Argentina’s Largest Natural Gas Distributor in $440 Million Restructuring

April 26, 2006

Cleary Gottlieb represented a creditors committee in the $440 million debt restructuring of MetroGAS S.A. The committee, which includes Fintech Advisory, UBS and Marathon, worked with the company during the second half of 2005 to design a new restructuring proposal after the company’s earlier restructuring offer failed to garner sufficient creditor support. The committee members also entered into a support agreement with the company pursuant to which, among other things, MetroGAS had the option to consummate the restructuring without seeking court approval of the restructuring agreement (known in Argentina as an Acuerdo Preventivo Extrajudicial) in the event that holders of at least 92% of the outstanding debt of the company participated in the offer. The APE agreement was executed by the company and the consenting creditors in the last week of April and, as contemplated in the support agreement, the exchange is expected to close in mid-May.

MetroGAS launched the new offer in the U.S. and Argentina in November 2005 and in Italy in March 2006, resulting in a combined acceptance level of 95%. Given the high level of support, MetroGAS will seek to consummate its restructuring pursuant to a voluntary out-of-court exchange.

Under the new offer, holders of MetroGAS’ outstanding debt can exchange their bonds and/or loans for new amortizing 10-year discount notes, amortizing 10-year par notes or cash at a 25% discount. If the cash option is undersubscribed, up to 36% of the debt of those receiving the discount notes will be allocated (pro rata) to the cash option; if the cash option is oversubscribed, the oversubscribed debt will be allocated (pro rata) to the par option. Holders who elect to receive either the discount or par notes will also receive a cash payment at closing in lieu of interest accrued on the new notes since January 1, 2005.

MetroGAS is the largest natural gas distribution company in Argentina (in terms of number of customers and volume of gas deliveries), with more than 1.9 million customers in the greater Buenos Aires area.