Tyco arranges preliminary settlement in case related to June 2007 separation

By Laura Lutz

Des Moines, April 11 - Tyco International Ltd. said that it reached a preliminary agreement to settle a lawsuit related to its $3.7 billion of outstanding debt securities.

The agreement was reached with firms that advise holders of about 80% of the debt.

In exchange for dismissal of the lawsuit and a waiver of any alleged default, the agreement calls for Tyco to make a total cash payment of $250 million to the holders of the securities. None of the debt will be redeemed as a result.

Tyco also agreed to offer to exchange its notes due 2028 and 2029 for notes with maturities in 2019 and 2021, respectively.

As a next step, Tyco will launch a consent solicitation for its 6 1/8% notes due 2008, 6 1/8% notes due 2009, 6¾% notes due 2011, 6 3/8% notes due 2011, 6% notes due 2013, 7% notes due 2028 and 6 7/8% notes due 2029.

The company will be asking holders to consent to a waiver of all alleged defaults related to Tyco's June 2007 separation into three publicly traded companies and to provide the holders with the right to repurchase at a fixed price under circumstances in case of a change of control.

In addition, Tyco will begin an exchange offer for its 7% notes due 2028 and its 6 7/8% notes due 2029, only to qualified institutional buyers under Rule 144A. The new notes will have substantially the same terms as the existing notes, but they will expire in 2019 and 2021, respectively.

Settlement of the agreement depends on the receipt of consents from holders of a majority of the notes.

Tyco said it expects to conclude the consent solicitations and exchange offer by the end of June.

Based in Pembroke, Bermuda, Tyco produces electronics, fire and security, health care and engineered products and services.

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