Dana Gas Sukuk First Look at Restructuring Terms

Dr. Arqala Will See You Now

On 5 June Dana Gas reported progress in reaching an agreement with 93.69% of its sukukholders for a “consensual” restructuring.  Later this month DG will be seeking shareholder agreement to the deal which was outlined in a 13 May press release.  

AA has just resurfaced after an intensive several months of work (not every investment turns out well) so initially missed the 13 May press release. 

While fully detailed terms haven’t been released yet, let’s take a first look at what we know. 

The USD 700 million sukuk which matured in October 2017 will be restructured in two tranches.  

Tranche A – Early Exit Option 

Up to a maximum of 25% of the face amount of the existing USD 700 million sukuk (USD 175 million) will be offered for immediate payment at 90.5% of the face amount of the sukuk.  Those responding within 7 days of the formal offer (“early election”) will receive an additional 2.5% flat of the face amount or a total of 93%.   No interest will be paid.  

Assuming a 31 July conclusion of the deal (roughly DG’s target date) and full take-up of the USD 175 million Tranche A, some USD 13.1 million in interest will be due-- 6 months at 9% and 9 months at 4% (the new “profit” rate) because DG’s last interest payment appears to have been made in April 2017.    

Including the “to-be-lost” interest in the calculation results in an effective discount of the total amount owed to holders of 15.8% or, if the early election is made, 13.5%. 

Tranche B – 3 Year Sukuk Maturing 31 October 2020  

The sukuk will have a three-year tenor starting from 31 October 2017 – the maturity of the existing sukuk.  It will be structured as a “wakala” with underlying “ijara” / “deferred sale” obligations.  

The new “profit rate” will be 4% per annum. 

Holders who make an early election to enter the deal will receive a similar 2.5% flat fee of the face amount of their tendered sukuks. 

DG will make an upfront payment of 20% of the face value of the existing instrument allocated to Tranche B (75% of USD 700 = USD 525).  This will result in a new sukuk with a face amount of USD 420 million. 

The terms call for a prepayment of 20% of the face amount of the existing sukuk (USD 105 million) within the first two years, i.e. no later than 31 October 2019.  That will reduce the sukuk to USD 315 million.  If DG does not make the prepayment within the specified time, the profit rate will increase to 6% per annum.  

DG will be allowed to pay dividends up to 5.5% of the paid in capital of DG (USD 1.9 billion equivalent) or roughly USD 105 million per year, subject to a minimum liquidity requirement of USD 100 million.  The dividend allowance is not tied to actual cashflow. 

All net free cash proceeds from the results of the NIOC arbitration and sale, if any, of Egyptian assets for repayment of the Sukuk.  There are also provisions relating to the buyback of the new sukuk under certain circumstances.  Not particularly clear, but then this is a summary.  

DG’s May 2018 Corporate Presentation appears to provide some additional information on this latter topic. Comments on page 5 state that, if Tranche A is not fully taken up, DG will use the remaining amounts allocated to Tranche A to buyback new sukuk at the market price within 9 months of closing of the restructuring.  If there is insufficient offer, then DG will prepay sukukholders pro-rata at par.   From the wording it seems that when the May report was issued, no deal had been struck with sukukholders. So these terms may not have been modified.   

Danagaz WLL has apparently been removed from the security package, perhaps compensated with the above. 

Comments 

Better Structure: Shorter tenor, more periodic amortization, additional “collateral”. 

You’ll recall, and if you don’t AA will remind you, that very early on AA wrote that the sukukholders needed to shorten the tenor (from five years), obtain interim principal repayments (no bullet structure) and secure more collateral.  To an extent that seems to have occurred.  To be very clear, AA is not claiming any credit for this outcome.  The sukukholders’ advisors don’t need AA to tell them the obvious.  

Reaching agreement is like some telephone calls with President Macron.  One doesn’t know all the details or what the course of negotiations was.  Like sausage one just has to eat it.  No doubt the case here.    

But as an outside commentator, AA will exercise his right to highlight things that might be better without the responsibility to make them so. 

Prepayment Failure: Doesn’t trigger acceleration of maturity.  

