ADT 2007 Annual Report Download - page 220

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Debt (Continued)
(i) certain of the Company’s outstanding public debt is declared due and payable and (ii) the Company
does not have sufficient liquidity available under its unsecured bridge loan facility to refinance such
debt. As a result, on November 27, 2007, the Company secured additional firm commitments from
certain of its lenders under the bridge loan facility. These additional commitments provide the
Company with sufficient liquidity to repay the outstanding public debt with borrowings of up to
$4.0 billion. The additional commitments expire on, and any borrowings under the facility would
mature on, November 25, 2008. The facility may only be used to repay, settle or otherwise extinguish
the public debt described above, which is the subject of ongoing litigation between the Company and
The Bank of New York. For more information regarding such litigation, see ‘‘Indenture Trustee
Litigation’’ in Note 16.
Additionally, on April 25, 2007, Tyco, certain of its subsidiaries and a syndicate of banks entered
into three unsecured revolving credit facilities with an initial aggregate commitment amount of
$2.5 billion that increased to $4.25 billion at the time of the Separation. Of the aggregate commitment
amount of $4.25 billion, a $1.25 billion commitment is available to Tyco, and a $1.5 billion commitment
was available to each of Covidien and Tyco Electronics. Tyco will use its revolving credit facilities for
working capital, capital expenditures and other corporate purposes. Tyco initially guaranteed the new
revolving credit facilities and Covidien and Tyco Electronics each assumed Tyco’s obligations with
respect to their revolving credit facilities upon the Separation. We no longer guarantee those assumed
amounts. At September 28, 2007, Tyco has borrowed $308 million under its unsecured revolving credit
facility. This facility has a variable interest rate based on LIBOR. The margin over LIBOR payable by
TIFSA can vary based on changes in its credit rating.
The unsecured revolving credit facilities replaced TIGSA’s existing $1.0 billion 5-year revolving
credit facility, $1.5 billion 3-year revolving bank credit facility and $500 million 3-year unsecured letter
of credit facility, which were all terminated by June 1, 2007 prior to their scheduled expiration dates of
December 16, 2009, December 21, 2007 and June 15, 2007, respectively. On the date of termination, no
amounts were borrowed under the $1.0 billion facility and the $1.5 billion facility, and letters of credit
of $494 million were issued under the $500 million facility.
On June 21, 2007, Tyco and TIFSA entered into a new $500 million letter of credit facility, with
Citibank N.A. as administrative agent, expiring on December 15, 2007. The facility provides for the
issuance of letters of credit, supported by a related line of credit facility. TIFSA may only borrow under
the line of credit agreement to reimburse the bank for obligations with respect to letters of credit
issued under this facility. The covenants under this facility are substantially similar to the covenants
under the bridge loan and revolving credit facilities. TIFSA would pay interest on any outstanding
borrowings at a variable interest rate, based on the bank’s base rate or the Eurodollar rate, as defined.
As of September 28, 2007, letters of credit of $494 million have been issued under the $500 million
credit facility and $6 million remains available for issuance. There were no amounts borrowed under
this credit facility at September 28, 2007. On October 19, 2007, the facility was amended. The
amendment extended the maturity date to June 15, 2008 and adjusted the interest rate spreads and fees
applicable to extensions of credit thereunder. Loans under the amended letter of credit agreement will
continue to bear interest based on LIBOR plus the applicable margin.
TIFSA’s bank credit agreements contain customary terms and conditions, and financial covenants
that limit the ratio of the Company’s debt to its earnings before interest, taxes, depreciation, and
amortization and that limit its ability to incur subsidiary debt or grant liens on its property. The
Company’s indentures contain customary covenants including limits on negative pledges, subsidiary debt
128 2007 Financials