S&P rates II-VI loan BB-

S&P said it assigned II-VI Inc.’s planned $2.8 billion term loan BB- with a 3 recovery rating. The agency also affirmed the BB- issuer rating and removed all its II-VI ratings from CreditWatch where it placed them with negative implications on March 31. The outlook is stable.

II-VI will use the loan proceeds to partially fund its acquisition of laser systems manufacturer Coherent Inc.

“The stable outlook reflects our expectation that II-VI will benefit from positive demand trends in both its stand-alone business and Coherent's business over the next two years. Despite its high starting S&P Global Ratings-adjusted leverage (in the mid-5x area immediately following closing), we project that the combined company will generate annual free cash flow of greater than $600 million and anticipate its leverage will decline below 5x during the 12 months following the close of the deal,” the agency said in a press release.

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