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Linde (LIN) Faces $500M Asset Freeze Over Russia Gas Complex

Linde plc’s LIN assets worth $500 million are likely to be frozen by a Russia court at the request of RusKhimAlyans developing a massive gas processing complex at the Baltic Sea port of Ust-Luga, per a Reuters report.

RusKhimAlyans, the joint venture half owned by Russia-based Gazprom, requested the Court of Arbitration of St Petersburg and the Leningrad Region to freeze Linde and its subsidiaries’ assets as a preventative measure.

The move came as retaliation for Linde’s decision not to supply contracted equipment due to the international sanctions resulting from Russia’s invasion of Ukraine.

The Baltic LNG project involves the development of a major liquefied natural gas (LNG) facility and a gas processing facility near the Baltic port of Ust-Luga. The complex is part of Gazprom’s strategy to shift focus to processing.

In 2021, Linde signed an engineering, procurement and construction contract with Gazprom and its partners for the Ust-Luga gas complex. In the second quarter of 2022, Linde notified the customer that it suspended work under the contract due to the sanctions imposed after Russia’s invasion of Ukraine.

RusKhimAlyans forwarded an advance payment of €947 million to Linde to secure the manufacturing and delivery of the equipment. However, the joint venture did not receive funds from the company after the contract’s suspension. Apart from the return of the advance payment, RusKhimAlyans wants Linde to compensate for unspecified damages.

Linde’s subsidiaries and ventures in Russia will be prevented from divesting or disposing of their assets. They may continue their usual business activities, as funds in their bank accounts will be available to them.

Price Performance

Shares of Linde have outperformed the industry in the past three months. The stock has gained 13.6% compared with the industry’s 10.9% growth.


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Zacks Ranks & Stocks to Consider

Linde currently carries a Zacks Rank #3 (Hold).

Some better-ranked players in the basic materials space are Commercial Metals Company CMC, currently sporting a Zacks Rank #1 (Strong Buy), and Flexible Solutions International, Inc FSI and Olympic Steel, Inc. ZEUS, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Commercial Metals Company manufactures, recycles, and markets steel and metal products, and related materials and services. CMC’s net debt to trailing 12-month adjusted EBITDA ratio was 0.5 at the end of the fiscal second quarter, while net debt to capitalization is just 14%.

Commercial Metals Company is expected to see 2022 earnings growth of 27.2%. CMC beat the Zacks Consensus Estimate for earnings in the prior four quarters, delivering an earnings surprise of 19.7%.

Flexible Solutions is an environmental technology company focusing on the research, development and manufacturing of products that save water and energy. The company develops and manufactures products such as WaterSavr, Heatsavr and Ecosavr.

Flexible Solutions is expected to see earnings growth of 57% in 2022. In the trailing four quarters, the company beat the Zacks Consensus Estimate for earnings thrice and missed the same once, delivering an earnings surprise of 52.7%.

Olympic Steel is a leading U.S. metals service center focused on the direct sale and distribution of large volumes of processed carbon, coated and stainless flat-rolled sheet, coil and plate steel, and aluminum products.

Olympic Steel has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 60 days. In the trailing four quarters, the company beat the Zacks Consensus Estimate for earnings thrice and missed the same once, delivering an earnings surprise of 25.4%.

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