Investors sold Tyco International shares amid reports that the company failed to disclose details on billions of dollars it spent on recent acquisitions.
Tyco has faced questions since announcing earlier this month plans to break itself up into four independent companies, in a bid to create more value for its shareholders.
On Monday, the company criticized a report in The Wall Street Journal that said the company made more than US$8 billion in acquisitions in the past three years, but failed to disclose them.
The Journal article concerned an e-mail the company sent to analysts last Thursday in which Tyco said more than a third of the US$11.3 billion it spent on acquisitions last year was spent on unannounced deals. The Journal, which said it was provided with fresh information about the deals after questioning Tyco, said the company paid US$4.19 billion in cash for unannounced deals last year.
That report contributed to the Bermuda-based holding company's shares falling US$6.96, or nearly 19 percent, to US$29.90 after ratings agencies Standard & Poor's and Fitch downgraded the debt of Tyco International and its wholly-owned financial subsidiary, Tyco Capital.
The company's shares have fallen by nearly half since December. In extended trading Monday, shares were down another US$0.45.
Spokeswoman Maryanne Kane said the numbers were correct, but that the company objected to any suggestions that they amounted to any kind of failure to disclose. She said Tyco followed proper accounting procedures, and that it would not make sense for a company with US$36 billion in revenue to issue press releases on tiny acquisitions. All of the numbers, she said, showed up in the bottom line of Securities and Exchange Commission filings.
Also on Monday, Tyco International announced plans repurchase US$4.5 billion of its commercial debts and improve liquidity, or its ability to meet its financial obligations.
On a conference call with investors, Tyco Capital officials acknowledged they have been shut out of the corporate bond market in recent days on accounting worries.
"It was extremely tight today, and I think with the ratings actions taken place, we have to go on the assumption that the market is not there for us," president and chief executive Albert Gamper Jr. said.
Commerzbank fixed-income analyst Steve Altman said Tyco Capital's credit remains stronger than that of the parent company, which is to blame for the downgrades, but like any finance company it faces problems if it's permanently kept of the commercial paper markets.
"I think they did their best to try to quell the concerns," Altman said. "I think as long as there's this period in between now and the divestiture the market is just going to trade very skittishly."
Tyco officials released copies of a letter demanding that TheStreet.com retract an article posted to its site Friday accusing Tyco of violating disclosure regulations and also overstating its cash flow.
"All of your assertions are factually incorrect and refuted by Tyco's public filings with the SEC," the letter from Tyco executive vice president and chief corporate counsel Mark Belnick said.
Babson College accounting professor Robert Halsey said the company did not appear to have violated any accounting guidelines, but said there are reasonable doubts that whether the acquisitions, when taken as a whole, are immaterial, as the company claims.
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