01—Abstract
Summary
Summary of the 8-K filed July 1, 2022. Cited figures are marked; the original filing is the authoritative source.
Coherent Corp. (formerly II-VI Incorporated) filed an 8-K on July 1, 2022, to report several material events.
The most significant development is the completion of its acquisition of Coherent, Inc. (the "Merger"), which was finalized on the Closing Date. This transaction was financed in part by a new $4 billiona senior secured credit facility, comprised of a $850 million Term Loan A, a $2.8 billion Term Loan B, and a $350 million revolving credit facility.
The proceeds from these facilities, along with other financing and cash on hand, were used to fund the cash portion of the merger consideration, repay existing debt, and cover associated fees and expenses. This marks a substantial step in the company's strategic growth, combining the operations of two significant entities in the photonics and laser technology sectors.
02—Key points
Key Highlights
- Completion of the acquisition of Coherent, Inc. for a combination of cash ($220.00 per share) and II-VI stock (0.91 shares of II-VI common stock per Coherent share).
- Entry into a new $4 billion senior secured credit facility to finance the acquisition and for general corporate purposes. This facility includes Term Loan A, Term Loan B, and a Revolving Credit Facility.
- Termination of previous credit agreements, including the Amended and Restated Credit Agreement dated September 24, 2019, and Coherent's Credit Agreement dated November 7, 2016.
- Issuance of 140,000 shares of Series B-2 Convertible Preferred Stock for $1.4 billion to an affiliate of Bain Capital, LP, under an unregistered sale exemption.
- Appointment of two new directors, Stephen A. Skaggs and Sandeep S. Vij, former board members of Coherent, to the Company's Board of Directors.
- Granting of special restricted stock unit awards to certain Company executives, with vesting over two years, to incentivize integration and performance post-merger.
- Information on the terms of the new credit facilities, including interest rates, maturity dates (5 years for Term Loan A and Revolving, 7 years for Term Loan B), amortization schedules, and covenants.
03—Questions
Frequently Asked Questions
What was the primary purpose of this 8-K filing?
The primary purpose of this 8-K filing was to report the completion of Coherent Corp.'s acquisition of Coherent, Inc. and the entry into a new, significant credit facility to finance this transaction and for general corporate purposes. It also documented the termination of previous credit agreements and other related corporate actions.
How was the acquisition of Coherent, Inc. financed?
The acquisition was financed through a combination of cash and stock. Specifically, Coherent shareholders received $220.00 in cash and 0.91 shares of II-VI (now Coherent Corp.) common stock for each share they owned. The cash component and transaction-related expenses were significantly funded by a new $4 billion senior secured credit facility.
What are the key terms of the new $4 billion credit facility?
The $4 billion credit facility consists of a $850 million Term Loan A, a $2.8 billion Term Loan B, and a $350 million revolving credit facility. The Term Loan A and Revolving Credit Facility mature in five years, while the Term Loan B matures in seven years. Interest rates are based on LIBOR or base rate plus applicable margins, with initial rates and step-downs based on leverage ratios. The facility is secured by substantially all assets of the company and its subsidiary guarantors and includes various covenants and events of default.
What happened to Coherent, Inc.'s previous debt arrangements?
As part of the transaction, Coherent Corp. terminated its previously existing credit agreements, referred to as the 'Existing II-VI Credit Facility' and the 'Existing Coherent Credit Facility,' and repaid all outstanding amounts under them.
04—Continue