What is the main purpose of the new note offering?

The primary purpose of the $500 million note offering is to generate funds to redeem TIFSA's outstanding notes that carry higher interest rates (6.375%, 7%, and 6 7/8%). This is a debt refinancing strategy to reduce the company's overall interest expense.

When will the existing notes be redeemed?

All of the outstanding 2011, 2028, and 2029 notes are scheduled to be redeemed on May 28, 2010.

How is the redemption price determined for the existing notes?

The redemption price is the greater of 100% of the principal amount or a calculated present value of future principal and interest payments. This present value is discounted at the Adjusted Redemption Treasury Rate plus a specified basis point spread (35 bps for 2011 notes, 15 bps for 2028 notes, and 25 bps for 2029 notes). Holders will also receive accrued interest.

What is the significance of this refinancing for investors?

This debt refinancing is generally positive for investors as it demonstrates the company's ability to access capital markets at a lower cost. By reducing interest expenses, Tyco can potentially improve its profitability and financial flexibility. It signals proactive financial management.

JCI 8-K SEC Disclosure — Apr 28, 2010

Summary

Johnson Controls International plc (though the filing is under Tyco International Ltd. due to corporate structure at the time) announced a significant debt management initiative on April 28, 2010. The company's wholly-owned subsidiary, Tyco International Finance S.A. (TIFSA), launched an underwritten offering of $500 million in 3.375% notes due 2015. The primary purpose of this new issuance is to finance the redemption of TIFSA's outstanding higher-interest notes, specifically the 6.375% notes due 2011, 7% notes due 2028, and 6 7/8% notes due 2029. This strategic move indicates a proactive approach by Tyco to optimize its capital structure by replacing more expensive debt with cheaper financing. Investors should view this as a positive development, suggesting the company is taking advantage of favorable market conditions to reduce interest expenses and potentially improve its financial flexibility and profitability. The redemption is scheduled to occur on May 28, 2010, with redemption prices for each series of notes detailed, including accrued interest.

Key Highlights

1Tyco International Finance S.A. (TIFSA), a subsidiary of Tyco International Ltd., launched a $500 million offering of 3.375% notes due 2015.
2The proceeds from the new note issuance will be used to redeem existing, higher-coupon debt.
3TIFSA has called for the redemption of all outstanding 6.375% notes due 2011, 7% notes due 2028, and 6 7/8% notes due 2029.
4The redemption date for all outstanding notes is May 28, 2010.
5Redemption prices for the notes will be calculated based on specific formulas involving present values of remaining payments and a spread over the Adjusted Redemption Treasury Rate.
6Holders of the called notes will also receive accrued and unpaid interest up to the redemption date.

Johnson Controls International plc 8-K Report, Corporate Update (Apr 28, 2010)

Summary

Key Highlights

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