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24 Long-term financial liabilities and short-term portions of long-term liabilities

Based on the table used in the Directors’ Report, net financial debt can be broken down as follows:

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(€ million)

31.12.2012

31.12.2013

 

Current

Non- current

Total

Current

Non- current

Total

Financial liabilities

 

 

12,554

 

 

13,328

Short-term financial liabilities

505

 

505

1,947

 

1,947

Long-term financial liabilities

110

11,939

12,049

303

11,078

11,381

Financial receivables and cash and cash equivalents

 

 

(15)

 

 

(2)

Cash and cash equivalents

(15)

 

(15)

(2)

 

(2)

 

601

11,938

12,539

2,248

11,078

13,326

Long-term financial liabilities

Long-term financial liabilities, including the short-term portions, of €11,381 million (€12,049 million at 31 December 2012) comprise:

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(€ million)

31.12.2012

31.12.2013

 

Short-term portion

Long-term portion

Total

Short-term portion

Long-term portion

Total

Banks

29

5,972

6,001

105

2,417

2,522

Ordinary bonds

81

5,965

6,046

198

8,659

8,857

Other lenders

 

2

2

 

2

2

 

110

11,939

12,049

303

11,078

11,381

The reduction in long-term financial liabilities (€668 million) was due to the combined effect of loans taken out and repayments made in 2013.

Loans taken out (€3,808 million) mainly concerned: (i) the issuance of five bonds for a total nominal value of €1,945 million; (ii) the launch of two taps of existing bonds for a total incremental amount of €750 million; (iii) the granting of three loans by the European Investment Bank (EIB), worth €300 million, €283 million and €65 million respectively (floating-rate amortised loans); and (iv) the use of revolving credit lines relating to bilateral loans with third-party banks for a total nominal amount of €225 million.

Repayments (€4,471 million) mainly concerned: (i) the early repayment of a pool loan from third-party banks for a nominal amount of €1,500 million, whose natural expiry was scheduled for 2017; and (ii) revolving credit lines relating to bilateral loans with third-party banks for a total nominal amount of €2,860 million.

The following table provides a breakdown of bonds by issuer and currency, showing the maturity date and the rate of interest:

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Euro Medium Term Notes (EMTN)

 

 

 

 

 

 

 

(€ million)

 

 

 

 

 

 

Issuing company

Currency

Notional
amount

Issue discount and accrued interest

Total

Rate (%)

Maturity

(*)

Bond tapped for an incremental amount of €500 million, with the same interest rate and maturity as the original placement.

(**)

Bond tapped for an incremental amount of €250 million, with the same interest rate and maturity as the original placement.

(***)

Bond corresponding to ¥10 billion converted into euros at the year-end spot exchange rate. The liability was converted into euro using a cross currency swap.

Snam S.p.A.

1,500

38

1,538

3.875

2018

Snam S.p.A.

1,250

40

1,290

3.5

2020

Snam S.p.A.

1,250

12

1,262

2.375

2017

Snam S.p.A.

1,000

42

1,042

5

2019

Snam S.p.A. (*)

1,000

18

1,018

4.375

2016

Snam S.p.A.

1,000

7

1,007

5.25

2022

Snam S.p.A.

750

 

750

2

2015

Snam S.p.A. (**)

500

9

509

3.375

2021

Snam S.p.A.

300

 

300

Floating

2016

Snam S.p.A.

70

1

71

2.625

2018

Snam S.p.A. (***)

Yen

70

 

70

1.115

2019

 

 

8,690

167

8,857

 

 

Financial liabilities to banks (€2,522 million) refer to: (i) revolving credit lines (€1,072 million); and (ii) term loans worth a total of €1,450 million, including €1,350 million23 relating to EIB funding and €100 million relating to a loan from a private bank, maturing on 29 January 2014.

At 31 December 2013, Snam had unused committed revolving credit lines worth approximately €5.2 billion24. There were no breaches of loan agreements at the reporting date.

Long-term financial liabilities (€11,381 million, including the short-term portions) are indicated below with their respective maturities:

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(€ million)

Value at 31 December

Maturity

Long-term maturity

Total long- term

 

2012

2013

2014

2015

2016

2017

2018

After 2018

Banks

6,001

2,522

105

790

320

20

51

1,236

2,417

Ordinary bonds

6,046

8,857

198

748

1,296

1,247

1,562

3,806

8,659

Other lenders

2

2

 

 

 

 

 

2

2

 

12,049

11,381

303

1,538

1,616

1,267

1,613

5,044

11,078

The breakdown of long-term financial liabilities by type of interest rate is as follows:

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(€ million)

31.12.2012

31.12.2013

 

Amount

%

Amount

%

(*)

At 31 December 2013, fixed-rate loans referred almost exclusively to bonds.

