8-KLeadership ChangesMaterial AgreementsSecurities & Listing+3

COHERENT CORP. 8-K Report, Material Agreement (Mar 31, 2021)

Filed March 31, 2021For Securities:COHR

Summary

This 8-K filing by II-VI Incorporated (now Coherent Corp. under its previous ticker COHR) details a significant amendment to its investment agreement with BCPE Watson (DE) SPV, LP, an affiliate of Bain Capital. The core of the update is an increased commitment from the Investor, bringing the total potential equity investment to approximately $2.1 billion. This investment is directly tied to II-VI's pending business combination with Coherent, Inc. The financing includes an initial $750 million for Series B-1 Convertible Preferred Stock and up to an additional $1.35 billion for Series B-2 Convertible Preferred Stock, contingent on the Coherent merger closing. Key implications for investors include the bolstering of II-VI's financial position to facilitate the Coherent acquisition, along with new governance rights granted to the Investor. Specifically, Bain Capital will have the right to nominate a director and an observer to II-VI's Board, reflecting their substantial stake. The convertible preferred stock carries a 5% annual dividend, payable in-kind initially, and is convertible into II-VI common stock at a fixed price of $85 per share, subject to certain conditions. This transaction is a crucial step in the proposed merger, providing the necessary capital and demonstrating investor confidence.

Key Highlights

  • 1II-VI Incorporated amended its investment agreement with BCPE Watson (DE) SPV, LP (Bain Capital affiliate) to increase the Investor's commitment.
  • 2The total potential equity investment by the Investor is approximately $2.1 billion, comprising $750 million for Series B-1 Convertible Preferred Stock and up to $1.35 billion for Series B-2 Convertible Preferred Stock.
  • 3The equity investment is conditional upon the closing of II-VI's business combination with Coherent, Inc.
  • 4The Investor receives rights to nominate one director and one observer to II-VI's Board of Directors as long as specified ownership thresholds are maintained.
  • 5The newly issued Series B-1 and Series B-2 Convertible Preferred Stock accrues dividends at 5.00% per annum, with payment terms evolving over time.
  • 6These preferred shares are convertible into II-VI common stock at a conversion price of $85.00 per share, subject to specific conditions and timings.
  • 7The equity securities were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.

Frequently Asked Questions

The primary purpose is to increase the equity investment commitment from BCPE Watson (DE) SPV, LP (an affiliate of Bain Capital) to approximately $2.1 billion, which is intended to help finance II-VI Incorporated's pending business combination with Coherent, Inc.

The Investor received Series B-1 Convertible Preferred Stock and will receive Series B-2 Convertible Preferred Stock. These shares accrue a 5% annual dividend (paid in-kind for the first four years, then optionally in cash or in-kind) and are convertible into II-VI common stock at $85 per share under certain conditions. The Investor also gains board representation rights.

Yes, the Investor is granted the right to nominate one director and designate one observer to II-VI's Board of Directors, provided they maintain a specified ownership level. This indicates a level of influence given the significant investment.

No, the shares of New II-VI Convertible Preferred Stock were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. Any common stock issuable upon conversion will be issued under Section 3(a)(9) of the Securities Act.