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:

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:

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:

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:

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

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.