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

Long-term financial liabilities, including the short-term portion, of €12,229 million (€11,381 million at 31 December 2013) comprise:

Financial liabilities to banks (€2,157 million) refer to term loans relating to EIB funding (€1,252 million) and to revolving credit lines (€905 million).

Financial liabilities to banks are all at floating rate, with the corresponding market value taken as the nominal repayment value.

At 30 June 2014, Snam had revolving credit lines committed but unused for approximately €4.7 billion. There were no breaches of loan agreements at the reporting date.

At 30 June 2014, 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.

The medium- and long-term loans taken out with the EIB in place as at 30 June 2014 are subject to contractual clauses in line with those described above, with the exception of the financial covenant.

At 30 June 2014, the financial liabilities subject to these restrictive clauses amounted to approximately €2.6 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 loan¹⁰.

In 2014, Snam repaid: (i) partially, ahead of schedule, a term loan with CDP concerning EIB funding , for a nominal amount of €100 million; (ii) revolving credit lines for a nominal amount of €165 million; and (iii) a loan that had fallen due for a nominal amount of €100 million.

Bonds, worth a nominal €9,942 million, refer to securities issued under the Euro Medium Term Notes programme¹¹. The par value of the ordinary bonds falling due in the next 18 months totals €750 million.

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

Bond Issues

In the first half of 2014, Snam issued three bonds with a par value of €600 million, €150 million and €500 million respectively.

The market value of the bonds, calculated using official listed prices at the end of the period, is approximately €10.5 billion.

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 the relative subsidiaries cannot, respectively, create or maintain restrictions on all or part of their own goods 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 loan¹².

In the first half of 2014, all the contractually required verifications of the financial covenants confirmed compliance.

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