Tyco Shares Plunge on New Fears
Shares of Tyco International Inc. plunged again Monday on accounting worries even as the company announced a debt-restructuring plan to improve liquidity and denied reports that it failed to disclose details on billions in acquisitions.
The Bermuda-based company’s shares fell $5.73, or nearly 16%, to $29.90 on the New York Stock Exchange after ratings agencies Standard & Poor’s and Fitch downgraded the debt of Tyco International and its wholly owned financial subsidiary, Tyco Capital. Its shares have fallen by nearly half since December. In extended trading, shares were down an additional 45 cents.
Tyco has faced questions since announcing this month plans to break up into four independent companies in a bid to create more value for its shareholders.
The company strongly criticized a report in Monday’s Wall Street Journal saying the company made more than $8 billion in acquisitions in the last three years, but failed to disclose them.
The Journal article concerned an e-mail the company sent to analysts Thursday in which Tyco said more than a third of the $11.3 billion it spent on acquisitions last year was spent on unannounced deals. The Journal, which said it was provided with fresh information about the deals after questioning Tyco, said the company paid $4.19 billion in cash for unannounced deals in 2001.
Spokeswoman Maryanne Kane said the numbers were correct, but that the company objected to any suggestions that they amounted to any kind of failure to disclose. She said Tyco followed proper accounting procedures, and that it would not make sense for a company with $36 billion in revenue to issue news releases on tiny acquisitions. All of the numbers, she said, showed up in the bottom line of Securities and Exchange Commission filings.
Also on Monday, Tyco International announced plans to repurchase $4.5 billion of its commercial debts and improve liquidity, or its ability to meet its financial obligations.
On a conference call with investors, Tyco Capital officials said they have been shut out of the corporate bond market in recent days on accounting worries.
“It was extremely tight today, and I think with the ratings actions taken place, we have to go on the assumption that the market is not there for us,” Chief Executive Albert R. Gamper said.
Commerzbank fixed-income analyst Steve Altman said Tyco Capital’s credit remains stronger than that of the parent company.