Failure to make the interim prepayment does not appear to constitute an event of default that allows acceleration of the sukuk.  Ideally it should be particularly given this issuer. Rather the penalty seems to be only an increase in the interest rate.  Realistically, if the Company can’t pay, a higher interest rate won’t be much deterrence.  

Dividend Payments:  Risks of cash leakage controlled?   

According to the transaction summary, approximately, USD 105 million in dividends can be paid each year—subject to maintenance of the USD 100 million minimum liquidity requirement—because  the dividend “allowance” is based on USD 1.9 billion in paid-in-capital at a 5.5% rate.  It is not tied to DG’s cash generation which would be preferable from a creditor standpoint, i.e., dividends tied to new cash generation.  

We don’t have sufficient details about the minimum liquidity requirement to know if it protects against leakage of cash needed to repay principal via dividends.    

The key issues are that DG's ability to generate cashflow from operations has been volatile, there are operating issues in Egypt and the UAE, much of its USD 636 million in cash as of 1Q18 will be expended on the restructuring, and the dividend allowance on its face appears overly generous.   

Over the past five years DG’s cashflow (defined as the net change in cash on the Statement of Cashflows adjusted to remove non-operating cash receipts–the sale of 5% of Pearl to RWE, the RWE dividend, the KRG/Pearl settlement, new borrowings, etc.) has been very volatile, averaging approximately USD 46 million per year.  While future cashflow (2018 forward) will benefit from an approximate USD 50 million a year reduction in interest expense, there seems to be little margin for error, absent asset sales or settlement with NIOC., the timing of which appear uncertain, if they will occur at all.  That’s particularly the case if sizeable dividends are paid.   

At closing of the restructuring, DG will have expended some USD 300 million of its USD 636 million in 1Q18 cash and banks (an amount which excludes USD 140 million earmarked for development of Pearl).  The prepayment on Tranche B will use another USD 105 million, reducing the remaining 1Q18 cash balance to USD 230 million and the sukuk principal to USD 305 million.  

Compounding risks, the final principal payment may be due shortly after the prepayment.  If it’s made on the last day (31 October 2019), only 12 months will remain until final maturity.  

Tranches A and B:  Sukukholders’ interests aligned?

The early exit option and ongoing market buybacks represent a potential preference to some creditors over others.  It will be interesting to learn, if possible, if those institutions that elect early exit were key in negotiating the restructuring.   There is a fundamental conflict of interest between those who are whole dollar creditors and those who acquired their stakes at a discount.  

Which option would you choose? 

So having raised that point, what would AA do if he had been unwise enough to purchase the sukuk?  

Take the early exit for three key reasons.  

First, if one doesn’t trust a potential business partner or issuer, one simply doesn’t do business with him.  No need for any further analysis.  

Second, if basic legal protections are lacking in a market, you can’t rely on the law to compel your counterparty to comply with the contract or the local courts to execute the judgments of foreign courts.  You are on the high wire without a safety net.  Usually, this is another deal breaker, unless your business puts the burden of risk preponderantly on the counterparty.  For example, you are a seller of investments rather than a buyer.  But is it worth the risk and bother?  

When the Ruler of Dubai created the DIFC, he sent a very clear message about the state of the law and courts in the UAE.  If you weren’t paying attention then, the recent decisions of the Sharjah Court hopefully caught your attention.  

Third, at the issuer level, DG exhibits high operating and credit risks.  Weak performance and a contration in squirrelly markets (that’s a technical term in case you don’t know).  DG has a “rich” history here (but not in the financial sense).  Future prospects do not appear bright. 

 

Construction Delivery Group Files AED49 Million Suit Against Nakheel

Bradley Hope over at The National reports that CDG has filed an AED million suit against Nakheel at the special Dubai World Tribunal at the DIFC.

Here's an extract from the claim filed by CDG (Dubai World Special Tribunal Case DWT-0008-2010).

The DWT website is at www.dubaiworldtribunal.ae.

1.The Claimant claims against the First Defendant and/or the Second Defendant and/or the Third Defendant  damages, monies due, interest, legal fees, costs and expenses.

