Fitch Rates MetroGAS' EUR110 Million Notes `BB+'.

Business Editors

CHICAGO--(BUSINESS WIRE)--Sept. 15, 2000

Fitch has assigned a foreign currency rating of `BB+' to the EUR110 million Notes to be issued by MetroGAS under its $600 million Medium Term Note Program. The Series B Notes will accrue at an annual 7.375 percent interest rate, maturing in September 2002. Proceeds will be used to refinance short- term bank debt.

Fitch maintains an international senior unsecured foreign currency rating of MetroGAS at `BB+' and an international senior unsecured local currency rating of `BBB'. The foreign currency rating is one notch above Fitch's `BB' sovereign rating of the Republic of Argentina. This rating reflects MetroGAS' individual credit quality combined with the expectation that the company would be able to maintain debt service on foreign currency-denominated debt in the unlikely event that the Argentine Government imposed foreign currency and/or transfer controls.

MetroGAS' local currency rating is supported by its low risk business profile, solid capital structure with low financial leverage, and management's ongoing efforts to contain costs. MetroGAS benefits from predictable earnings and cash flow stream, which derive from its remaining 28- year exclusive license to distribute gas within its defined territory. The company serves approximately 1.9 million customers, 95 percent of which are residential and account for near 50 percent of total revenues, providing additional stability to MetroGAS cash flow given the low elasticity of their demand during economic slowdowns. The remaining 50 percent of the company's revenues derive from industrial clients, composed mainly by natural gas-fired power plants. The demand of these plants is strongly related to the hydrological conditions as more than 40 percent of Argentina's electricity comes from hydroelectric power in standard years. Over the near to medium-term, the construction of several combined cycle gas-fired power plants in Buenos Aires area will reduce the sensitivity of throughput volumes to hydroelectric conditions; thus reducing MetroGAS exposure to weather fluctuations. The rating also reflects the company's reliable long-term gas supply contracts and its ability to satisfy peak day requirements.

MetroGAS operates under an adequate regulatory environment where tariffs are determined using a price-cap methodology and are reviewed every five years based on the recovery of new investment plans, and the favorable impact of increased efficiencies. Tariffs are calculated in U.S. dollars and denominated in pesos at a rate 1:1 pursuant to Convertibility Law, and allow for inflation adjustments based on the U.S. Producer Price Index (PPI) every six months (January and July). During FY 2000, the Argentine Government has been reluctant to allow tariff increases related to PPI adjustments for the natural gas distribution companies (LDC). On July 17, 2000, it was decided that the LDCs would receive the previously deferred 3.78 percent from January 2000, and tariff increases related to PPI adjustments, between July 2000 and June 2002 will be deferred until the next tariff revision in July 2002. These tariff increases, registered as revenues by LDC's, will be accumulated in a special fund and will earn interest at 8.2 percent annually. This deferral of the PPI adjustment has been a result of an agreement between the government and the gas distribution companies. Possible additional modifications to the concession agreements have increased the regulatory risk associated with the gas industry.

MetroGAS' financial performance and credit measures reflected significant improvements during 1999 and first semester of 2000, primarily as a result of increased sales to power plants and of processed natural gas, partially offset by a decrease in sales to industrial, commercial and governmental customers. This, combined with sustained costs reductions and a more efficient utilization of firm gas transportation capacity, helped increase the EBITDA margin and the EBITDA interest coverage to 19 percent and 4.0 times as of June 2000, respectively. MetroGAS' capitalization remained stable at 37 percent. Credit protection measures are expected to moderately improve over the coming years based on the beginning of operation of the Buchanan-Pipeline combined with sustained reduction in costs. EBITDA-to-Interest is expected to reach approximately 5 times by year 2003.

Over the last several years, the company has accessed the capital markets to finance its capital expenditure program. Capital expenditures for year 2001 will rise to $90 million and will be partially financed with additional financial debt. These investments are mainly related to the one-time $40 million investment in the Buchanan-Pipeline. Going forward, annual capital expenditures are expected to stabilize at approximately $50 million, and will be financed with MetroGAS' operating cash flow. MetroGAS' financial debt is expected to remain stable at approximately $400 million.

MetroGAS S.A. is the largest of eight Argentine natural gas distribution companies formed from the 1992 privatization of Gas del Estado. The Company has an exclusive license to serve the Federal Capital district, as well as 11 municipalities located in the southern and eastern sections of greater metropolitan Buenos Aires. MetroGAS is 70 percent owned by Gas Argentino S.A. (GASA) and 10 percent by employees, with the remaining 20 percent traded on the Buenos Aires and New York stock exchanges. GASA is a consortium composed of British Gas PLC (54.7 percent) and Astra Compania Argentina de Petroleo S.A. (45.3 percent). British Gas also serves as technical operator of MGS.

Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in New York and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide.