Deals
Tyco Lenders Face Early-Payback Snag With Johnson Controls
- Change-of-control clause requires at least two cuts to junk
- While unlikely, holders avoid `worst-case scenario' in merger
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Johnson Controls Inc.’s $28.7 billion acquisition of Tyco International Inc. is posing a dilemma for the target’s bondholders: they can only demand early repayment if the deal results in two or more ratings firms downgrading the company’s bonds to junk, according to Covenant Review.
That change-of-control clause doesn’t seem likely to be triggered, said Alex Diaz-Matos, an analyst at Covenant Review, who added that it might not be a bad thing for Tyco debt investors.