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17 March 2021

II-VI details proposed equity investment from Bain Capital

Engineered materials and optoelectronic component maker II-VI Inc of Saxonburg, PA, USA has provided additional information on the terms of Bain Capital’s proposed equity investment in it.

II-VI will enter into an investment agreement with funds affiliated with Bain Capital, pursuant to which the investor will purchase:

  • 75,000 shares of new Series B-1 Convertible Preferred Stock, for a total $750m;
  • an additional 75,000 shares of new Series B-2 Convertible Preferred Stock, for a total $750m upon the potential closing of II-VI’s proposal to acquire Coherent Inc of Santa Clara, CA, USA (which provides lasers and laser-based technology for scientific, commercial and industrial applications); and
  • if elected by II-VI and agreed by the investor, up to an additional 50,000 shares of new Series B-3 Convertible Preferred Stock for a total $500m (assuming 50,000 shares are elected), at the time the investor purchases the Series B-2 Convertible Preferred Stock.

Assuming that the merger with Coherent is completed, the investor’s shares of Series B Convertible Preferred Stock are expected to have a weighted average initial conversion price of $93.58 per share of II-VI common stock. The initial conversion price per share of II-VI common stock is expected to be (i) $85.00 for the Series B-1 Convertible Preferred Stock; (ii) $104.09 for the Series B-2 Convertible Preferred Stock; and (iii) $93.58 for the Series B-3 Convertible Preferred Stock. The conversion prices will be subject to customary adjustment for certain events relating to the capital stock of the company. The investor will be obligated to purchase the Series B-1 Convertible Preferred Stock regardless of whether the II-VI completes the acquisition of Coherent.

The Series B Convertible Preferred Stock will be entitled to dividends at 5.00% per annum. Until the fourth anniversary of the applicable issuance date, dividends will be payable solely in-kind and capitalized to the principal value. After the fourth anniversary of the applicable issuance, dividends will be payable at the II-VI’s option, in cash, in-kind or as a combination of both.

The Series B Convertible Preferred Stock may be converted, in whole or in part, at the option of the holder into II-VI’s common stock based on the applicable conversion price, at any time. Following the third anniversary of issuance, II-VI may require conversion of all shares of a series of Series B Convertible Preferred Stock if the volume-weighted average price of the firm’s common stock exceeds 150% of the applicable conversion price for 20 trading days out of any 30 consecutive trading day period.

The shares of Series B-1 Convertible Preferred Stock will initially be non-voting. Following the expiration of the required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended), the Series B Convertible Preferred Stock will generally vote together with II-VI’s common stock, on an as-converted basis.

Upon the issuance of the Series B-1 Convertible Preferred Stock, Bain will have the right to designate one director and one observer to II-VI’s board of directors. Bain has indicated that the initial board member is expected to be its co-chairman Steve Pagliuca. Bain has also agreed generally not to dispose of any of its shares of Series B Convertible Preferred Stock for one year following their issuance and will have customary registration rights in connection with its investment.

See related items:

Coherent declares new II-VI acquisition proposal superior to amended Lumentum merger agreement

Lumentum to acquire Coherent for $5.7bn

Tags: II-VI Inc

Visit: www.ii-vi.com

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