Tyco May Be Facing $1.7 Billion IRS Payment

In addition, Tyco's accounts are currently being reviewed by PriceWaterhouseCoopers as part of its regular fiscal year-end audit. And, facing suspicions among investors that former managers cooked the company's books, Tyco's new management set up an internal probe under outside lawyer David Boies.

Dow Jones Newswires reported Wednesday that the company was in talks with Morgan Stanley and Bank of America for a $1.5 billion loan with a one-year term. This could represent a move to raise money to pay off any outstanding back taxes.

Until last year, Kozlowski and Swartz enjoyed strong reputations as visionary managers, and Tyco enjoyed a market worth of more than $100 billion. But fraud charges against the executives, a slowdown in Tyco's main businesses, a cash squeeze, and allegations that Tyco's accounting is not clean have crushed the stock this year.

Under its new CEO Ed Breen, however, Tyco has rallied strongly off its yearly lows as investors have bet that investigations won't turn up anything that would imply the company is far less profitable than its books suggest.

>To order reprints of this article, click here: Reprints