By BLOOMBERG

DUBAI • Talks to resolve a dispute between Dana Gas PJSC and holders of US$700 million (RM2.75 billion) of Islamic securities broke down after the company proposed a 15% haircut on some of the debt, according to two people familiar with the matter.

The energy company suggested buying back about US$200 million at 85 cents to the dollar, and rolling over the rest into new securities with a profit rate of 4%, the people said, declining to be identified.

Bondholders, which include Goldman Sachs Group Inc and BlackRock Inc, want the buyback to be at par and the profit rate to be higher, the people said.

It’s the latest setback in a dispute that began in June, when Dana Gas said it no longer considers its sukuk compliant with Shariah standards.

It has since missed profit payments in July and didn’t repay two US$350 million Mudarabah bonds due on Oct 31. The company initially proposed replacing the securities with four-year notes that pay less than half the current average 8% profit rate, but later retracted the offer.

Dana Gas in December said it plans to ask the UK court to set aside a Nov 17 judgement that went against it because the company couldn’t participate in the trial. If its application is unsuccessful, Dana Gas will appeal against the judgement.

If the appeal is successful, it will be reheard by the English High Court over a three-day period from Jan 30, the company said last month.