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Non-Tech : Tyco International Limited (TYC)
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To: blankmind who wrote (2789)2/6/2002 3:48:11 PM
From: muckraker71  Read Replies (1) of 3770
 
TYC is a highly-leveraged company. Much of this debt is in the form of commerical paper which matures as often as every 30 days. As a result, TYC is constantly in the market to replace this maturing paper.

However, these days, TYC has acknowledged that recent rumors have frozen them out of the CP market. As a result, TYC has to pay off the maturing paper without the benefit of being able to access its normal method of paying off this paper.

If this situation goes on long enough, the theory is that TYC will eventually run out of cash.

Personally I don't put much faith in the the cash-squeeze scenario, but this is an environment of extreme fear.
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