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LOANS | 12 Months Ended
--- | ---
Dec. 31, 2019
LOANS [Abstract] |
LOANS |
13. | LOANS
Short-term and long-term loans as of December 31, 2019 and 2018 comprise the following:
|  | 2019 |  |  | 2018 |
Current Loans |  |  |  |  |  |
2018 Notes Interest |  |  | 336,881 |  |  |  | 349,375 |
Pre-export finance |  |  | 1,021,325 |  |  |  | - |
Leasing (Note 22) |  |  | 363,881 |  |  |  | 331,850 |
Total Current loans |  |  | 1,722,087 |  |  |  | 681,225 |
Non Current Loans |  |  |  |  |  |  |  |
2018 Notes |  |  | 29,847,160 |  |  |  | 28,789,009 |
Leasing (Note 22) |  |  | 2,013,557 |  |  |  | 2,214,706 |
Total non current loans |  |  | 31,860,717 |  |  |  | 31,003,715 |
Total (1) |  |  | 33,582,804 |  |  |  | 31,684,940 |
(1) Net of issuance expenses of Ps. 97,840 and Ps. 185,243 as of December 31, 2019 and 2018, respectively. The activity of the loans as of December 31, 2019 and 2018 is the following:
|  | 2019 |  |  |  |
|  | Leases liabilities |  |  | Other payables |  |  | 2018 |
Beggining balance |  |  | 2,546,556 |  |  |  | 29,138,384 |  |  |  | 10,218,503 |
Inflation adjustment restatement |  |  | (891,146 | ) |  |  | (13,298,217 | ) |  |  | (10,931,986 | )
Accrued interest |  |  | 194,944 |  |  |  | 2,061,631 |  |  |  | 2,305,265 |
Effect of foreign exchange rate change |  |  | 1,178,710 |  |  |  | 13,935,368 |  |  |  | 19,765,612 |
VAT unpaid installments |  |  | 15,988 |  |  |  | - |  |  |  | 29,388 |
Procceds from loans |  |  | - |  |  |  | 1,051,809 |  |  |  | 21,261,978 |
Payment of loans (1) |  |  | (167,989 | ) |  |  | - |  |  |  | (2,042,940 | )
Payment of redemption of loans |  |  | - |  |  |  | - |  |  |  | (7,378,176 | )
Interest paid (2) |  |  | (159,164 | ) |  |  | (2,024,070 | ) |  |  | (1,542,704 | )
Ending balance |  |  | 2,717,899 |  |  |  | 30,864,905 |  |  |  | 31,684,940 |
(1) For the years ended on December 31, 2019 and 2018, Ps. 149,238 and Ps. 156,861 respectively were cancelled through the offseting of debit balances maintained with the creditor (Pampa Energía). (2) For the years ended on December 31, 2019 and 2018, Ps. 143,357 and Ps. 149,373, respectively, were cancelled through the offseting of debit balances maintained with the creditor (Pampa Energía). The maturities of the current and non-current loans as of December 31, 2019 are as follows, not including issuance expenses:
|  |  |  |  | To due |  |  |  |
|  | Due at 12/31/2019 |  |  | From 1/01/2020 to 12/31/2020 |  |  | From 1/01/2021 to 12/31/2021 |  |  | From 1/01/2022 to 12/31/2022 |  |  | From 1/01/2023 to 12/31/2023 |  |  | From 1/01/2024 onwards |  |  | Total |
2018 Notes |  |  | - |  |  |  | 336,881 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 29,847,160 |  |  |  | 30,184,041 |
Financial Leasing |  |  | 90,363 |  |  |  | 273,518 |  |  |  | 296,515 |  |  |  | 321,370 |  |  |  | 348,380 |  |  |  | 1,047,292 |  |  |  | 2,377,438 |
Pre-export finance |  |  | - |  |  |  | 1,021,325 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 1,021,325 |
Total |  |  | 90,363 |  |  |  | 1,631,724 |  |  |  | 296,515 |  |  |  | 321,370 |  |  |  | 348,380 |  |  |  | 30,894,452 |  |  |  | 33,582,804 |
The following table sets reconciliation between the total of future minimum lease payments as of December 31, 2019, and their present book value:
|  | 12/31/2019 |
As of 12/31/2020 |  |  | 538,339 |
From 1/01/2021 to 12/31/2021 |  |  | 448,037 |
From 1/01/2022 to 12/31/2022 |  |  | 448,037 |
From 1/01/2023 to 12/31/2023 |  |  | 448,037 |
From 1/01/2024 onwards |  |  | 1,163,723 |
Total minimum future payments |  |  | 3,046,173 |
Future financial charges on financial leases |  |  | (668,735 | )
Book Value financial leases |  |  | 2,377,438 |
