Dana Gas, which missed sukuk payments in October, will pay bondholders $70 million in cash and split the remaining Shariah- compliant debt into $425 million of convertible bonds and an ordinary sukuk of equal value, the United Arab Emirates fuel producer said in a statement. The five-year convertible bonds will pay a profit rate of 7 percent and the ordinary sukuk 9 percent. That compares with 7.5 percent on the existing sukuk.

"It's positive for the creditors because there is no reduction in the principle amount and the process was done relatively quickly," Abdul Kadir Hussain, chief executive officer at Mashreq Capital DIFC in Dubai, said by phone. "The cost is fair because this is a company that went into forced restructuring and so it should pay more than the market average."

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