By Bolaji Ojo
Wolfspeed Inc. says it has filed for U.S. Chapter 11 bankruptcy protection. This action will slash the company’s debt burden by $4.6 billion, and sharply reduce its interest expense, giving the silicon carbide supplier the breathing room to keep operating.
The action, though anticipated, will change the corporate structure of Wolfspeed by transferring ownership of the enterprise to key lenders, including Japan’s Renesas Electronics Corp. Wolfspeed executives said its previous shareholders will receive between 3 and 5 percent of the shares of the new entity, leaving creditors with a stake of about 95 percent.
“We have decided to take this strategic step because we believe it will put Wolfspeed in the best position possible for the future,” said Robert Feurle, Wolfspeed’s CEO, in a statement. “A stronger financial foundation will enable us to focus acutely on innovation in rapidly scaling verticals undergoing electrification where quality, durability and efficiency matter most.”
Two years ago, Renesas injected $2 billion into Wolfspeed to secure about 10 years of SiC supplies. The money will now be converted into both new notes and new common equity, according to Wolfspeed, which said “Renesas loan claims entitled [it] to additional incremental consideration to the extend certain regulatory approvals are not obtained by an agreed upon deadline.”
Editor’s note: This is a breaking story. Please check back for an update.
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