2.The Claimant's contractual and non-contractual claims arise out of and in connection with a contract (PJ-338) and/or contracts for the provision of Facilities Management Services (comprising Mobilisation Phase Services and Operational Phase Services in respect of 1,224 villas and 114 “Canal Cove homes” located on the Palm Jumeirah, Dubai) between approximately March 2007 and January 2009.

3.The Claimant Claims:

(i)  AED 24,514,464.49  Mobilisation Phase: unpaid fees to 31 January 2009
(ii) AED 2,608,347.75  Mobilisation Phase: loss of profit 01 February 2009 – 30 June 2010 
(iii) AED 6,001,899.58  Operational Phase: unpaid fees to 31 December 2008
(iv) AED 1,369,200.00 Operational Phase: loss of profit 01 January 2009 – 31May 2009
(v) AED 4,097,925.00 Operational Phase: Maintenance Services; fixed running costs for villas exceeding 400;  01 June 2008 - 31 December 2008
(vi) AED 982,534.00 Loss and damage: office, plant and equipment
(vii) AED 103,235.69 Loss and damage: emergency stores
(viii) AED 1,095,149.87 Loss of main office overhead contribution
(ix) AED 679,023.69 De-mobilisation costs on wrongful termination
(x) AED - To be advised  Loss of the use of the Claimant's Performance Security (AED 1,569,460.00) for the period 10 February 2009 – 07 October 2009

Interest pursuant to Articles 88 and 76 of Federal Law No. 18 of 1993: the Claimant claims compound interest on the above amounts at 12% per annum from the date such sums accrued to the date of payment, alternatively at such rate and for such period as the Tribunal deems fit.

As Bradley notes the process and outcome of the case will be closely watched to see how the Special Tribunal works.  As well, whether the ST gives smaller creditors a way around the rescheduling.  It would seem that CDG perhaps does not intend to contract with Nakheel again.

DIFCI to Divest Non Core Assets and Assure Robust Streams of Liquidity

Photo Jimmyjazz Released to Public Domain

 

Today's Gulf News carried a report that DIFCI had decided to get rid of its non core assets.  It has some US$1 billion of them.  Some of which are pictured above.

In the words of Shahli Akram, Acting Managing Director:

"DIFCI may divest certain of its investment portfolio to create robust liquidity streams across the business, whilst maintaining very strong focus on augmenting returns from our core business lines and also creating operational efficiency across the board," he said.

There's a lot of this going around lately.  Sort of like SARS.  The GCC is beginning to look like a US suburb with all the jumble and yard sales going on.  Adnan and  Ms. Maha up in Kuwait -  are selling so many "non core" assets that in three to five years they may have no assets left.  Not a one.  A Pretty fellow in Bahrain with a load of non core assets - real estate focused.  And now even DIFCI.

Ever wonder how a competently managed careful firm gets loaded up with non core assets? 

Well, Abu Arqala has a theory based on his experience at the university.  I had a friend let's call him "Sam".  Sam had a legendary refrigerator.  It all began innocently enough.  A clean refrigerator.  Some food items - fruit, vegetables, etc.  Over time these were augmented with left over pizza, Chinese food..  As new items were added, the old ones were all pushed further and further to the back until a critical mass and pressure sufficient for a chain reaction occurred.  One month thereafter,  some of the fruit had  developed whiskers - stubble to be sure, but growth nonetheless.  At two months, the Chinese food eyes.   At three months the pizza a proto hand or claw.  After 9 months, many swore they could hear vague stirrings from deep within the  refrigerator - nameless unthinkable shapes moving at night.  After 18 months, voices were heard. but in an unknown guttural language.   A new form of  life had been created.  After a while, the door was kept closed.

At the 24 month mark, during one summer, a "roomie" temporarily subletting opened the refrigerator.  A hardy soul not particularly prone to squeamishness he took charge of the situation.  Robust liquidity streams were mopped up from the floor.  And in some cases scraped from the interior.  Most of the non core assets were disposed of, except for one legendary orange with a long black beard that eluded capture.   They say (and who am I to doubt them) that it has until today and that if one listens carefully, its plaintive cries can still be heard at night. 

