The shareholders of Dana Gas have given a nod to distribute the company's potentially first-ever cash dividend despite the board’s recommendation to defer disbursement to a later date in the wake of the ongoing litigation.
The company, on the recommendation of the Securities and Commodities Authority, tabled a resolution at the annual general meeting on Wednesday detailing the legal battles in London and the UAE and asked the shareholders to delay the cash dividend disbursement, a request which they rejected, the company said in a statement to Abu Dhabi Securities Exchange, where its shares are traded.
“Such resolution was put to the shareholders but rejected by simple majority, subsequent to which the majority of shareholders proceeded to vote in favour of the declaration of a dividend, against the board of director’s specific reconsidered recommendation to the contrary,” the company said in the bourse filing.
Shares in the company rose during early trading but lost momentum in the latter half of the session, ending flat at Dh0.96 per share. It was the second most traded stock on the bourse, which closed 0.5 per cent higher.
The Sharjah-based company is embroiled in a legal dispute over the legality of its sukuk after it shocked creditors, including investment bank Goldman Sachs and the world’s largest asset manager BlackRock, last year when it declared its Islamic bonds illegal, citing changes in sharia law. The company argued that it was, therefore, not obliged to repay the debt, and has faced legal action from creditors as a result.
In an April 8 bourse filing, the company said that it had received an injunction from the UK High Court related to the ongoing dispute with its creditors, which prevented it from paying dividends unless it also sets aside money to redeem the sukuk.
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The company on Wednesday said that the Sharjah Federal Court of First Instance suspended the enforcement of the UK court orders pending referral to the UAE courts to determine their enforceability. The existing and future sukuk holders of Dana gas were also barred from taking legal action against the firm by Sharjah court, it said in a bourse filing.
In March the board of Dana Gas recommended distributing 5 per cent of the company's capital as a cash dividend for the financial year 2017, which, if disbursed, would be the first cash dividend in the company’s trading history.
Dana said on April 15 it sought guidance from SCA, which also advised the firm to put the English court’s restraining order before the UAE courts to determine eligibility for enforcement in the country.
“On the matter of the deferral of the consideration and resolution of the dividend item on the AGM agenda, SCA responded that it had no objection on condition that the shareholders at the meeting be made aware of the English Court injunction,” the company said.
Despite the dispute, Dana Gas is pursuing its strategy of recovering outstanding receivables and stabilising its business amid difficult market conditions.
