Moody’s rates Coherent Holding CFR, loan Ba2

Moody's Investors Service said it assigned a Ba2 corporate family rating and Ba2-PD probability of default rating to Coherent Holding GmbH, an operating subsidiary of parent company Coherent, Inc.

Concurrently, the agency assigned a Ba2 rating to Coherent GmbH's proposed senior secured bank credit facility and assigned a speculative grade liquidity rating of SGL-2.

The bank credit facility will consist of a $750 million euro-denominated term loan and a $100 million multi-currency revolving credit facility.

Proceeds from the new debt financing will be used principally to fund the pending acquisition of Rofin-Sinar Technologies, Inc. for an enterprise value of about $840 million. The ratings assume that the Rofin acquisition will be completed by the calendar year ending 2016.

The outlook is stable.

The Ba2 corporate family rating reflects Coherent's leveraged capital structure with trailing pro forma debt to EBITDA (Moody's adjusted for pensions and operating leases) of roughly 3.7 times as of March 31, as well as the company's significant exposure to cyclical end markets and concentration risk with over 30% of the combined entity's sales targeting the flat panel display sector,the agency said.

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