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Non-Tech : Tyco International Limited (TYC) -- Ignore unavailable to you. Want to Upgrade?

To: blankmind who wrote (2902)	2/12/2002 8:22:31 AM
From: GVTucker	Read Replies (1) \| Respond to of 3770

blankmind, RE: It frees them from the nervousness in the bond market; the nervousness that dissipated within a few days anyway. Yes, drawing on a bank line frees Tyco from the commercial paper market. But the nervousness in the bond market hasn't dissipated at all. Tyco bonds are still way below where they were trading before Tyco drew on the bank line. That is because drawing on bank lines is a sign of weakness. A bank line is the last source of liquidity for a company. If the nervousness is just temporary, then Tyco should reissue commercial paper and pay off the bank line. They aren't because they can't. Note, BTW, that most Tyco bonds declined yesterday. This time, though, that might actually be a good sign for stockholders. There's no question that the original breakup plan proposed a couple of weeks ago benefited bondholders at the expense of diluting stockholders. The guess in the fixed income market is that Tyco may come out with a new plan that gives a little more benefit to stockholders at the expense of the bondholders. That would better explain why Tyco drew on the bank credit lines.