Linde Plc · NASDAQ:LIN
Linde — Debt Investor Presentation (July 2006)
45 slides from Linde's debt investor presentation, July 2006
Slide 1: Subordinated bond issue Linde Group
Strictly private & confidential Subordinated bond issue Linde Group July 2006
Slide 2: Disclaimer (1)
Strictly private & confidential Disclaimer (1) This presentation contains forward-looking statements about Linde AG (“Linde”), The BOC Group plc (“BOC”) and their respective subsidiaries and businesses. These include, without limitation, those concerning the strategy of an integrated group, future g
Slide 3: Disclaimer (2)
Strictly private & confidential Disclaimer (2) This presentation has been prepared by and is the sole responsibility of Linde AG (“Linde”). This presentation is provided for information purposes only and does not constitute or form part of any offer or invitation to sell or issue, or any solicitatio
Slide 4: Disclaimer (3)
Strictly private & confidential Disclaimer (3) This document and its contents are confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose. This document is for distribution only to persons who
Slide 5: Together with BOC we will create a leading global industrial gases business
Strictly private & confidential Together with BOC we will create a leading global industrial gases business
Slide 6: Linde and BOC – A global leader with enhanced profitability
Strictly private & confidential 1 Linde and BOC – A global leader with enhanced profitability 2 Acquisition details 3 Finance policy and debt considerations 4 Key aspects of the hybrid financing 5 Linde’s historical performance 6
Slide 7: A compelling strategic rationale
Strictly private & confidential A compelling strategic rationale A logical strategic move • A world leading industrial gas company • Sustainable and stable growth in the gas industry • Strong cash flow generation • Minimal LBO risk Transformation into pure gas play • Disposal of Material Handling vi
Slide 8: A global leader in industrial gases
Strictly private & confidential A global leader in industrial gases Global industrial gases revenues 2005 (in €m) (1) (before potential anti-trust disposals) 12,000 • Pure gas player • Global presence on all continents 8,000 • Strong and complementary position in — Regions — Market segments 4,000 —
Slide 9: Linde Gas: Product Segments – Cylinder, Bulk
Strictly private & confidential Linde Gas: Product Segments CYLINDER — Low-volume users — Also covering high-value gases — Delivery through dense dealer network — Cylinders generate rental fees — 2005 sales: €1,644 million BULK — Medium-volume users — Delivery via railroad/trucks to gas tanks — Medi
Slide 10: Linde Gas: Product Segments – On-site, Healthcare
Strictly private & confidential Linde Gas: Product Segments ON-SITE — High-volume users — Delivered through pipeline from on-site unit — Long-term take-or-pay contracts (15 years) — Energy prices subject to pass-through clauses — 2005 sales: €1,010 million HEALTHCARE — Institutional (hospital suppli
Slide 11: Industrial gases market characterised by stable growth
Strictly private & confidential Industrial gases market characterised by stable growth Strong and stable growth Global industrial gases market growth • Growth expectation from 2004 onwards 1999 – 2009E of 7% p.a. €51.0bn • Driven by new applications and outsourcing CAGR +7% • Very stable industry gr
Slide 12: Strong international presence with only limited overlap
Strictly private & confidential Strong international presence with only limited overlap (1) Combined global presence in approx. 70 countries #2 Europe #3 North America 32% 15% 23% 9% 7% 8% Linde BOC Linde BOC #1 Africa #1 Asia/Pacific (2) #2 South America 42% 12% 24% 42% 10% 18% 0% 2% 6% Linde BOC L
Slide 13: Complementary geographic presence
Germany Sweden Norway Finland Denmark Linde Iceland Austria Switzerland Benelux Spain BOC France Strictly private & confidential Italy Portugal Greece Cyprus Russia Hungary Czech Republic Slovakia Romania Bulgaria Ukraine Slovenia Estonia Lithuania Latvia Serbia Linde + BOC presence by country (1) C
Slide 14: Leading position in product segments
Strictly private & confidential Leading position in product segments Global cylinder sales (1) Global bulk sales (1) Global onsite sales (1) Joint #1 #1 BOC BOC #2 Linde BOC Linde Linde Linde + AL PX AP AL Linde + PX AP AL Linde + AP PX BOC BOC BOC • Market leader • Joint market leader • Global #2 p
Slide 15: Ideally positioned in key growth markets and segments
Strictly private & confidential Ideally positioned in key growth markets and segments Linde + BOC global market shares per growth segments (1) Leading position in 4 out of 7 growth segments Geographies (2) Products #1 #1 BOC 24% Linde 6% 31% #2 #1 #2 8% #1 #4 4% 17% 10% 9% 18% 15% 9% 8% 7% 4% Easter
Slide 16: Linde Engineering: Leading market position in all product segments
Strictly private & confidential Linde Engineering: Leading market position in all product segments Top 1 Top 2 Air Separation Plants Hydrogen and Synthesis Products: Gas Plants • Oxygen Products: • Nitrogen • H2/CO/Syngas • Rare gases • Ammonia • Gas removal • Gas purification Olefin Plants Natural
Slide 17: Leveraging the existing Engineering JV to its full potential
Strictly private & confidential Leveraging the existing Engineering JV to its full potential Track record of successful cooperation • Long-standing close cooperation for more than 10 years • BOC Engineering successfully integrated in JV since 2002 • Exclusive development and construction agreement •
Slide 18: Combined gas and engineering revenues of approx. €12 bn
Strictly private & confidential Combined gas and engineering revenues of approx. €12 bn (1) 2005 estimated gas and engineering 2005 estimated gas and engineering revenues (in €bn) (1) EBIT (in €bn) (2) 11.9 1,6 6.1 0,8 5.8 0,8 (3) (3) Linde G&E BOC combined Linde G&E BOC combined • Further potential
Slide 19: Annual pre-tax cost synergies of ~€250m p.a.
