ADT 2008 Annual Report Download - page 238

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. Debt (Continued)
commitment was not funded, resulting in a total funding of $286 million, which represented the total
amount outstanding under our revolving credit facilities as of September 26, 2008.
On April 25, 2007, Tyco, certain of its 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 the Company’s 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 the Company with sufficient liquidity to repay the Company’s 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 the Company
and the trustee for such public debt. In June 2008, the Company settled this litigation and terminated
this facility. In connection with the facility termination, the Company 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 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
and sale/leaseback transactions. None of these covenants are considered restrictive to the Company’s
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 the Company delivered to holders a notice of redemption of its $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 the Company 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, the Company 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, the Company recorded a gain
of $6 million upon exercise of the conversion option by holders. See Note 15. The last redemption date
was September 25, 2008. Any notes outstanding after that date were redeemed with available cash. As
of September 26, 2008, no amounts remain outstanding under the 3.125% convertible senior
debentures.
Other Debt Information
The fair value of debt was approximately $4.0 billion (book value of $4.3 billion) and $4.5 billion
(book value of $4.5 billion) at September 26, 2008 and September 28, 2007, respectively, based on
discounted cash flow analyses using current market interest rates.
2008 Financials 135