By Dena Aubin

NEW YORK (Reuters) - Tyco International (TYC.N: Quote, Profile, Research) on Friday said it has agreed to pay bondholders $250 million under a preliminary settlement of a dispute over its restructuring into three separate entities last year.

The agreement was reached with firms that advise holders of about 80 percent of Tyco's $3.7 billion of outstanding debt. In return, debtholders have agreed to dismiss their lawsuit and waive any alleged default, Tyco said in a statement.

As part of the agreement, Tyco said it is also offering to exchange its notes due in 2028 and 2029 for notes maturing in 2019 and 2021, respectively.

"It may appear a (bondholder) win, but in terms of relative economics, it is a loss since it sends a message that bondholders will blink and the process of organizing investment-grade bondholders to fight is simply too cumbersome," said Glenn Reynolds, senior analyst and chief executive of independent research firm CreditSights, in an emailed message.

"Basically, bad behavior was rewarded," he said.

Tyco was sued by the trustee of its bonds, the Bank of New York (BK.N: Quote, Profile, Research), and a group of bondholders who argued that the company broke terms and conditions of its debt by not offering to buy back the debt at what they argued was its full value.

The bondholders said the company did not receive the necessary approval before it spun off its electronics and health-care divisions last year into independent companies.

The remaining Tyco International consists of the company's fire and security and engineered products divisions.