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Fitch rates ADT notes BBB+, loan BBB+
Fitch Ratings said it assigned a BBB+ rating to the ADT Corp.'s proposed offering of $2.5 billion of senior unsecured notes.
The offering will be comprised of five-year, 10-year and 30-year senior unsecured notes.
The notes will rank equally in right of payment with all of ADT's existing and future unsecured indebtedness, Fitch said.
The notes will be initially guaranteed by Tyco International, Ltd., which guarantee will be automatically and unconditionally released upon the occurrence of the planned spin-off of the ADT and flow control businesses, the agency said.
The proceeds will be used to repay intercompany debt and to make other cash payments to Tyco to allow it to fund repurchases or redemptions of its indebtedness, Fitch said.
Fitch also said it assigned a BBB+ rating to ADT's $750 million five-year unsecured revolving credit facility.
Tyco is also initially guaranteeing the new credit facility and its guarantee will be released in connection with the spin-off.
Following the completion of the planned spin-off of ADT, Fitch said it expects to assign it an issuer default rating of BBB+, short-term issuer default rating of F2 and commercial-paper rating of F2.
The outlook is expected to be stable.
The ratings reflect the company's strong brand recognition, its national footprint and leading market position, recurring revenue base, sustainable free cash flow generation and solid liquidity, Fitch said.
Concerns include emerging competition from non-traditional security service providers, risk associated with operating as an independent public company and contingent liabilities, particularly tax liabilities, the agency said.
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