Tyco Cancels Finance IPO, to Accelerate Spin Off (Update2)
By Rachel Layne


Exeter, New Hampshire, Feb. 6 (Bloomberg) -- Tyco International Ltd., which isn't able to borrow in the commercial paper market, canceled a plan to sell shares in its finance unit and will accelerate the spin off of the business.

``We are not in a panic mode'' about separating the finance unit,'' Tyco Chairman and Chief Executive Dennis Kozlowski said on a conference call with analysts and investors. The company has no cash problems, he said.

Tyco shares, which had lost half of their value since Kozlowski announced a breakup plan two weeks ago, rose $3.95, or 17 percent, to $27 05 in early afternoon trading.

The company is shut out of the market for commercial paper, or short-term corporate IOUs, which increased its finance costs and spurred credit rating downgrades. Tyco's finance unit, which is reassuming the CIT brand name, may be hampered from making loans unless it separates quickly from Tyco, analysts and investors have said.

The switch to bank loans earlier this week will reduce profit by 10 cents to 15 cents a share this fiscal year, Kozlowski said. Tyco had forecast profit of $3.70 a share in the year sending Sept. 30.

The company expects to sell its plastics business by April, Kozlowski said. The company is spinning off its finance, fire protection and flow control, and healthcare services units. It had planned to sell shares in each business.

Kozlowski will head the electrics and security-systems company that remains when the breakup is complete, expected in about a year.


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