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Dana Gas announced on 15 October that it had secured a USD 90 million loan from the UAE's Mashreq Bank priced at Libor plus 3 percent.
The loan matures in one year, but is extendable at DG's option for another four years.
As per the press release, the loan "will be repaid" when DG's Egyptian assets are sold.
Some thoughts.
First, the 3% margin is described as "initial". That certainly sounds like it is subject to change. AA for one would expect that as the loan is extended the margin is increased.
Second, DG's Chairman asserted that this loan is a testament to DG's "financial and operational strength".
That is a bit of a howler.
It reminds me of the repeated assertions of Damas' "proven business model" made some years back by the Abdullah Brothers.
DG is borrowing one year money at a 3% margin.
That is a rather large spread.
And more likely evidence of financial and operational weakness than strength.
In any case the long ordeal of the Sukuk holders is over.
Perhaps one man's gain will be another man's loss?
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