ADT 2009 Annual Report Download - page 218

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Debt (Continued)
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 the
Company’s credit rating and facility utilization. Together with the Company’s $1.19 billion five-year
senior revolving credit agreement, dated as of April 25, 2007, the Company’s total committed revolving
credit line was $1.69 billion as of September 25, 2009. These revolving credit facilities may be used for
working capital, capital expenditures and other corporate purposes. As of September 25, 2009, there
were no amounts drawn under these facilities, although the Company had dedicated $200 million of
availability to backstop outstanding commercial paper.
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.
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 of fiscal 2008, the Company
recorded a gain of $6 million upon exercise of the conversion option by holders. See Note 14. The last
redemption date was September 25, 2008. Any notes outstanding after that date were redeemed with
126 2009 Financials