Liquidity risk is the risk that new financial resources may not be available (funding liquidity risk) or the company may be unable to convert assets into cash on the market (asset liquidity risk), meaning that it cannot meet its payment commitments. This may affect profit or loss should the company be obliged to incur extra costs to meet its commitments or, in extreme cases, lead to insolvency and threaten the company’s future as a going concern. Snam’s objective is to have a financial structure (in terms of leverage ratio and ratios of medium- o long-term debt and fixed-/floating-rate debt to total debt), which ensures an adequate level of liquidity for the group, minimising the related cost and maintaining a balance between the term and composition of its debt in line with business objectives.
Decree Law no. 1 of 20 January 2012, authorising “Urgent arrangements for competition, development of infrastructure and competitiveness”, was published in the Gazzetta Ufficiale of 24 January 2012. Specifically, Article 15 “Arrangements on ownership unbundling” established that the Prime-Ministerial Decree pursuant to Article 1, paragraph 905 of Law no. 296 of 27 December 2006, relating to the implementation of ownership unbundling between Eni and Snam, shall be issued within six months of the above-mentioned Decree Law coming into force.
Snam is currently financed entirely by its ultimate parent, Eni S.p.A. In the case of a change of control at Snam by Eni S.p.A., existing agreements between the companies give Eni S.p.A. the right to extinguish the credit lines granted early. At present, Snam believes that cash flows from operations and its current financial and capital structure can reasonably allow access to a wide range of financing from the capital markets and banks. However, there are no guarantees that Snam would be capable of obtaining loans and financing from other sources under the same conditions as current ones.
