8-KShareholder MattersCorporate ChangesOther Events+1

COHERENT CORP. 8-K Report, Rights Modification (Jul 7, 2020)

Filed July 7, 2020For Securities:COHR

Summary

Coherent Corp. (formerly II-VI Incorporated) filed an 8-K on July 7, 2020, detailing the establishment of its 6.00% Series A Mandatory Convertible Preferred Stock. This filing is a crucial update for investors, as it outlines the terms and conditions of a significant capital raise through both preferred and common stock offerings, which closed on July 7, 2020. The mandatory convertible preferred stock is set to convert into common stock between July 2023 and August 2023, with the exact conversion ratio dependent on the average volume-weighted average price of the common stock during a specific 20-day trading period prior to conversion. The company also detailed the rights associated with this preferred stock, including dividend payments and liquidation preferences, emphasizing that common stock holders will rank junior to preferred stockholders. Importantly, the filing addresses the voting rights of the preferred stockholders, which are limited but can be triggered by a failure to pay dividends for a specified period, granting them the right to elect two directors to the board under certain circumstances. These events represent a substantial financial maneuver by Coherent Corp. to bolster its capital structure and fund operations or growth initiatives.

Key Highlights

  • 1Coherent Corp. (formerly II-VI Incorporated) established its 6.00% Series A Mandatory Convertible Preferred Stock, with the terms formalized in a Statement filed on July 6, 2020.
  • 2The company closed offerings for both Mandatory Convertible Preferred Stock (2.3 million shares) and Common Stock (10.7 million shares) on July 7, 2020, raising significant capital.
  • 3Each share of Mandatory Convertible Preferred Stock is convertible into 3.8760 to 4.6512 shares of Common Stock, with the final conversion ratio determined by the average common stock price over a 20-day period prior to July 1, 2023.
  • 4Dividends on the preferred stock are payable quarterly at an annual rate of 6.00% of the $200.00 liquidation preference, and can be paid in cash, common stock, or a combination thereof.
  • 5Common stock holders are junior to mandatory convertible preferred stockholders regarding dividends and liquidation preferences.
  • 6Holders of the Mandatory Convertible Preferred Stock gain voting rights to elect two directors to the board if dividends are not paid for six or more dividend periods, subject to certain limitations and corporate governance rules.
  • 7The mandatory conversion date for the preferred stock is expected to be July 1, 2023.

Frequently Asked Questions

This 8-K filing primarily announces and details the terms and conditions of Coherent Corp.'s (formerly II-VI Incorporated) issuance of 6.00% Series A Mandatory Convertible Preferred Stock and concurrent Common Stock Offering. It establishes the legal framework for the preferred stock and confirms the closing of these capital-raising events.

The Mandatory Convertible Preferred Stock is expected to convert automatically on July 1, 2023. The exact number of common shares received per preferred share will be determined by the volume-weighted average price of Coherent Corp.'s common stock over a 20-day trading period prior to July 1, 2023, and will fall within a range of 3.8760 to 4.6512 shares, subject to anti-dilution adjustments.

The Mandatory Convertible Preferred Stock pays cumulative dividends at an annual rate of 6.00% of its $200.00 liquidation preference. These dividends are payable quarterly and can be paid in cash, shares of common stock, or a combination of both. However, dividends are only paid if declared by the board of directors.

Generally, holders of the Mandatory Convertible Preferred Stock do not have voting rights, except as required by law or the company's charter. However, if dividends have not been declared and paid for the equivalent of six or more dividend periods (a 'nonpayment'), these holders, along with holders of other voting preferred stock, will gain the right to elect two additional directors to the board. These voting rights cease once all accumulated unpaid dividends are paid.