Moody's affirms Agere

Moody's Investors Service said it affirmed the B1 corporate family rating, Ba3 probability-of-default rating and B1 $362 million subordinated convertible note (LGD4, 68%) of Agere Systems Inc. with a developing outlook following the announcement that LSI Logic Corp. and Agere have entered into a definitive merger agreement under which the companies will be combined in an all-stock transaction with an equity value of $4 billion. Subject to customary shareholder and regulatory reviews, the transaction is expected to close in the first quarter of 2007.

The agency said the developing outlook reflects the uncertainty with respect to the legal structure following the merger, including whether there will be any guarantees from LSI.

While the indenture that governs Agere's convertible requires the company to repurchase the notes for cash if there is a change of control or if there is a termination of trading of the common stock of Agere or its successor, Moody's said the specific terms of these triggers are not met in this proposed transaction.

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