GAS TRANSPORTER OF THE SOUTH INC | CIK:0000931427 |

Short-term and long-term loans as of December 31, 2017 and 2016 comprise the following:

⁽¹⁾Issuance expenses net.

 

The breakdown of loans based on its currency of origin is the following:

 

The activity of the loans as of December 31, 2017 and 2016 is the following:

 

 

₍₁₎  As of December 31, 2017, Ps. 37,951 were cancelled through the offsetting of debit balances maintained with the creditor (Pampa Energía).

₍₂₎  As of December 31, 2017, Ps. 44,457 were cancelled through the offsetting of debit balances maintained with the creditor (Pampa Energía).

The maturities of the current and non-current loans (without including issuance cost) as of December 31, 2017 are as follows:

 

The following are the maturities of the finance leases in force as of December 31, 2017:

 

The following table sets reconciliation between the total of future minimum lease payments as of December 31, 2017, and their present book value:

 

Issuance of notes under the 2014 Global Program (the “2014 EMTN Program”):

The 2014 EMTN Program provides for the issuance of up to a maximum principal amount of U.S.$400 million in notes, and was authorized by resolutions of an Extraordinary Shareholders’ Meeting dated April 25, 2013, and by resolutions

 

of its Board of Directors adopted on July 23, 2013 and December 23, 2013. The program was also authorized by the CNV on January 3, 2014, after the issuance of Resolution No. 17,262.

As it is mentioned above, on January 10, 2014 TGS launched an offer for a voluntary exchange. The exchange offer settled on February 7, 2014. TGS accepted 67% of the 2007 Notes. For this reason, on February 7, 2014, the Company issued its 2014 Notes in aggregate principal amount of U.S.$255,451,506 (the “2014 Notes”) under its 2014 EMTN Program. The main conditions of 2014 Notes are as follows:

 

 

The 2014 Notes are traded in the BCBA, the MAE and the Euro MTF of the Luxembourg Exchange.

The terms and conditions of the 2014 Notes are similar to those applied to the 2007 Notes, having not changed financial covenants with respect to those effective for the 2007 Notes. According to the criteria established by IAS 39, the exchange offer was not accounted for as an extinguishment of financial liabilities, and thus, the costs paid are amortized over the remaining life of the 2014 Notes.

The book values are based on cash flows discounted at an effective rate of 10.126%.

The 2014 Notes contain certain restrictive covenants that, among other things, limit the ability of the Company to (i) incur additional indebtedness, (ii) pay dividend, (iii) issue guarantees, (iv) dispose certain assets and (v) make certain related party transactions. The Company was in compliance with all covenants of the 2014 Notes as of the December 31, 2017.

The Company may incur in additional indebtedness as long as (i) after issuing it, the consolidated coverage ratio (calculated as the quotient of the consolidated adjusted EBITDA -earnings before financial results, income tax, depreciation and amortization-) and the consolidated interest expense) is equal or higher than 2.0:1; and (ii) the consolidated debt ratio (calculated as the quotient of the consolidated debt and the consolidated EBITDA) is equal or lower than 3.75:1; (ii) it is incurred to refinance outstanding debt and (iii) it is originated in advances from customers.

Additionally, the Company may pay dividends as long as (i) the Company is not in default under 2014 Notes, (ii) immediately after any dividend payment, the Company would be able to incur in additional indebtedness pursuant to item (i) and (ii) of the preceding paragraph.

 

On August 11, 2016, the Company entered into a financial leasing agreement with Pampa Energía. The agreement is valid for 10 years. During 9 years and 11 months TGS pays Pampa Energía a monthly fee of U.S.$ 623,457, without taxes, with an option to purchase in month 120 for the same amount.