Creditors of UAE based energy producer Dana Gas have turned down a proposal by the firm to restructure its $700mn of Islamic bonds and are expecting better terms, two sources familiar with the matter told Reuters.
Dana refused to redeem its sukuk on maturation last year, claiming that the instruments were no longer sharia-compliant because of changes in Islamic finance practice.
Legal proceedings between Dana and its creditors continue in UK and UAE courts, but negotiations to achieve an out-of-court settlement have so far reached an impasse.
The latest restructuring proposal was put forward by the company to sukuk holders about two weeks ago, according to Reuters.
Dana and a committee representing creditors did not immediately respond to requests for comment.
The company offered to exchange 10% of the sukuk in cash and to roll over the remaining 90% over four years at a yearly profit rate of 4%, said the sources. It also offered to buy back up to half of the bonds at a 15% discount.
The creditors' committee, advised by investment bank Moelis, rejected Dana's proposal.