8-KAcquisitions & DispositionsMaterial AgreementsFinancial Events+2

COHERENT CORP. 8-K Report, Material Agreement (Sep 12, 2013)

Filed September 12, 2013For Securities:COHR

Summary

II-VI Incorporated has announced a significant strategic move through the acquisition of Oclaro, Inc.'s Switzerland-based semiconductor laser business. This acquisition, valued at $115 million, involves the purchase of Oclaro Switzerland GmbH and specific assets related to the semiconductor laser business. The transaction was funded through a combination of cash and a newly expanded credit facility, highlighting the company's proactive approach to financing growth. Furthermore, II-VI has secured an exclusive 30-day option to acquire Oclaro's optical amplifier business for an additional $88 million, demonstrating a clear intent to further consolidate its position in optical technologies. This dual-pronged approach, encompassing both immediate acquisition and strategic optioning, positions II-VI for enhanced market presence and technological synergy. The company has also concurrently amended and restated its credit agreement, increasing its revolving credit facility to $225 million and adding a $100 million term loan, with proceeds from the term loan used for this acquisition.

Key Highlights

  • 1II-VI Incorporated acquired Oclaro's Switzerland-based semiconductor laser business for $115 million.
  • 2The acquisition includes Oclaro Switzerland GmbH and specific semiconductor laser assets.
  • 3II-VI paid $92 million in cash, with adjustments for receivables, hold-back, and working capital.
  • 4The company secured an exclusive 30-day option to acquire Oclaro's optical amplifier business for $88 million.
  • 5II-VI expanded its credit facility, increasing its revolving credit facility to $225 million and adding a $100 million term loan.
  • 6The term loan was utilized to finance the acquisition of the semiconductor laser business.
  • 7A multi-year supply agreement was established, with II-VI providing semiconductor laser products to Oclaro's amplifier business.

Frequently Asked Questions

The total consideration for the semiconductor laser business was $115 million. This comprised $92 million in cash, $6 million subject to a hold-back for 15 months for post-closing adjustments, and $2 million subject to a potential post-closing working capital adjustment. Oclaro retained $15 million in accounts receivable from the business.

Yes, II-VI has secured an exclusive 30-day option to purchase Oclaro's optical amplifier business for $88 million. II-VI paid $5 million for this option, which will be applied against the purchase price if exercised. If not exercised, Oclaro retains the $5 million option payment.

The acquisition was financed through a combination of cash and debt. II-VI amended and restated its credit agreement, increasing its revolving credit facility to $225 million and securing a new $100 million term loan. The term loan was specifically utilized to fund this acquisition.

The amended credit agreement includes financial covenants requiring II-VI to maintain a minimum consolidated interest coverage ratio of 4.0 and a maximum consolidated leverage ratio of 3.0. The facility also contains customary affirmative and negative covenants typical for such credit agreements.