S&P keeps Linde on negative watch

Standard & Poor's said Linde AG's BBB+/A-2 corporate credit ratings remain on CreditWatch with negative implications following the company's announcement that it will offer an increased price of £16 per share for The BOC plc (A/negative watch/A-1), which is supported by BOC's board of directors.

The increased bid at £16 per share would result in financing needs of about €13.5 billion for the transaction, comprising the purchase price and the refinancing of BOC's debt and pension liabilities. Linde plans to finance this by a rights issue of about €1.4 billion to €1.8 billion, substantial asset disposals and diverse debt instruments, which are expected to reflect about 50% of the total transaction value.

As a result, Linde's key cash flow protection ratios and debt leverage are expected to be aggressive, especially in the first two years after the closing of the transaction, S&P said.

However, the agency also aid that Linde's operating cash flow generation will substantially benefit from the integration of BOC and the focus on industrial gases and engineering should result in an even more stable cash flow stream, supporting fairly quick deleveraging.

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