What are the main purposes of these new credit facilities?

The primary purpose of these new credit facilities is to provide financing for Tyco International and its subsidiary, ADT Corporation, in preparation for and in connection with the planned separation of ADT. This includes funding intercompany debt prepayments, managing Tyco's liabilities related to the separation, and providing general corporate purposes for TIFSA and ADT.

What is the total amount of new financing secured by Tyco and ADT?

Tyco and ADT have secured new revolving credit facilities totaling $1.75 billion ($1 billion for TIFSA and $750 million for ADT) and a bridge loan facility of $2.25 billion for ADT, bringing the total new credit availability to $4 billion.

Are the loans under these facilities already drawn?

No, the filing explicitly states that no proceeds from either the revolving credit agreements or the bridge loan agreement were drawn down at closing. The bridge loan, in particular, has conditions requiring ADT to attempt to raise funds through senior notes before the bridge loan is funded.

What are the key financial covenants associated with these agreements?

Both the revolving credit agreements and the bridge loan agreement include a financial covenant requiring the maintenance of a leverage ratio (consolidated debt to consolidated EBITDA) of 3.5 to 1.0. Following the distribution of ADT, the ADT credit agreement and bridge loan will also include an interest coverage ratio covenant of 3.0 to 1.0.

JCI 8-K: Material Agreements

Summary

This Form 8-K filing by Tyco International Ltd. reports on the entry into material definitive agreements related to new credit facilities on June 22, 2012. The company secured significant financing through two new revolving credit facilities and a bridge loan facility, primarily to support its planned separation of The ADT Corporation (ADT). The new facilities include a $1 billion five-year senior unsecured credit agreement for Tyco International Finance S.A. (TIFSA) and a $750 million five-year senior unsecured revolving credit agreement for ADT. Additionally, a $2.25 billion 364-day senior unsecured bridge loan agreement was established for ADT. These new credit arrangements are crucial for managing the financial aspects of the upcoming ADT spin-off, including intercompany debt prepayments and Tyco's liability management. The filing details the terms, covenants, and interest rate structures for these facilities, indicating that no funds were drawn at closing, with the bridge loan specifically contingent on ADT's efforts to issue senior notes first. The agreements include standard covenants and events of default, with specific provisions related to the ADT distribution, such as release of guarantees upon consummation and conditions for the distribution itself.

Key Highlights

1Tyco International entered into two new five-year senior unsecured revolving credit facilities totaling $1.75 billion ($1 billion for TIFSA and $750 million for ADT).
2A separate 364-day senior unsecured bridge loan facility of $2.25 billion was secured for ADT to fund separation-related payments.
3These new credit facilities are primarily intended to support the planned separation (distribution) of The ADT Corporation from Tyco.
4The ADT credit facility's availability is initially limited to $250 million until the distribution is completed.
5Tyco acts as a guarantor for both new revolving credit facilities, with ADT's guarantee of the TIFSA facility and Tyco's guarantee of the ADT facility to be released upon the ADT distribution.
6The bridge loan facility is also guaranteed by Tyco until the ADT distribution is consummated.
7All facilities were undrawn at closing, with the bridge loan subject to conditions, including ADT's effort to raise funds via senior notes.

Johnson Controls International plc 8-K Report, Material Agreement (Jun 27, 2012)

Summary

Key Highlights

Frequently Asked Questions