NEW YORK, July 2 (UPI) -- Tyco International on Tuesday raised a less-than-expected $4.6 billion from the sale of its CIT Group finance arm in the fourth-largest initial public offering in U.S. corporate history.
Tyco sold 200 million shares at $23 each, below the expected range of $25 to $29 a share.
The stock opened on the New York Stock Exchange at $23.20, but fell to a low of $22 and is hovering around $22.90 a share.
Proceeds from the IPO are $400 million less than the lowest amount expected by CIT.
Tyco spun off CIT Group after acquiring the company in March of 2001 for some $9.2 billion in stock.
Meanwhile, Fitch raised its ratings on Livingston, N.J.-based CIT Group's senior long term debt to A and short-term debt to F1 even as Morgan Stanley Dean Witter threw some water on the offering.
Fitch said, "CIT's ratings reflect Fitch's increased comfort with liquidity management, including the anticipated reduction in the company's commercial paper program to $3 to $5 billion from over $8 billion.
"While CIT has worked diligently to develop contingent sources of liquidity and takes great comfort in surviving the capital markets stress it has been under thus far, Fitch believes that this will be an enduring process for market-funded companies which seek to earn and maintain 'F1' ratings," the rating agency said.
"Issuers such as CIT must regularly demonstrate their ability to monetize assets to ensure that in the event they are unable to access unsecured sources of capital, the company would be in a position to unwind the portfolio or execute contingency funding plans that are sufficient to meet all upcoming maturities," Fitch said.
"Securitization, one means of demonstrating market accessibility, has accounted for at least 20 percent of funding for CIT and that will continue to be the case at a minimum," Fitch said.
Meanwhile, Morgan Stanley Dean Witter analyst Kenneth Posner said in a note to clients, "We believe credit quality concerns linger for CIT, wide debt spreads pose a competitive issue and returns appear unsustainable. We see much higher upside elsewhere in the specialty finance group."
Posner placed an underweight rating on the stock.
Tyco was relying on the IPO to reduce its liquidity constraints by repaying both some $3.8 billion in revolving credit and a $2.0 billion bank loan.
But, even at the lower price, the CIT Group IPO is still the largest IPO of the year, eclipsing the $3.9 billion spinoff of Travelers Property & Casualty from Citigroup back on March 22.
The CIT initial offering is also the fourth-largest in U.S. history, topping the $4.4 billion Conoco IPO.
AT&T Wireless was the largest initial public offering at $10.6 billion, followed by $8.7 billion for Kraft Foods and $5.5 billion from United Parcel Service.
Since Tyco acquired the company, CIT Group has cut $5 billion of non-core and less profitable assets and businesses.
Goldman, Sachs & Co. and Lehman Brothers acted as joint book-running managers for the offering.
