ADT 2008 Annual Report Download - page 172

During the year ended September 28, 2007, we recorded a $259 million charge to other expense, net
for the loss on early extinguishment of debt related to the debt tender offers in connection with the
Separation.
Bank and Revolving Credit Facilities
On June 24, 2008, Tyco and TIFSA entered into a $500 million senior unsecured revolving credit
agreement with Citibank, N.A., as administrative agent for the lenders party thereto. This credit agreement
has a three-year term. Borrowings under this agreement have a variable interest rate based on LIBOR or
an alternate base rate. The margin over LIBOR can vary based on changes in our credit rating and facility
utilization. Together with the existing $1.25 billion five-year senior revolving credit agreement, dated as of
April 25, 2007, our total commitments under these facilities increased to $1.75 billion. These revolving
credit facilities will be used for working capital, capital expenditures and other corporate purposes. As of
September 26, 2008, there was $286 million drawn under these unsecured revolving credit facilities and as
of November 12, 2008 we had $686 million outstanding. As discussed above, with the exception of the
$60 million in commitments from Lehman, we believe that all of the lenders under our revolving credit
facility are capable of meeting any borrowing requests TIFSA may make.
On April 25, 2007, we, certain of our subsidiaries and a syndicate of banks entered into a 364-day
unsecured bridge loan facility. On October 1, 2007, the commitments with respect to the unused portion of
our unsecured bridge loan facility expired, but were subsequently renewed before being terminated in
connection with the overall facility’s termination in June 2008. The unsecured bridge loan facility provided
us with sufficient liquidity to repay our outstanding public debt with borrowings of up to $4.0 billion. The
facility could only be used to repay, settle or otherwise extinguish such public debt, which was the subject of
ongoing litigation between us and the trustee for such public debt. In June 2008, we settled this litigation
and terminated this facility. In connection with the facility termination, we recorded a $36 million charge to
other expense, net to write-off unamortized debt issuance costs.
On June 21, 2007, Tyco and TIFSA entered into a $500 million letter of credit facility, with
Citibank N.A. as administrative agent, that was scheduled to expire on June 15, 2008. The facility
provided for the issuance of letters of credit supported by a related line of credit facility. Effective
June 6, 2008, this facility and all commitments under this facility were terminated.
TIFSA’s bank credit agreements contain customary terms and conditions, and financial covenants
that limit the ratio of our debt to earnings before interest, taxes, depreciation, and amortization and
that limit our ability to incur subsidiary debt or grant liens on our property. Our indentures contain
customary covenants including limits on negative pledges, subsidiary debt and sale/leaseback
transactions. None of these covenants are considered restrictive to our business.
Convertible Debentures
As of September 28, 2007, TIFSA had $21 million outstanding of its 3.125% convertible senior
debentures due 2023 with a 2015 put option (‘‘the 3.125% convertible senior debentures’’). On
August 25, 2008, we delivered to holders a notice of redemption of our $19 million remaining principal
amount of the 3.125% convertible senior debentures. These debentures were originally convertible into
Tyco shares. As a result of the Separation transactions undertaken by us in 2007, these debentures
became convertible into common shares of Tyco International Ltd., Covidien Ltd. and Tyco
Electronics Ltd. The 3.125% convertible debentures were converted into 11.496 common shares of each
of the three separate companies, per $1,000 principal amount. During the fourth quarter of fiscal year
2008, we issued 217,589 shares of Tyco common stock and obtained shares of Covidien Ltd. and Tyco
Electronics in connection with the redemption of the 3.125% convertible senior debentures.
Additionally in the fourth quarter, we recorded a gain of $6 million upon exercise of the conversion
option by holders (see Note 15 in the Consolidated Financial Statements). The last redemption date
was September 25, 2008. Any notes outstanding after that date were redeemed with available cash. As
2008 Financials 69