I'm guessing the same sort of thing happens in the financial world.  One starts with a collection of perfectly good assets.  New assets are added to the portfolio pushing the earlier ones to the back.  As they sit  there, some of them begin to fester.  Soon infecting others,  Before you know it, you're loaded up with non core assets.

One can well imagine how Shahli feels having opened DIFCI's rather large refrigerator.

DIFC Investments Downgraded with Outlook Negative

8 July 2010 - Approximately US$1.25 billion in debt affected

Moody's Investors Service has today downgraded to B3 from B2 the senior unsecured issuer and debt ratings of DIFC Investments LLC ("DIFCI" or "the Group") and Dubai Sukuk Centre Ltd. At the same time, Moody's has converted DIFCI's B3 issuer rating into a B3 corporate family rating (CFR) and assigned a probability of default rating (PDR) of B3, in line with the rating agency's practice for corporate issuers with non-investment-grade ratings. The outlook on all ratings is negative.

Moody's says that DIFCI's downgrade to B3 reflects the Group's highly leveraged financial profile, its expected heavy reliance on asset disposals in the coming 12-24 months in order to build sufficient liquidity to meet maturing debt obligations, and its continued negative free cash flow generation. While recognising management's intention to refocus the business, reduce costs and dispose of non-core assets, Moody's points out the risk that these measures may be insufficient to ensure that the Group has available funds to meet its maturing financial obligations as they become due over the next two to three years. The downgrade to B3 also factors in the negative impact that challenging conditions in the Dubai real estate market continue to have on DIFCI's financial profile. In 2009, the company recorded significant impairments in its real estate portfolio, which, combined with write-downs in its broader asset portfolio, contributed to a full-year loss from continuing operations of USD480 million. 

 More bad news for the Emirate.   And a commentary on market conditions. 

WallSt WTF "Appreciation" of Damas Saga

Ken over at WallSt. WTF has an "appreciation" of the Damas saga.  Well worth a read if you haven't seen it.

Damas - Enforceable Undertaking Latest Developments

A rather enigmatic press release from Damas on Nasdaq Dubai this morning.

Three points of note:

1. Damas International Limited ("DIL") is negotiating a Cascade Agreement with Damas Investments Limited and Damas Real Estate Limited, the Abdullah Brothers who own both companies, and their respective creditors.  "The purpose of the Cascade Agreement will be to effect an orderly realisation of the assets of the Abdullah Brothers Group. DIL and its board will at all times continue to act in accordance with their legal duties."
2. "DIL notes that its undertaking to recover amounts owing from the Abdullah Brothers at paragraph 17.37 of the DIL Enforceable Undertaking is expressed to be subject to any stand-still, restructuring, security, cascade or similar agreement with the Abdullah Brothers Group and their creditors, including DIL. DIL further notes that in the enforceable undertaking given by the Abdullah Brothers dated 21 March 2010 (the "Abdullah Brothers Enforceable Undertaking") the obligation to repay the Drawings Amount (as defined therein) to DIL at paragraph 15.11 is expressed to be on terms and conditions either already agreed or to be agreed with DIL. Further, the obligations of the Abdullah Brothers to use the net proceeds of realisation of assets to repay the Drawings Amount at paragraph 15.12.1 of the Abdullah Brothers Enforceable Undertaking is expressed to be subject to the terms of any settlement, stand-still, restructuring, security, cascade or similar agreement with creditors (including DIL)."

It sounds as though Damas is in the process of revising the original repayment schedule agreed with the Abdullah Brothers.  No doubt legally required in terms of the rights of all creditors.  What it probably means for DIL is a longer payback period.  And depending on the assets, perhaps less than 100% payout.  From what I've read it seems likely that many of the investments may be problematic to sell at original cost.

Dr. Omar Bin Sulaiman Freed After Repaying Dh51.5 Million in "Bonuses"

The National reports that Dr. Bin Sulaiman has been released after repaying Dh51.5 million in funds he was alleged to have misappropriated as bonuses during his tenure as head of the DIFC.  

As the article notes, the Dubai anti-corruption law provides an "out" if the funds are returned.  It's unclear if the return of funds constitutes an admission of guilt or is equivalent to a "nolo contendere" plea.

