Moody’s upgrades II-VI

Moody’s Investors Service said it upgraded II-VI Inc.’s ratings, including the corporate family rating to Ba3 from B1 and the senior secured revolver and senior secured term loan A to Ba3 from B1.

The agency upgraded the speculative grade liquidity rating to SGL-1 from SGL-2. The outlook is stable. The rating on the senior secured term loan B will be withdrawn following repayment, Moody’s said.

The upgrade follows the announcement II-VI plans to repay the senior secured term loan B using proceeds of a stock offering and a mandatory convertible preferred stock offering, the agency said.

“The upgrade to the CFR reflects the planned debt repayment, which will reduce reported debt by about 31%, improving leverage to about 4.9x debt to EBITDA (12 months ended March 31, 2020, Moody’s adjusted, pro forma for the debt repayment) from 6.8x. The upgrade also reflects the issuance of common and mandatory convertible preferred shares to fund the debt repayment, which Moody’s views as indicative of a more conservative financial policy,” Moody’s said in a press release.

The outlook is stable.

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