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Tyco’s ADT Sells $2.5 Billion of Bonds as It Plans for Spinoff

Tyco International Ltd.’s (TYC) ADT security systems unit sold $2.5 billion of bonds as it prepares for a spinoff and its parent entered into a five-year, $1 billion revolving line of credit.

Proceeds from ADT’s sale will be used to repay intercompany debt to Tyco as it seeks to become an independent entity by the end of September, Schaffhausen, Switzerland-based Tyco said today in a statement. Tyco will guarantee the debt until the split occurs.

ADT issued $1 billion of 10-year, 3.5 percent notes that yield 190 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg. The company also sold $750 million each of 2.25 percent, five-year notes that yield 150 basis points more than their benchmark and 4.875 percent, 30-year debt at a spread of 225.

The loan was arranged by Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp., according to a regulatory filing today. The company terminated a $750 million loan.

The Tyco loan will reduce the banks’ commitments under an existing five-year credit agreement that is set to mature in September to $500 million from $640 million, according to the filing.

ADT, with Tyco as the guarantor, entered into a separate agreement for a $750 million revolver. The Boca Raton-based provider of electronic security will become a stand-alone company after Tyco splits into three independent publicly traded companies, according to a Sept. 19 news release.

The sale of ADT’s bonds, to which Standard & Poor’s assigned a BBB rating and Moody’s Investors Service ranked an equivalent Baa2, was managed by Citigroup, Goldman Sachs Group Inc. and JPMorgan, Bloomberg data show.

To contact the reporters on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net; Kristen Haunss in New York at khaunss@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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