For more on this topic, you can check out Ken's post earlier this week at WallStWTF.    

Damas - Update on Enforceable Undertaking

From Nasdaq Dubai.

Damas International Limited (The Company) announced today that it is taking all reasonable steps to secure and recover the drawings amount owed to the Company by the Abdullah brothers.

The Company is working with the Abdulla brothers within the overall timeline, to recover the drawings amounts, as agreed in the Settlement Agreement and the Share Pledge Agreement (the "Agreements"). Given the complexity involved in transferring / selling the assets declared to the Company, it is taking more time to affect the recoveries as per the timeline mentioned in the previous announcement by the Company on 4 November  2009. The delay in payments does not constitute an event of default under the Agreements.   However, the amount of US$55 million to be paid by the Abdullah brothers to The Company on or before 30th April 2010 will be carried forward and settled in accordance with the terms and conditions of the Agreements. Active efforts are underway by the Company and the Abdulla brothers to repay the amounts either in cash or by transfer of assets.

The Company is constantly engaged with the Abdulla brothers to ensure expeditious realization from the sale of assets to settle their drawings. These efforts are on going and the Company will report to its shareholders and the market on a regular basis as to its efforts, and the effectiveness of its efforts in recovering all amounts due to the Company by the Abdullah brothers.

The Company, having clarified this matter and informed the market of the developments requests an immediate reinstatement of the trading on its shares.

 Some reactions.

1. Sounds like the recovery isn't going particularly well.  Old hands in the banking business will tell you it's not a good sign when the obligor can't make the first scheduled payment on a deal he's recently negotiated with you.  I have good reason to believe that this rule applies pretty much around the world - even in Dubai. 
2. The Brothers took cash and a "bit" of gold from Damas.  The company is unable to pay its lenders. 
3. When I read comments about transfers of assets (even with a new presumably alert and scrupulous board), I worry about the transfer of illiquid and potentially duff assets.  If the Brothers can't liquidate the assets, why should Damas presume that it can?  And if the debt is extinguished at transfer and not upon realization, why should Damas bear the liquidity risk (that the price they actually get will be much less than the transfer value) and the costs of carrying the asset until realization.
4. As noted above, the Brothers took cash and a "bit" of gold.  Their obligation is to return the company to the position before the "withdrawal".   The goal should be to avoid a BPPN "settlement" that lets the obligors skate away scot-free.

DIFC Investments Reports US$562.1 Million Loss

The National carries an article today about DIFC Investments loss.  

Beyond the details, this is another sign that the economic distress in the Emirate is not limited to Nakheel and Dubai World. 

Rather the impact from the crisis is broad.  With new funding constrained, the Emirate  is now in a very difficult position.  It simply cannot devote all of its limited cash to triage. - salvaging those bits with the most commercial promise. Substantial funds have to be devoted to paying Nahkeel's creditors to prevent a complete implosion of the economy.  And to be clear, I'm not focused so much on banks and other financial creditors as much as on trade creditors and investors/purchasers in the projects.

Damas Elects New Board

As you've probably seen in press reports yesterday, Damas held an Extraordinary General Meeting of shareholders yesterday at which a new board was elected.  Here's the press release on NasdaqDubai with more details

As to the new board, the new members are:

1. Abbas G. Ameeri
2. Abdullah Fadhel Ahmed AlMazrui
3. Anan Fakreddin
4. Ehsan Abbas
5. Ibrahim Belsalih
6. Nicholas G. Hegarty
7. Simon Copleston
8. TN Pratap
9. Tariq L. Ali

The EGM also approved:

1. Dual listing of shares in both US$ and AED.  (Previously, Damas was listed only in US$ on NasdaqDubai).
2. The resignation of the former directors.

As you'll recall the DFSA settlement required a change in the Board along with other measures outlined here.

Bin Sulaiman NOT Released on Bail

17 April 2010 Update:  The Attorney General of Dubai has issued a statement that Dr. Bin Sulaiman has not been released.

Below is the original post which is erroneous.

