8-KMaterial AgreementsFinancial EventsSecurities & Listing+2

COHERENT CORP. 8-K Report, Material Agreement (Aug 29, 2017)

Filed August 29, 2017For Securities:COHR

Summary

II-VI Incorporated (now Coherent Corp.) announced on August 29, 2017, the successful completion of its offering and sale of $345 million in aggregate principal amount of 0.25% Convertible Senior Notes due 2022. This offering was conducted as a private placement to qualified institutional buyers under Rule 144A. The company utilized a portion of the net proceeds, approximately $49.9 million, to repurchase 1,414,900 shares of its common stock at $35.25 per share, an action often taken to mitigate potential dilution from convertible debt. The remaining net proceeds are earmarked for general corporate purposes, which may include debt repayment, capital expenditures, investments, acquisitions, or further equity repurchases. These notes carry a low coupon rate of 0.25% and mature in September 2022. They are convertible into the company's common stock at an initial rate of 21.2500 shares per $1,000 principal amount, implying an initial conversion price of approximately $47.06 per share. The terms of conversion are subject to specific conditions related to stock price performance and corporate events.

Key Highlights

  • 1Completion of a $345 million offering of 0.25% Convertible Senior Notes due 2022.
  • 2Notes were sold via private placement to qualified institutional buyers under Rule 144A.
  • 3Approximately $49.9 million of proceeds used to repurchase 1,414,900 shares of common stock.
  • 4The convertible notes mature on September 1, 2022.
  • 5Initial conversion price is approximately $47.06 per share, convertible into 21.2500 shares per $1,000 principal.
  • 6Conversion is subject to specific conditions related to stock price and corporate events.
  • 7Remaining net proceeds intended for general corporate purposes, including potential debt reduction, investments, and acquisitions.

Frequently Asked Questions

The primary purpose was to raise capital. The company raised approximately $335.3 million in net proceeds. A portion was used for share repurchases to mitigate potential dilution, and the remainder is intended for general corporate purposes such as debt repayment, capital expenditures, investments, or potential acquisitions.

The notes have a principal amount of $345 million, mature on September 1, 2022, and carry a low interest rate of 0.25% per annum, payable semi-annually. They are convertible into II-VI Incorporated's common stock at an initial conversion rate of 21.2500 shares per $1,000 principal, equating to an initial conversion price of approximately $47.06 per share.

The repurchase of approximately $49.9 million worth of common stock at $35.25 per share is a common strategy when issuing convertible debt. It helps to offset or mitigate the dilutive effect that the issuance of new shares upon conversion of the notes could have on existing shareholders.

Prior to June 1, 2022, conversion is generally permitted only under specific circumstances: if the stock price meets certain thresholds (130% of conversion price for 20 out of 30 trading days), if the trading price of the notes falls below 98% of their conversion value, or upon certain specified corporate events. After June 1, 2022, holders can convert at any time until maturity.