Fitch Ratings Places Tyco Int'l (TYC) on Rating Watch

Fitch Ratings announced it has placed the ratings for Tyco International, Ltd. (NYSE: TYC) and Tyco International Finance S.A. (TIFSA) on Rating Watch Evolving. TIFSA is a wholly owned direct subsidiary of Tyco International Ltd. which guarantees TIFSA's debt. A full ratings list is shown below.

Earlier today, Tyco announced its plan to separate into three companies within approximately 12 months. The separation will be accomplished through tax-free spin-offs of the ADT North America residential security business and the Flow Control business. The remainder company will consist of Tyco's commercial fire and security business. Upon completion of the transaction, Fitch estimates that ratings for existing debt, and ratings for the successor companies, could be the same or lower than Tyco's current ratings, and that higher ratings are less likely. Fitch also estimates that ratings for existing debt would not change by more than one notch in either direction and that all ratings will be at least 'BBB-'. Final ratings will depend on Fitch's assessment of each stand-alone company's capitalization, debt level, financial leverage, expected operating performance, competitive position, and other factors which will be clarified as Tyco proceeds with the separation process.

Tyco's current ratings incorporate the company's competitive market positions, solid operating performance and free cash flow, disciplined cash deployment, ample liquidity, and low leverage. Debt/EBITDA at June 24, 2011 was 1.25 times (x), down modestly from 1.4x at the end of fiscal 2010. The leverage ratio reflects the positive impact of substantial equity used in 2010 to help fund the $2 billion acquisition of Broadview Security. Tyco has consistently maintained debt levels within a steady range near $4.5 billion. In the unlikely event that the pending separation is terminated, Tyco has the capacity to increase debt levels modestly without affecting the ratings.

You May Also Be Interested In

• Morgan Stanley Downgrades Circle Internet Group (CRCL) to Underweight
• nVent Electric (NVT) PT Raised to $210 at Evercore ISI
• Weyerhaeuser (WY) PT Raised to $28 at Truist Securities