According to the Gulf News, Dr. Omar Bin Sulaiman, Former Governor of the DIFC, has been released on AED 50 million bail.  This amount is equivalent to the amount he is being investigated over.

As you'll recall earlier Dubai had passed an anti corruption law, which among other things provided  for immediate release in the case of full restitution. 

Of course, according to the press article, the amount involved here is "bail" and not a return of the disputed funds.

Limitless - First DIFC Case

Here's a report from Maktoob Business that a former employee has filed a case against Limitless at the DIFC Courts.

As you'll recall (and if you don't, here's the link), if a company owes US$2,000 and does not pay for a period of three weeks, it may be wound up.   Chapter 5 Articles 50 and 51 are the place to look.

Presumably a tactic by the former employee to secure a payment.  It's highly unlikely the Court will put Limitless in compulsory liquidation.

Former Head of DIFC Arrested on Corruption Charges

Yesterday the Gulf News reported the arrest of a former prominent individual at the DIFC  for abuse of his post and AED 50 million (US$ 13.6 million) in financial irregularities.  At that point identified only with the initials OS.     

This morning he's been identified in the press - but not by the authorities - as Dr. Oman Bin Suleiman.  You'll recall last November Shaykh Mohammed relieved Dr. Omar from his position as Governor of the DIFC.

Those who remember their history will recall that back in 2004 the then Head of the DFSA Philip Thorpe and one of his colleagues were summarily ejected from their posts because of their temerity in raising some questions about real estate deals done by the DIFC with related parties. 

Kingdom Holding Company Makes Offer to Acquire Minority Shares in Kingdom Hotel

KHC has made an offer to acquire the minority shareholders' stake in Kingdom Hotels at US$5.00 per share, contingent on achieving a minimum 75% ownership.

Here's the press release on the offer and summary 2009 financial results.

Banks at DIFC Legally Barred From Charging Assets in UAE

Emirates Business 24/7 reports that banks operating out of the DIFC are legally incapable of taking a charge on collateral to secure their loans because only banks regulated by the Central Bank of the UAE may do so.  Banks within the DIFC are not subject to Central Bank of UAE regulations.  Rather the DFSA regulates them.

Presumably authorities will be keen to encourage lending and therefore will expand the law to allow banks regulated by the DFSA to register/perfect charges on collateral.

As to the second constraint, this is not uncommon.  There are restrictions for example on "Wholesale Banks" in the Kingdom of Bahrain in terms of deposit taking from residents of the Kingdom.

DIFC Guide to Issuing Sukuk

From the DIFC press release.

"The Dubai International Financial Centre Authority today announced the release of the “DIFC Sukuk Guide” - a comprehensive introduction to various sukuk structures, as well as legal and regulatory information on issuing sukuk from the DIFC and listing sukuk on NASDAQ Dubai."

Prepared by Clifford Chance, Amanie Consulting, the DFSA and the DIFC,  "The guide provides detailed descriptions of more than 10 sukuk structures, information on the history and current status of sukuk globally, an overview regarding the issuing and listing of sukuk in or from DIFC, and regulatory licensing in the district."

Here's the link to download a copy.

Shakeup in Dubai Inc

Dr. Omar Sulayman is out at DIFC.

He is therefore out at Investment Corporation of Dubai ("ICD").

As are the following also out at ICD:

1. Mohammed Gergawi at Dubai Holding  (He just gave a speech this week at World Economic Forum Global Agenda Meeting in Dubai, which was optimistic to put it mildly).
   
2. Sultan Sulayem at Dubai World
3. Mohammed Al Abbar at Emaar

FT analysis here.  Khaleej Times here.

I think there are three motives:

1. Despite the "humming" you're told you can or should hear from Dubai, the financial situation is not good.
2. "New faces" to put in front of the bankers.   Sober new faces not associated with the old policy.  Guys who are going to use both sides of the Xerox paper.
   
3. Cover for Dubai Inc.  Those responsible have been dealt with. 

Changes at DIFC? Bin Sulayman Out?

Rumors in the market.  Stay tuned.

