S&P: Microsemi on watch

Standard & Poor's said it placed on CreditWatch with negative implications Microsemi Corp.'s BB- corporate credit rating and BB+ rating on its $425 million senior secured facility following news that the company made a hostile bid for Zarlink Semiconductor Inc. for $548 million.

Despite a view that Microsemi's operating performance has been good, the proposed transaction could lead to a sharp increase in leverage if completed, S&P said.

Reflecting Microsemi's acquisition of Actel in late 2010 and growth in its security and industrial end markets, Microsemi's March 2011 quarter revenues increased by about 51% to $679 million, the agency said.

S&P said it will monitor the status of the transaction and review the specific terms of the company's financing for the acquisition and its effects on leverage and cash flow, as well as management's integration strategy.

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