Coherent closes €670 million term loan, $100 million revolver

By Marisa Wong

Morgantown, W.Va., Nov. 8 – Coherent, Inc. entered into a credit agreement on Monday with Barclays Bank plc as administrative agent and letter-of-credit issuer and Bank of America, NA and MUFG as letter-of-credit issuers, according to an 8-K filing with the Securities and Exchange Commission. Coherent Holding GmbH is the borrower.

The credit agreement provides for a seven-year €670 million senior secured term loan and a five-year $100 million senior secured revolver with a $30 million letter-of-credit sublimit and a $10 million swingline sublimit.

In August, Coherent announced it downsized the term loan to €670 million from €675 million. The loan was priced at an original issue discount of 99.25, as previously reported.

The company may increase the aggregate revolving commitments or borrow incremental term loans in an aggregate principal amount of up to $150 million, according to Monday’s 8-K.

The credit agreement requires the company to prepay the term loans in some circumstances, including from excess cash flow beyond a threshold amount, from the receipt of proceeds from dispositions or from the incurrence of debt and from extraordinary receipts resulting in net cash proceeds in excess of $10 million in any fiscal year.

The interest rate for term loans is Euribor plus 350 basis points initially; after the first year, the margin ranges from 300 bps to 350 bps, depending on the consolidated total gross leverage ratio at the time of determination. The interest rate for the term loan is subject to a 0.75% Euribor floor. The interest rate for revolving loans ranges from Libor plus 375 bps to Libor plus 425 bps, also based on the consolidated total gross leverage ratio at the time of determination.

The credit agreement requires the company to make scheduled quarterly payments on the term loan of 0.25% of the original principal amount, with any remaining principal payable at maturity.

A commitment fee accrues on any unused portion of the revolving commitments at a rate of 37.5 bps or 50 bps, depending on the consolidated total gross leverage ratio.

The credit agreement requires the company to maintain a senior secured net leverage ratio as of the last day of each fiscal quarter of less than or equal to 3.5 to 1.0.

On the closing date, the term loan was drawn in full, and its proceeds were used to finance the company’s acquisition of Rofin-Sinar Technologies Inc. Proceeds of the revolver can be used to pay fees incurred in connection with the merger, to refinance debt and for working capital and general corporate purposes. On the closing date, the company used €10 million of the revolver for the issuance of a letter of credit.

On Nov. 4, Coherent terminated its amended and restated loan agreement dated May 30, 2012 with Union Bank, NA and repaid the loans outstanding under the facility.

Coherent is a Santa Clara, Calif.-based provider of lasers and laser-based technology for scientific, commercial and industrial customers.

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