Hawkamah Corporate Governance Conference - Important Documents Released

Hawkamah held its Fourth Annual Conference "Building Middle East Markets and Corporate Governance Imperatives" the 9th and 10th at the DIFC, Dubai.   Event was in partnership with the OECD.

As usual, a worthwhile event.

Two solid documents issued:

1. Policy Brief on Improving Corporate Governance of Banks in the Middle East and North Africa Region
   
2. Study on Insolvency Systems in the Middle East and North Africa   

The Study covers 11 jurisdictions:

DIFC, Egypt, Jordan, Kuwait, Lebanon, Oman, Palestine, Qatar, Saudi Arabia, UAE and Yemen.

There are some global comparables on recovery rates (Page 5) based on another study the World Bank "Doing Business 2009".

As you might expect, the MENA region has lower claim recovery rates than other major countries.  Japan at 92.5% , the OECD at 68.6% versus MENA at 29.99%.  Bahrain came in with a respectable 63.2%

Anyway:  A hat tip to Hawkamah.  More evidence of  regional institutions helping develop the GCC/MENA market.

DFSA to Tighten Corporate Governance Standards

Abu Dhabi's The National reports on DFSA plans to tighten corporate governance.

Key elements of the proposed reforms are:

1. Mandatory separation of role of Chairman from CEO
2. Abolition of share payment for non executive directors
3. Mandatory number of non-executive directors on audit, remuneration, and nomination committees

The full article is here.

Some comments:

1. I hope the reference to non executive directors is really to independent directors.   A non-executive director could be a major shareholder or the representative of a major shareholder.  An independent director as that term is understood elsewhere, e.g., the UK or Bahrain is someone with sufficient expertise and a degree of independence both from management and the major shareholders so that he or she will truly look out for the interests of all stakeholders of the firm.
2. The comment about the various board committees seems to imply that current regulations allow executive directors to sit on those committees.  An executive director is one involved in the management of the firm.  It is hard to think of a situation where any executive directors should be a member of the audit committee of the board of directors. The audit committee is supposed to be checking very carefully that the management of the firm is applying  appropriate accounting principles and standards as the basis for its financials on a consistent basis and that any estimates involved in the preparation of the financials are well founded and documented.  That the controls in the company are adequate to prevent honest errors or fraud.  And that both the internal audit function and external auditors are independent of management, have assigned competent staff to do the audit and are discharging those responsibilities fully and professionally.  Similarly, it would not be a good idea to have an executive director on the remuneration committee where he might set the salaries of other directors and thus give them an incentive to support his actions as a member of management.  Or on the nomination committee where he might pick a friend to be a director.  There is a fundamental conflict of interest for an executive director to sit on any of these committees.
   
3. While this is a good step, it is very important to understand that regulations are not a panacea. Like the traffic signal at the corner or the posted speed limit, corporate governance reuglations are only effective if people obey them.  So they are a necessary first step.   But, if they are ignored, no matter how elaborate and well constructed they are, they will not work.   Enron Corporation had an extensive code of ethics  - some 65 pages.  That document proved ineffective.  Not for want of not being there.  Rather because the people who were supposed to implement it, didn't.  More on Enron here.  Both Enron Corporation and Hollinger  International had an impressive list of independent directors.  And elaborate procedures to vet related party transactions. Reading the Breeden Report on Hollinger will illustrate better than I can the critical importance of people in making whatever process a firm has work.  Sometimes group dynamics - the desire to avoid confrontation, the fear of appearing ill-informed - cause even the most honest to make bad decisions.  Corporate governance like religion is in the heart not on a piece of paper.  Paper provides a guide, but it's no substitute for the heart.
4. People from the region should not be overawed by experts from the West preaching their particular mathhab of corporate governance.  Enron, BCCI, Madoff, LTCM and many more all occurred in these self-proclaimed exemplars of world class standards and regulation.  Though I suppose the counterargument is that the doctrine is sound but was not followed, or, perhaps more precisely not enforced by the regulators.
5. Finally, if any banker out there thinks that corporate governance code or set of regulations is going to protect him from someone determined to cheat him, I'd refer him or her to my traffic light example above.  Traffic laws have not proven to be a "grail" holy or otherwise in preventing violations or deaths.