Fitch keeps Tyco on evolving watch

Fitch Ratings said its evolving Rating Watch for Tyco International Ltd. (BBB+/F2) remains unchanged following the company's announcement of an agreement to settle most of the security class action lawsuits involving its stock and the conduct of former management of the company. The proposed settlement calls for a cash payment of nearly $3 billion and is subject to approval by the court.

The agency said the settlement would reduce uncertainty surrounding the amount of contingent liabilities to be shared after Tyco's separation, helping to mitigate the negative impact on Tyco's balance sheet. While Tyco has not yet disclosed how it plans to fund the settlement but, Fitch said its ratings for the company incorporate Tyco's capacity to absorb a sizeable settlement.

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