Description of the indebtedness of the Company Class 2 Notes (“2018 Notes”) The Ordinary General Shareholders’ Meeting held on April 26, 2017, ordered the increase of up to US$ 700,000,000 (or its equivalent in other currencies) of the 2017 Program authorized by the CNV by Resolution No. 17,262 dated January 3, 2014, whose amount until the Shareholders´ Meeting was held was US$ 400,000,000 (the “2017 Program”). On May 2, 2018, within the framework of the 2017 Program, the Company issued the 2018 Notes according to the following characteristics:
| 2018 Notes
Amount in U.S.$ | 500,000,000
Interest Rate | 6.75% annual
Issuance price | 99.725%
| Scheduled payment date | Percentage of the principal to be paid
Amortization | May 2, 2025 | 100%
Frequency of interest payment | Semiannual, payable on May 2 and November 2 of each year.
Guarantor | None
The authorization for the public offering of the 2017 Program was granted by the CNV through Resolutions No. 17,262 and 18,938 dated January 3, 2014 and September 15, 2017, respectively. On October 31, 2018, through Disposition No. DI-2018-55-APN-GE#CNV, the CNV granted the extension of the 2017 Program until January 3, 2024. The Ordinary General Shareholders´ Meeting held on August 15, 2019 decided to increase the 2017 Program from US$ 700 million to US$ 1.2 billion. This increase was authorized by the CNV on October 9, 2019 through Resolution RESFC-2019-20486-APN-DIR # CNV. Funds obtained by the Company are applied to:
i. | The repurchase of the Class 1 Notes (the “2014 Notes”) for U.S.$ 86,511,165;
ii. | the cancellation and total redemption of the 2014 Notes for U.S.$ 120,786,581;
iii. | the balance of net funds to make investments in capital expenditures.
The value of the financial debt is based on its amortized cost calculated as cash flows discounted at an effective rate of 7.088%. Covenants As of the date of issuance of these consolidated financial statements, the Company has complied with a series of restrictions derived from its current financial agreements, which include, among others, those related to obtaining new loans, payment of dividends, granting of guarantees, disposal of certain assets and make certain transactions with related parties. The Company may contract new debts under the following conditions, among others: a. To the extent that after the new debt has been incurred (i) 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 to or lower than 3.5:1. b. For the refinancing of the outstanding financial debt. c. Originated by customer advances. The Company may pay dividends under the following conditions: (i) the Company is not in default under 2018 Notes, and (ii) immediately after any dividend payment, the Company may incur new debts according to the provisions in point a. of the preceding paragraph. Lease liability Corresponds to the financing obtained for the acquisition of the corresponding assets to the treatment and compression plant located in the area of Río Neuquén. Said agreement was concluded on August 11, 2016 with Petrobras (currently Pampa Energía) and consists of the payment of 119 consecutive monthly installments of U.S.$ 623,457 without taxes and an option to purchase for the same amount payable at the end of the 120th month of the effectiveness of the contract. Pre-export finance On November 5, 2019, the Company agreed with Itaú Unibanco S.A. the granting of a loan for US $ 17 million in order to pre-finance the exports of propane, butane and natural gasoline made. The characteristics of this loan are as follows:
Amount in US$ | 17,000,000
Interest Rate | LIBOR + 1.95%
| Scheduled payment date | Percentage of the principal to be paid
Amortization | March 4, 2020 | 100%
Frecuency of interest payment | Monthly, payable on December 4,2019, January 6, 2020, February 4, 2020 and March 4, 2020
Guarantor | US Treasury bills *
* Included in “Other financial assets at amortized cost.”
As of the date of issuance of these Financial Statements, this loan is fully paid.

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