MetroGas to explore refinancing options amid license process delay

By Caroline Salls

Pittsburgh, March 11 - MetroGas SA's board of directors has agreed to hire Barclays plc to work with the company to find the best possible alternative for refinancing MetroGas' outstanding debt while it awaits completion of a license renegotiation process, according to a 6-K filed with the Securities and Exchange Commission.

The company said the license renegotiation process would lead to a necessary tariff review to establish a fair and reasonable tariff that would allow MetroGas to continue operating in the medium and long term.

According to the release, Enargas has not yet issued the tariff charts under a transitory agreement between the company and the Renegotiation and Public Services Contract Analysis Unit.

Even though the company had to submit increases to the diverse categories of customers aimed at funding the capacity expansions for main gas pipelines and paying gas increases to producers, MetroGas said the increases did not result in an income of any kind given that the tariff obtained by the distribution services has not been adjusted in more than 10 years.

Although it complied with all of the requirements related to the pass through of levies, contributions and other charges that significantly impact its operating costs and also the daily differences in the price of gas purchasing and the operating unit costs, the company said the authorities still have not approved the pass through of charges to the customers, "disregarding all of the rules and regulations in force" after seven years since the company first filed for recognition.

As a result, MetroGas said it has been forced to pay these charges in order to avoid court executions.

The company said it had to absorb increases in costs that rose by 200% on average from 2001 to 2009.

MetroGas said the deterioration in its financial position continues to affect its capacity to generate the necessary cash flow.

If the situation persists, the company said it may be forced to refinance its outstanding debt.

MetroGas is a Buenos Aires gas company.

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