Abu Dhabi-listed Dana Gas said it has applied to the Sharjah Court to lift an injunction which blocked stakeholder claims against a $700 million Islamic bond it had declared unlawful and attempted to restructure.
The application was carried out to comply with an English Court order, Dana Gas said in a statement.
Last week, Dana Gas said a London’s High Court judge upheld an interim injunction blocking sukuk-holders from enforcing claims related to the securities.
It also asked Dana Gas to lift the UAE injunction obtained in June and seek a stay of proceedings at the Sharjah Court, while also restricting the company from selling assets or raising more debt and paying dividends.
Dana initially obtained the UAE injunction after receiving legal advice that said the sukuk were not sharia-compliant and were therefore "unlawful" in the UAE and as a result it would be necessary to restructure the sukuk “to ensure that it conforms to the relevant laws for the benefit of all stakeholders.”
It then proposed swapping $700 million of outstanding Islamic bonds maturing in October for new sharia-compliant instruments with four-year maturities and profit distributions at less than half the rate of the existing instruments.
Sukuk-holders and Dana Gas have so far failed to reach an agreement on the restructuring, leading to court proceedings in a UK Court.
It has shaken up the Islamic finance industry, which has not had new legal interpretations since the sukuk was issued – meaning if the sukuk is illegal now, it was illegal when it was issued.
Dana Gas said last week, the final outcome of the ongoing litigations in UAE courts on its Islamic bond or sukuk, would likely result in a significant liability for the sukuk-holders to repay the company excess 'on account profit payments' based on a lawful reconciliation.
The Sharjah Court injunction has restrained any holders of the sukuk from enforcing payments on the outstanding value until a final decision is made by the court with an initial hearing scheduled for December 25.