Dana Gas restructured its contested $700m sukuk and returned to record profits by 2022

In June 2017 Dana Gas, the ADX-listed Middle East's largest private gas producer, said it would not redeem its $700m sukuk, arguing the mudaraba structure had fallen into disuse and was no longer valid under UAE law. Creditors sued in English and UAE courts, the two jurisdictions issued conflicting rulings, and the dispute shook the $2.5 trillion sukuk industry.

In May 2018 Dana Gas and a creditors' committee agreed a consensual restructuring: holders exchanged the contested instruments for new three-year notes at a 4% profit rate, and the legal proceedings were dropped. The company then completed buybacks and refinancings, and by the chairman's account went from $1bn of overdue receivables and $1bn of debt to a fully redeemed sukuk and negligible receivables.

With the balance sheet reset, 2021 became Dana Gas's best year since its 2005 founding: net profit of $317m versus a $376m loss in 2020, record cash collections of $377m, and a total dividend of 8 fils per share, up 45% on 2020's payout. In 2022 it kept paying semi-annual dividends, with the chairman calling its yield among the highest on the ADX.

Fully redeemed its sukuk, cut debt to near zero, then swung from a $376m 2020 loss to a record $317m 2021 profit and 8 fils dividends per share.

The May 2018 settlement converted the contested $700m sukuk into new notes and ended years of litigation in two jurisdictions.

Cash flow after the settlement was used to buy back and retire the sukuk rather than fund expansion, shrinking the balance sheet first.

Rising energy prices and tight cost control rebuilt EBITDA, turning a $376m 2020 loss into record profit and dividends.

When a debt you issued becomes unpayable, a consensual restructuring with existing creditors beats a courtroom win: it resets the balance sheet and lets operations rebuild credibility.

By 2022 Dana Gas was paying semi-annual dividends and funding the $600m Khor Mor gas expansion in Iraqi Kurdistan. The 2018 case also reshaped Islamic finance: standard-setters tightened sukuk documentation and investors shifted to English-law-only structures.