| Item 1.01. | Entry into a Material Definitive Agreement. |
On October 10, 2023, Silicon Carbide LLC (“Silicon Carbide”), a wholly owned subsidiary of Coherent Corp. (the “Company”), entered into (i) an investment agreement (the “Denso Investment Agreement”), dated as of October 10, 2023, with Denso Corporation (“Denso”), pursuant to which, subject to the terms and conditions set forth therein, Silicon Carbide has agreed to issue and sell to Denso 16,666,667 Class A Common Units of Silicon Carbide (the “Common Units”) for an aggregate purchase price of $500,000,000, and (ii) an investment agreement (the “MELCO Investment Agreement”, and together with the Denso Investment Agreement, the “Investment Agreements”), dated as of October 10, 2023, with Mitsubishi Electric Corporation (“MELCO”), pursuant to which, subject to the terms and conditions set forth therein, Silicon Carbide has agreed to issue and sell to MELCO 16,666,667 Common Units for an aggregate purchase price of $500,000,000 (the issuance and sale of the Common Units to Denso and MELCO, collectively, the “Equity Investments”). Following the consummation of the Equity Investments, it is expected that the Company will own approximately 75% of Silicon Carbide’s outstanding Common Units, Denso will own approximately 12.5% of the Common Units and MELCO will own approximately 12.5% of the Common Units. In connection with the execution of the Investment Agreements, Silicon Carbide has agreed to enter into certain supply arrangements with each of MELCO and Denso pursuant to which Silicon Carbide will supply 150 mm and 200 mm silicon carbide substrates.
The transactions are subject to certain closing conditions, including: (i) the obtainment or waiver of specified regulatory approvals and (ii) the consummation of the separation of the silicon carbide business of the Company and its subsidiaries (the “SiC Business”) so that it is directly or indirectly owned by Silicon Carbide in accordance with the terms of the Investment Agreements (the “Separation”).
The Investment Agreements contain customary representations, warranties and covenants of Silicon Carbide and Denso or MELCO, as applicable, including covenants by Silicon Carbide concerning the conduct of the SiC Business in the ordinary course during the interim period between the execution of the applicable Investment Agreement and the closing or termination of such Investment Agreement (subject to customary exceptions). Under the Investment Agreements, each of Silicon Carbide and Denso or MELCO, as applicable, provide indemnification for (i) breaches of certain fundamental representations and (ii) breaches of their respective post-closing covenants. The Investment Agreements also contain certain termination rights for both Silicon Carbide and Denso or MELCO, as applicable.
A copy of the Denso Investment Agreement and the MELCO Investment Agreement are attached as Exhibit 10.1 and 10.2 to this Current Report on Form 8-K, respectively, and are incorporated herein by reference. The foregoing description of the Denso Investment Agreement and the MELCO Investment Agreement does not purport to be complete and is qualified in its entirety by reference to the Denso Investment Agreement or the MELCO Investment Agreement, as applicable.
The representations, warranties and covenants set forth in the Investment Agreements have been made only for the purposes of those agreements and solely for the benefit of the parties to the Investment Agreements, may be subject to limitations agreed upon by the parties thereto, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Investment Agreements instead of establishing these matters as facts, as well as by information contained in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, and may be subject to standards of materiality applicable to the parties thereto that differ from those applicable to investors. In addition, such representations and warranties were made only as of the dates specified in the Investment Agreements. Accordingly, the Investment Agreements are included with this filing only to provide investors with information regarding the terms of the Investment Agreements and not to provide investors with any other factual information regarding the parties thereto or their respective businesses.
On October 10, 2023, the Company issued a press release announcing the execution of the Investment Agreements. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
