Moody’s rates Lattice CFR, loan Ba3

Moody's Investors Service said it assigned Lattice Semiconductor Corp. a corporate family rating of Ba3, probability of default rating of Ba3-PD and a $350 million senior secured term loan rating of Ba3 (LGD3).

The outlook is stable.

Lattice will use the proceeds from loan and balance sheet cash of both Lattice and Silicon Image, Inc. to fund the acquisition of Silicon Image for about $603 million plus about $28 million of transaction fees.

Moody’s said the corporate family rating reflects relatively stable free cash flow due to Lattice's fabless operating model, and moderate starting leverage of about 4 times debt to EBITDA (Moody's adjusted, proforma for the Silicon Image acquisition), which is appropriate given Lattice's small scale as a niche player in the programmable logic segment of the semiconductor market.

The Ba3 rating on the loan, at the same level as the corporate family rating, reflects the single class of debt, the absence of financial maintenance covenants, and the limited cushion of subordinated liabilities in the capital structure, the agency said.

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