FINANCIAL LIABILITIES

6 Months Ended

Jun. 30, 2021

FINANCIAL LIABILITIES


		As of
US$ MILLIONS		June 30, 2021		December 31, 2020
Current:
Inflation swaps		$	—	$	23
Deferred consideration	(a)	978		—

Total current financial liabilities		$	978	$	23

Non-current:
Inflation swaps		$	—	$	46
Deferred consideration	(a)	—		962
Total non-current financial liabilities		$	—	$	1,008

a) Deferred consideration

Deferred consideration is related to the April 4, 2017 acquisition of Nova Transportadora do Sudeste S.A. (“NTS”), our Brazilian regulated gas transmission business. The deferred consideration is denominated in U.S. dollars and accrues interest at 3.35% compounded annually. The financial liability is measured at amortized cost and is payable on the fifth anniversary of the date of acquisition.

Exchangeable shares, class B shares and class C shares

The exchangeable and class B shares are classified as liabilities due to their exchangeable and cash redemption features. Upon issuance, exchangeable and class B shares were recognized at their fair value of $38.09 per share. The fair value was based on the NYSE opening price of one unit on March 31, 2020, the date of the special distribution. Subsequent to initial recognition, the exchangeable and class B shares are recognized at amortized cost and remeasured to reflect changes in the contractual cash flows associated with the shares. These contractual cash flows are based on the price of one unit. As at June 30, 2021, the exchangeable and class B shares were remeasured to reflect the NYSE closing price of one unit, $55.55 per share. Remeasurement gains or losses associated with these shares are recorded in the Consolidated Statements of Operating Results. During the six-month period ended June 30, 2021, our shareholders exchanged 11,410 exchangeable shares for an equal number of units. Our company declared and paid dividends of $23 million and $46 million on its exchangeable shares outstanding during the three and six-month periods ended June 30, 2021, respectively. Dividends paid on exchangeable shares are presented as interest expense in the Consolidated Statements of Operating Results.

The following tables provide a continuity schedule of outstanding exchangeable shares and class B shares along with our corresponding liability and remeasurement gains and losses.


	Exchangeable shares outstanding (Shares)	Class B shares outstanding (Shares)
Balance at January 1, 2020	—	—
Share issuance	46,349,323	1
Share exchanges(1)	(1,388,874)	—

Balance at December 31, 2020	44,960,449	1
Share exchanges(1)	(11,410)	—

Balance at June 30, 2021	44,949,039	1

1. Shares were exchanged for an average unit price of $52.61 and $39.60 for the six-month period ended June 30, 2021 and twelve-month period ended December 31, 2020, respectively. The weighted average price of the units exchanged during the period is calculated based on the NYSE closing price per unit on the date of exchange


	Exchangeable and class B shares (US$ Millions)
Balance at January 1, 2020	$	—
Share issuance	1,765
Share exchanges	(55)
Remeasurement of liability	511
Balance at December 31, 2020	$	2,221

Remeasurement of liability	276
Balance at June 30, 2021	$	2,497

Similar to class B shares, class C shares are classified as liabilities due to their cash redemption feature. However, class C shares, the most subordinated class of all common shares, meet certain qualifying criteria and are presented as equity instruments given the narrow scope presentation exceptions existing in IAS 32. Refer to Note 13, Equity, for further details related to class C shares.