Tyco Unit IPO Prices at $23 a Share
By HARRY R. WEBER
Associated Press Writer
Monday July 1, 7:21 pm Eastern Time
CONCORD, N.H. (AP) -- A year after buying finance company CIT Group, Inc., for $9.2 billion, Tyco International Ltd. got only half that in return Monday as it spun the unit off in an initial public offering, a source said
Tyco sold 200 million shares of CIT for $23 apiece, raising $4.6 billion for Tyco, according to a press release from CIT Group Tuesday night. That's down from the $25 to $29 per share, or up to $5.8 billion, Tyco expected to get for the unit.
Tyco plans to use the money to help pay off its $27 billion in debt. The shares were to begin trading Tuesday under the ticker symbol CIT on the New York Stock Exchange.
The shares were priced after the close of the markets. Tyco stock gained 24 cents to close at $13.75 on the New York Stock Exchange.
"It's a very difficult IPO market," said Steven Altman, an analyst with Commerzbank in New York. "Over the last few days, several IPOs have been postponed and some have been canceled because investors are being selective and some of the implications with accounting issues at other companies."
Still, Altman said the money raised will help pare Tyco's debt.
"While falling below the target range, it could be viewed as a disappointment for Tyco, but $4.6 billion will go a long way in satisfying Tyco's debt securities," Altman said.
He added, "Now that they completed the transaction, I'd expect them to sit down with banks to refinance some of the remaining debt."
Tyco decided against selling its lending division and instead spun it off because the company felt it would be a quicker way of getting money to pay debt.
Tyco, based in Bermuda but with headquarters in Exeter, N.H., decided against selling its lending division and instead spun it off because the company felt it would be a quicker way of getting money to pay debt.
Investors have sent Tyco shares down about 80 percent for the year following Enron-inspired accounting questions, a decision to scrap a plan to break up the company and the resignation of chief executive Dennis Kozlowski on June 3.
Kozlowski was charged with sales tax evasion in New York related to the purchase of $13 million in art. On Wednesday, Kozlowski pleaded innocent to a second indictment charging him with tampering with evidence related to the sales tax investigation. |
