United Arab Emirates

Dubai’s DP World has agreed to buy Drydocks World and a maritime business park in the emirate for $405m. Ports operator DP World, majority owned by government conglomerate Dubai World, agreed to buy Dubai World’s Drydocks World ship repair unit via a cash injection of $225m. DP World also said it would buy another Dubai World unit, Dubai Maritime City, for $180m. DP World said the Drydocks transaction, expected to close before the end of the first quarter of 2018, was contingent on a successful completion of Drydock’s restructuring process, the Financial Times reported.

Dana Gas PJSC bondholders, including BlackRock Inc. and Goldman Sachs Group Inc., submitted a proposal to the Middle Eastern energy producer to resolve a dispute over a $700 million sukuk that shocked the Islamic finance industry this year, Bloomberg News reported. A person close to the company said the terms aren’t acceptable. The deal, which has support from over 70 percent of sukukholders, includes a cash pay-down of $300 million at par and a dual-listing of the company’s shares on the London Stock Exchange, the ad hoc committee of bondholders said in a statement.

To see how far Dubai has come, take a look at its credit default swaps. The extra cost investors pay to insure the sheikhdom’s bonds versus those of its oil-rich neighbor, Abu Dhabi, has fallen below 60 basis points this month for the first time on record, Bloomberg News reported. That’s down from 555 basis points back in 2009, when Dubai’s government-related companies were in talks to restructure billions of dollars in debt and Abu Dhabi came to the emirate’s rescue with a bailout. Dubai is a rare example of a Gulf economy that doesn’t rely almost entirely on oil revenue to fund expansion.

The standoff between Dana Gas PJSC and its bondholders took a fresh twist after the Middle Eastern energy explorer that’s trying to void $700 million of its own debt was said to believe investors may even have to pay the company, Bloomberg News reported. The Sharjah-based gas producer says a court battle with holders of the Islamic securities, or sukuk, may see it having to return less than 10 percent of the amount it borrowed, according to a person familiar with Dana Gas’s own analysis.

Dana Gas PJSC won an extension of a London court order blocking investors from taking action over $700 million in disputed Islamic bonds until after a trial scheduled for as soon as October, Bloomberg News reported. Dana, which has operations in Egypt and Iraq, sent shockwaves through the world of Islamic finance by announcing in June that its own sukuk were not Shariah compliant. The U.K. court hearings are part of a global legal effort by the company, including filings in the United Arab Emirates and British Virgin Islands, to stop investors from trying to force payment.

Champions of the rapidly expanding $2 trillion Islamic finance market are probably hoping the Dana Gas situation will go away, and they may yet get their wish, Bloomberg News reported. The Middle Eastern energy explorer sent shockwaves through the Shariah industry this month when, as part of its battle to restructure debt, it declared the bonds it issued were no longer legal under Islamic law.

Nothing in Islamic finance or the United Arab Emirates’ laws regarding Shariah-compliant debt has changed since Dana Gas PJSC restructured its sukuk about four years ago, Bloomberg News reported. "What makes the sukuk illegal now?” asks Rizwan Kanji, a partner at law firm King & Spalding LLP. When the gas producer started negotiations with creditors in 2012, the issue relating to mudarabah structures was “clear and settled,” said the Dubai-based lawyer who specializes in Shariah-compliant deals. Since then, there have been no changes in Islamic finance or related U.A.E.

A decision by Abu Dhabi-listed Dana Gas to declare $700 million of its sukuk invalid has sent shivers through the Islamic finance industry, raising concern about the safety of sharia-compliant debt instruments in general, Reuters reported. Dana said on Tuesday it had received legal advice that its sukuk, or Islamic bonds, which mature in October, were not compliant with the Islamic sharia code and had become "unlawful" in the United Arab Emirates.

Dana Gas PJSC plans to more than halve profit rates on $700 million of its Islamic bonds after they were found to be non-compliant with religious law, adding a new twist to a debt restructuring initiated in May, Bloomberg News reported.

Dana Gas PJSC named legal and financial advisers to assess options for about $700 million in Islamic bonds due in October, according to a person with knowledge of the situation. Houlihan Lokey Inc. will serve as financial adviser and Squire Patton Boggs LLP will provide legal counsel, according to the person, who asked not be identified because the matter is not public, Bloomberg News reported. None of the companies commented.