Institutional investors including the $12.8 billion Teachers' Retirement System of Louisiana, the $7.3 billion Louisiana State Employees' Retirement System and the $3.8 billion Plumbers and Pipefitters National Pension Fund today filed suit to block Tyco International Ltd. from splitting into three publicly traded companies.
The suit, filed in U.S. District Court in Concord, N.H., accuses the company of engineering the split to shield corporate assets and seeks assurance that all of Tyco's assets "will remain available for recovery in the event of a judgment in the ongoing securities class action," according to a statement from the group. The same plaintiffs sued Tyco in 2002, accusing the company of accounting and securities fraud, said Allan Ripp, spokesman for the group; that case is pending.
Tyco refused "to structure the transaction to provide for joint and several liability among the resulting separate entities, or to provide plaintiffs with any other appropriate assurances that the split-up plan will not frustrate plaintiffs' ability to satisfy an award of damages" in securities litigation, according to the new lawsuit.
The other plaintiffs in both cases are United Association General Officers Pension Plan, United Association Office Employees Pension Plan and United Association Local Union Officers & Employees Pension Fund, all based in Virginia, and Voyageur Asset Management.
The law firms of Grant and Eisenhofer, Milberg Weiss Bershad and Schulman, and Schiffrin and Barroway are representing plaintiffs in the both cases, Mr. Ripp said.
In response to the suit, Sheri Woodruff, Tyco spokeswoman, released a company statement, saying, "Under Tyco's proposed separation plan, any existing or potential liabilities that cannot be associated with a particular entity will be allocated as appropriate among each of the businesses. In addition, as a backstop for such liabilities, there will be an agreement among the three post-spinoff companies to be jointly and severally liable for these liabilities. This includes the liabilities, if any, related to the pending shareholder litigation. Although formal agreements will not be drafted until much later in this planned separation process, we believe that the planned treatment of these liabilities addresses any concerns that a current or potential claimant might have. We are confident that the planned separations can be completed as previously announced."