Strictly private & confidential Annual pre-tax cost synergies of ~€ 250m p.a. Synergy split Comments • Cost synergy potential of ~€ 250m p.a. Procurement Supply further substantiated and R&D Management/ — Realisation of full cost synergies expected Production during 2009 — More than 50% of synergies
Slide 20: EBITDA
Strictly private & confidential EBITDA Linde Gas EBITDA margin at the leading Linde EBITDA growth post transaction edge within the industry • Traditionally high EBITDA margin levels continued to be achieved by combined group 28 Definition 27 • Communication of group and segment EBITDA 26 • Current L
Slide 21: Acquisition details
Strictly private & confidential 1 Linde and BOC – A global leader with enhanced profitability 2 Acquisition details 3 Finance policy and debt considerations 4 Key aspects of the hybrid financing 5 Linde’s historical performance 21
Slide 22: Anticipated timetable – key milestones
Strictly private & confidential Anticipated timetable – key milestones Announcement • 6 March 2006 • Anti-trust approval as pre-condition • Offer will be recommended by BOC board Loan syndication • 3 May 2006 Anti-trust • 6 June 2006: Approval from European Commission • Pre-conditions include sale o
Slide 23: Purchase Price and Financing Framework
Strictly private & confidential Purchase Price and Financing Framework BOC purchase price: approximately €12.4 billion ● Offer of 1,600 pence in cash for each BOC share, valuing existing issued share capital at £8.2 billion ● Premium of approximately 39% to the closing price of 1,151 pence per BOC s
Slide 24: Syndicated bank financing (GBP 8.9 billion & EUR 2 billion)
Strictly private & confidential Syndicated bank financing (GBP 8.9 billion & EUR 2 billion) Key syndication highlights • 60% oversubscription - leaving EUR 9 billion of liquidity untapped • Syndicate of 50 banks • Strong commitment of all of Linde’s core relationship banks • More than 50% of the ban
Slide 25: Disposals
Strictly private & confidential Disposals Anti-trust Gas • BOC Poland • Linde UK • Selected businesses of Linde and BOC in US • Dissolve certain Air Liquide Joint Ventures in Asia • Other (mainly South America and Australia) Material • Investment bank mandated to prepare dual-track process Handling
Slide 26: Equity capital increase
Strictly private & confidential Equity capital increase Equity Capital Increase Offering • Shares outstanding (current: 120 million/new: 157 million) • €1.835 billion • Offer price €49.50 • 2 new shares per 7 shares held • Fully preemptive Convertible • Granting of rights to all bondholders (04–09)
Slide 27: Finance policy and debt considerations
Strictly private & confidential 1 Linde and BOC – A global leader with enhanced profitability 2 Acquisition details 3 Finance policy and debt considerations 4 Key aspects of the hybrid financing 5 Linde’s historical performance 27
Slide 28: Finance policy
Strictly private & confidential Finance policy Rating • Investment grade rating from the start according to preliminary rating reports of the agencies • Quick improvement through disposals and equity measures • Mid-term improvement through solid finance policy Debt • Discipline through financial cov
Slide 29: Finance considerations
Strictly private & confidential Finance considerations Cash flow focus • High sustainable cash flow in pure gas play • Strong and stable long-term industry growth (2–2.5x GDP-growth) Fast deleveraging • Equity measures and disposals will cover a significant portion of purchase price Proven • Debt re
Slide 30: Deleveraging the balance sheet: a proven track record
Strictly private & confidential Deleveraging the balance sheet: a proven track record 4,000 88.6% 3,500 3659 74.9% 68.3% 3264 62.5% Net debt in € m 3,000 49.9% 2814 2,500 2430 34.1% 2,000 1968 1,500 1505 1,000 2000 2001 (IAS) 2002 (IAS) 2003 (IAS) 2004 (IAS) 2005 (IAS) *) Net debt defined as Financi
Slide 31: Broad experience in the capital markets
Strictly private & confidential Broad experience in the capital markets • €1 billion inaugural Benchmark bond in 2000 • 78 tranches with a total volume of €2.5 billion issued under the Debt Issuance Programme in 2000–2002 — “Best new MTN issuer in the corporate sector 2001” (MTN WEEK) • €400 million
Slide 32: Key aspects of the hybrid financing