At fixed rate (*)

6,048

50

8,559

75

At floating rate

6,001

50

2,822

25

 

12,049

100

11,381

100

At 31 December 2013, Snam had medium- and long-term loans from a pool of national and international banks. Some bilateral loan agreements were also entered into with these banks. The main medium- to long-term financial payables are also subject, inter alia, to the usual covenants imposed in international market practice, e.g. financial covenants and negative pledge, pari passu and change of control clauses.

Specifically, the pool loans and most of the bilateral loans are subject, inter alia, to:

  • a financial covenant stipulating compliance by Snam with a set ratio of net financial debt to RAB, as defined in the loan agreements;
  • a negative pledge covenant pursuant to which Snam and the Group subsidiaries are subject to limitations in terms of pledging real property rights or other restrictions on all or part of the respective assets, shares or merchandise, and/or documents representing merchandise; this covenant is subject to set expiry dates and to exceptions on restrictions whose creation and/or existence is explicitly permitted.

Snam also had the following in place at 31 December 2013:

  • medium- and long-term loan agreements with Cassa Depositi e Prestiti S.p.A. concerning EIB funding. The loans are subject to obligations in line with the provisions applicable to the other medium- and long-term bank loans described above;
  • medium- and long-term loans taken out with the EIB, which are subject to contractual clauses in line with those described above, with the exception of the financial covenant.

At 31 December 2013, the financial liabilities subject to these restrictive clauses amounted to approximately €3.7 billion.

Failure to comply with the covenants established for these loans – in some cases only when this non-compliance is not remedied within a set time period – and the occurrence of other events, such as cross-default events, some of which are subject to specific threshold values, may result in Snam’s failure to comply and could trigger the early repayment of the relative loan.

Bonds, worth a nominal €8,690 million, refer to securities issued under the Euro Medium Term Notes programme.

The covenants set for the programme’s securities reflect international market practices and relate, inter alia, to negative pledge and pari passu clauses. Specifically, under the negative pledge clause, Snam and its significant subsidiaries are subject to limitations in relation to the creation or maintenance of restrictions on all or part of their own assets or inflows to guarantee present or future debt, unless this is explicitly permitted.

Failure to comply with these covenants – in some cases only when this non-compliance is not remedied within a set time period – and the occurrence of other events, such as cross-default events, some of which are subject to specific threshold values, may result in Snam’s failure to comply and could trigger the early repayment of the relative loan.

In 2013, all the checks on the financial covenants required under the contracts confirmed compliance with the covenants.

The market value of the long-term financial liabilities is analysed in Note 30, “Guarantees, commitments and risks”.

Below are details of net financial debt showing related-party transactions.

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(€ million)

31.12.2012

31.12.2013

 

Current

Non- current

Total

Current

Non- current

Total

A. Cash and cash equivalents

15

 

15

2

 

2

B. Securities

 

 

 

 

 

 

C. Cash (A+B)

15

 

15

2

 

2

D. Financial receivables not held for operating activities

 

 

 

 

 

 

E. Short-term financial liabilities to banks

364

 

364

1,936

 

1,936

F. Long-term financial liabilities to banks

27

5,572

5,599

102

2,017

2,119

G. Bonds

81

5,965

6,046

198

8,659

8,857

H. Short-term financial liabilities to related parties

141

 

141

11

 

11

I. Long-term financial liabilities to related parties

2

400

402

3

400

403

L. Other short-term financial liabilities

 

 

 

 

 

 

M. Other long-term financial liabilities

 

2

2

 

2

2

N. Gross financial debt (E+F+G+H+I+L+M)

615

11,939

12,554

2,250

11,078

13,328

O. Net financial debt (N-C-D)

600

11,939

12,539

2,248

11,078

13,326

23 The amount includes two loans agreed with CDP concerning EIB funding for a total of €403 million.

24 In January and February 2014, as part of the process of optimising its debt structure, Snam reduced its available committed long-term credit lines by €0.5 billion.

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