Tyco International reached a preliminary agreement on Friday to pay $250 million to settle lawsuits brought by holders of $3.7 billion of its debt.
The preliminary settlement, which does not involve buying back any of the debt, stems from lawsuits filed by the bondholders who allege the conglomerate's plan to split into three companies was unfair to them.
The Bank of New York , the trustee for Tyco's bonds, and a group of bondholders had sued Tyco, claiming the company broke terms and conditions of its debt.
Bondholders claimed that the debt issued in 1998 and 2003, will not be paid back as the company has decreased in size could become a buyout candidate. The holders also feared Tyco would change the terms of buying back some debt.
Tyco offered to exchange bonds that mature in about 20 years for bonds that mature in about 10. Bonds with shorter time spans are usually considered to be safer as the company does not have to survive as long to repay the principal.
Tyco said in a statement that debt holders have agreed to dismiss their lawsuit and waive any alleged default.
The preliminary deal involves holders of 80 percent of the $3.7 billion in debt.