Tyco bondholders trheaten to delay planned spinoff

By Lisa Kerner

Charlotte, N.C., June 14 - Tyco International Ltd.'s failure to obtain requisite bondholder consents may delay the planned spinoff of two businesses to shareholders slated for June 29.

The Bank of New York, the indenture trustee for the notes, is seeking a court ruling to determine if the break-up violates the successor obligor provision of the note indentures, according to a letter from the ad hoc committee of Tyco noteholders to Tyco's board.

"This court action could very well delay the proposed timing of the break-up. A multi-billion dollar judgment in the noteholders favor would obviously have an impact on Tyco's future as well," the letter stated.

The noteholders group holds a majority of the notes issued by Tyco International Group, SA and guaranteed by the parent company, Tyco International, under the 1998 and 2003 note indentures.

Bermuda-based Tyco's business segments include electronics, fire and security, health care, and engineered products and services. The company announced its spinoff plans on April 20.

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