II-VI Incorporated Provides Detail on Proposed Equity Investment from Bain Capital

March 16, 2021   I     PDF

 

II-VI Incorporated (Nasdaq: IIVI), a global leader in engineered materials and optoelectronic components, today provided additional information on the terms of Bain Capital’s proposed equity investment in the Company.

Under the terms of the proposed investment, the Company will enter into an investment agreement with funds affiliated with Bain Capital (the “Investor” and the agreement, the “Investment Agreement”), pursuant to which the Investor will purchase:

  • 75,000 shares of new Series B-1 Convertible Preferred Stock of the Company (“Series B-1 Convertible Preferred Stock”), for an aggregate purchase price of $750,000,000;
  • an additional 75,000 shares of new Series B-2 Convertible Preferred Stock of the Company (“Series B-2 Convertible Preferred Stock”), for an aggregate purchase price of $750,000,000 upon the potential closing of the Company’s previously disclosed proposal to acquire Coherent, Inc. (Nasdaq: COHR); and
  • if elected by the Company and agreed by the Investor, up to an additional 50,000 shares of new Series B-3 Convertible Preferred Stock of the Company (“Series B-3 Convertible Preferred Stock”) for an aggregate purchase price of $500,000,000 (assuming 50,000 shares are elected), at the time the Investor purchases the Series B-2 Convertible Preferred Stock. The Series B-1 Convertible Preferred Stock, the Series B-2 Convertible Preferred Stock, and the Series B-3 Convertible Preferred Stock are referred to collectively as the “Series B Convertible Preferred Stock.”

Assuming 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 Company 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 Company’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 the Company’s common stock based on the applicable conversion price, at any time.  Following the third anniversary of issuance, the Company may require conversion of all shares of a series of Series B Convertible Preferred Stock if the volume-weighted average price of the Company’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 nonvoting.  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 the Company’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 the Company’s Board of Directors.  Bain has indicated that the initial board member is expected to be Steve Pagliuca, Co-Chairman of Bain Capital.  Bain has also agreed generally not to dispose of any of its shares of Series B Convertible Preferred Stock for one year following issuance thereof and will have customary registration rights in connection with its investment.

A presentation further discussing Bain Capital’s proposed equity investment can be viewed on the Company’s website at www.ii-vi.com/investor-relations.