Major Argentine Natural Gas Pipeline Company in Debt Restructuring

Cleary Gottlieb is acting as co-counsel to a creditors committee in the $575 million debt restructuring of Transportadora de Gas del Norte S.A. The offer was launched on August 3 and the expiration date is August 31 (unless extended by the company).

TGN is one of the few remaining Argentine utilities seeking to restructure its financial debt following the economic crisis of 2001-2002. The creditors committee, which includes Stark Investments, ING and D.E. Shaw, has worked closely with the company for more than two years to design a new restructuring proposal after earlier attempts by the company to restructure its financial debt failed to garner sufficient creditor support. The committee members have also entered into a support agreement with the company pursuant to which, among other requirements, TGN must consummate the offer without seeking court approval of the restructuring agreement (known in Argentina as an Acuerdo Preventivo Extrajudicial) in the event that holders of at least 98% of the outstanding debt of the company participate in the offer.

In addition to the committee members and other creditors who have also executed support agreements with TGN, the International Finance Corporation has also agreed to participate in the exchange offer, representing in the aggregate 80.02% of TGN’s outstanding debt as of the launch date of the offer.

Under the exchange offer, holders of TGN’s outstanding debt can exchange their bonds and/or bank loans for a combination of: (1) a pro rata portion of a US$52.4 million cash payment (together with interest accrued on such amount since January 1, 2005); (2) new amortizing 8-year notes; (3) new bullet 8-year notes; and (4) new class C common shares representing up to 20% of TGN’s post-issuance capital stock. Participating holders would also receive additional cash payments at closing in lieu of interest accrued on the new exchange notes since January 1, 2005 (net of any partial interest already paid by the company during such period).