Linde plc — Form 10-Q Summary
Business context and reporting period
For the quarter ended September 30, 2017; Linde plc was incorporated on April 18, 2017 and had conducted no material operating activities. The filing primarily reflects formation and costs related to the proposed combination of Praxair, Inc. and Linde AG. Accordingly, the quarter and inception-to-date results are not comparable to a prior-year operating period.
Financial results and position
| Metric | Quarter ended September 30, 2017 | April 18–September 30, 2017 |
|---|---|---|
| Revenue | None reported; the filing does not provide a clear revenue figure. | |
| Other expenses / operating loss | $290,825 | $753,465 |
| Net loss | $290,825 | $753,465 |
| Total comprehensive loss | $309,447 | $769,581 |
| Basic and diluted loss per share | $(11.63) | $(30.14) |
At September 30, total assets were $9.07 million, including $8.98 million of capitalized equity-issuance costs. Cash was $83,342. Current liabilities included $9.22 million of related-party debt and $622,059 of accrued liabilities; shareholders’ equity was negative $774,997. No operating margins are meaningful because the company had no material operating business or reported revenue.
From inception through September 30, operating cash flow was negative $34,798, investing cash flow was zero, and financing cash flow was positive $118,140. Ending cash was $83,342. Praxair International Finance UC paid certain registration fees directly on the company’s behalf; these were treated as noncash transactions in the cash flow statement.
Changes, financing, and outlook
- The company’s $30 million euro-denominated cash management facility with Praxair International Finance UC bears interest at one-month EUR LIBOR plus 0% and had $9.22 million outstanding at September 30.
- The $8.98 million of equity-issuance costs are capitalized; if the business combination is not completed, they will be recognized as expense.
- Praxair shareholders approved the merger on September 27. After quarter-end, on October 23, the Linde AG exchange-offer minimum acceptance threshold was reduced from 75% to 60%, and the offer deadline was extended to November 7, 2017. As of October 26, approximately 67.95% of eligible Linde AG shares had been tendered.
- The parties expected the combination to close in the second half of 2018, subject to tender, regulatory and other conditions. The filing gives no standalone earnings or operating guidance for Linde plc.
Risks and unusual items
Completion could be delayed or fail due to regulatory approvals, unmet closing conditions, adverse legal or regulatory action, or other specified termination events. The agreement provides for a €250 million termination fee in certain circumstances. Management also identified risks including integration disruption, failure to achieve expected synergies or cost reductions, litigation, cybersecurity issues, pension-asset performance, and economic, currency, tax, and regulatory changes. The filing reported no legal proceedings and no significant market risk from the company’s activities during the period. Management concluded disclosure controls were effective.
Investor facts to verify
- Whether the exchange offer met its revised threshold by the November 7, 2017 deadline and whether required regulatory approvals were obtained.
- Whether the business combination closed as expected and whether integration costs, synergies, or other transaction effects differed from expectations.
- How the company funded its obligations and whether the related-party facility balance, terms, or accrued transaction costs changed.
- Whether capitalized issuance costs were ultimately offset against an equity transaction or expensed if the combination did not close.