Any boost that Tyco International's bank debt holders could expect to reap from the company's disclosure that past aggressive accounting measures would have no material effect on the company's financial statements was muffled due to the slow holiday week. The company's revolver expiring in February is inching closer to par as a refinancing approaches and Tyco's bank debt maturing in February 2006 was quoted in the mid 90s. But, bank debt levels remain largely unchanged.
Tyco revealed that the aggressive accounting measures were intended to increase reported earnings. But there was no significant fraud and the revelations will not have any effect on cash flow this year. Calls to Tyco's financial officials were not returned by press time. In addition to the disclosure, the company's management said Tyco is still in negotiations to refinance its $3.855 billion revolver. "We remain confident that we will be able to obtain a bank facility in advance of our February maturity," said Edward Breen Jr., ceo of Tyco, in a conference call last Tuesday. The company's management is hoping to obtain another unsecured credit facility.
Morgan Stanley and Bank of America are said to have swiped the lead roles from the incumbent J.P. Morgan. The facility was originally a 364-day commercial paper backstop that was termed out last February. The company's $2 billion revolver expiring in February '06 is led by J.P. Morgan.