Moody's affirms Tyco

Moody's Investors Service said it affirmed the long-term and short-term ratings and developing outlook of Tyco International Group SA and its consolidated subsidiaries, following the company's announcement that it would split into three independent, publicly traded companies.

Moody's said the rating affirmations reflect the company's strong free cash flow generation offset by anemic organic revenue growth and the potential that Tyco's strategy to further enhance long-term shareholder value, by separating its portfolio of businesses, could come at the detriment of creditors.

Moody's noted that the break-up will take over a year to implement and is subject to various execution risks and that Tyco's ratings acknowledge the company's strong free cash flow generation and its realization of debt reduction to its $10 billion target, while the company makes progress dealing with its litigation overhang, resulting from prior management scandals, which the company may resolve in fiscal 2006.

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