Strictly private & confidential 1 Linde and BOC – A global leader with enhanced profitability 2 Acquisition details 3 Finance policy and debt considerations 4 Key aspects of the hybrid financing 5 Linde’s historical performance 32
Slide 33: Key features of the offering (I)
Strictly private & confidential Key features of the offering* (I) Issuer Linde Finance B.V. Guarantor Linde AG (on a subordinated basis) Expected instrument ratings Moody‘s: Ba1, S&P: BB after BOC acquisition (2 notches below expected senior credit ratings) Subordinated to all senior creditors, pari
Slide 34: Key features of the offering (II)
Strictly private & confidential Key features of the offering* (II) Arrears of Interest Settlement Deferred dividend/capital pusher and redemption Alternative Coupon Issuance and/or sale of ordinary shares (2 % annual issuance cap) Settlement Mechanism (ACSM) Change of control clause Yes The bonds ma
Slide 35: Overview of optional deferral mechanism
Strictly private & confidential Overview of optional deferral mechanism Optional deferral date No interest Cumulative interest deferral deferral Deferred interest due and payable at earlier of the following events: Next payment on junior Next payment date Buyback/redemption of securities or parity w
Slide 36: Deferred dividend pusher
Strictly private & confidential Deferred dividend pusher Outstanding deferred coupons are immediately payable via the ACSM if Linde makes an ordinary share dividend 2.0 1.6 5 – 200 5 : 4 .2 % Dividend (€) 1.2 CA G R 197 0.8 0.4 0.0 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 198
Slide 37: Sector dividend history
Strictly private & confidential Sector dividend history 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Linde √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ BOC Group √ √ √ √ √ √
Slide 38: Key attractions of the offering
Strictly private & confidential Key attractions of the offering Our company Our hybrid bond offering • A global leader in a growing market • 60-year final maturity • Strong and stable cash flow generation • Optional cumulative deferral • Minimal LBO risk • No mandatory deferral feature • Solid inves
Slide 39: Linde's historical performance
Strictly private & confidential 1 Linde and BOC – A global leader with enhanced profitability 2 Acquisition details 3 Finance policy and debt considerations 4 Key aspects of the hybrid financing 5 Linde’s historical performance 39
Slide 40: Return on Capital Employed
Strictly private & confidential Return on Capital Employed Consistent increase of the key performance indicator 2002 2003 2004** 2005 Linde Gas 9.6% 10.1% 10.9% 11.8% Linde Engineering 13.3% 11.7%* 16.7% 20.4% Material Handling 8.7% 9.7% 12.3% 13.1% Linde Group 7.0% 7.7% 10.8% 12.5% * Since 2003 bas
Slide 41: Group Operating Cash Flow
Strictly private & confidential Group Operating Cash Flow € million 1,600 1,435 1,400 1,281 1,255 1,200 1,145 1,000 891 800 705 600 400 200 0 2000 2001 (IAS) 2002 (IAS) 2003 (IAS) 2004 (IAS)* 2005 (IAS) *Restated figures 41
Slide 42: Linde Gas: Sales and EBITA Margin
Strictly private & confidential Linde Gas: Sales and EBITA* Margin € million 4,500 16.2% 4,400 16.0% 15.6% 4,300 4,438 4,200 4,100 4,000 4,003 3,900 3,800 3,843 3,700 3,600 3,500 2003 2004 2005 * Linde EBITA before contribution of JVs & Associates and after pension interest Sales EBITA Margin 42
Slide 43: Linde Engineering: Sales and EBITA Margin
Strictly private & confidential Linde Engineering: Sales and EBITA* Margin € million 1,800 5.5% 1,600 1,400 4.3% 1,623 1,200 3.6% 1,581 1,000 1,270 800 600 400 200 0 2003 2004 2005 * Linde EBITA before contribution of JVs & Associates and after pension interest Sales EBITA margin 43
Slide 44: Material Handling: Sales and EBITA Margin
Strictly private & confidential Material Handling: Sales and EBITA* Margin € million 3,700 6.1% 3,600 5.7% 3,500 3,628 3,400 3,300 3,372 3,200 3.1% 3,100 3,000 3,063 2,900 2,800 2,700 2003 2004 2005 * Linde EBITA before contribution of JVs & Associates and after pension interest Sales EBITA Margin 4
Slide 45: Investor Relations Contacts
Strictly private & confidential Investor Relations Contacts Thomas Eisenlohr, Head of Investor Relations Phone +49 611 770 610 thomas.eisenlohr@linde.de Robert Schneider Phone +49 611 770 270 robert.schneider@linde.de