic Sharia and were illegal in the UAE.