Soon to split itself up into three parts, Tyco International announced that its board approved the divestiture of its Power Systems unit. The conglomerate also said it would take a $500 million impairment charge–$370 million after taxes–for the assets of its Power Systems unit.
The board gave Tyco chief executive officer Edward Breen the power to decide whether to proceed with the divestiture based on the terms of proposed sale. In an 8-K, the company reported that it found that Power Systems assets are impaired under Statement of Financial Accounting Standards No. 144, Accounting for the Impairment and Disposal of Long-Lived Assets.
The impairment charge, which Tyco expects to record in the three-month period ending June 29, enables the company to move ahead with a divestiture of Power Systems, a division of Tyco Electronics. On the 29th, Tyco also plans to divide into three companies—Tyco Healthcare, Tyco Electronics, and Tyco International.
In other Tyco-related news, a judge refused to dismiss lawsuits by three smaller groups of former shareholders one month after the company agreed to settle most shareholder claims stemming from the fraud committed by former top executives, according to the Associated Press. The decision came a month after Tyco agreed to settle most shareholder claims stemming from mismanagement and looting by former chief executive officer Dennis Kozlowski and other previous top executives.
On Tuesday, while U.S. District Judge Paul Barbadoro reportedly dismissed some counts and defendants, he kept alive most of their claims against Tyco, its former executives and directors, and the company’s former auditor, PricewaterhouseCoopers LLP.
On May 15, Tyco reported that it would pay $2.98 billion to settle a class-action lawsuit that resolves all shareholder claims for alleged securities and accounting fraud during Kozlowski’s regime.
Shareholders will also get 50 percent of any recovery from Tyco’s suit against Kozlowski, former CFO Mark Swartz, and former board member Frank Walsh. Still alive are lawsuits by the state of New Jersey, former shareholders of AMP Inc., and former shareholders of TyCom Inc., a one-time Tyco subsidiary, the AP reported.