EV chip-maker Wolfspeed inks bankruptcy protection deal
Wolfspeed Inc, a chipmaker for EVs, has entered into a pre-arranged Chapter 11 restructuring.
The so-called bankruptcy protection deal, was agreed with Wolfspeed's major creditors - holders of over 97% of its senior secured notes and a majority of its convertible debt holders.
The restructuring deal is expected to allow Wolfspeed to slash its debt burden by roughly 70% (about $4.6 billion) and cut annual cash interest payments by close to 60%.
Moreover, existing creditors will inject $275 million of fresh financing.
It expects to shore up its liquidity position and restore confidence through the arrangements. Operationally, Wolfspeed said it's 'business as usual', with production continuing at its Mohawk Valley fabrication facility in New York state.
“After evaluating potential options to strengthen our balance sheet and right-size our capital structure, we have decided to take this strategic step because we believe it will put Wolfspeed in the best position possible for the future,” CEO Robert Feurle said.
"we are grateful for the confidence and support of key lenders, who share our vision for the future and believe in our growth prospects."
The chip firm had some $1.33 billion in cash at the end of March and roughly $6.5 billion in total debt.
It comes as Wolffspeed faces weaker demand and the impact of shifting trade policies, which recently in May, triggered going-concern warnings. Also, this year it has made changes to executive management and cut senior headcount by around 30%.
Wolfspeed said it expects to exit bankruptcy by the close of the third quarter of calendar 2025, subject to creditor approval.
The chip-maker's NYSE-listed shares fell 31% on Monday, and the stock is down just over 90% in 2025-to-date.
