Wolfspeed Takes Strategic Step to Strengthen Financial Position and Drive Long-Term Growth
In a decisive move to fortify its financial foundation and position itself for scalable, profitable growth, Wolfspeed, Inc. (NYSE: WOLF) has announced the execution of a Restructuring Support Agreement (RSA) with key lenders. The agreement, which has garnered strong support from stakeholders, including holders of more than 97% of its senior secured notes, Renesas Electronics Corporation’s wholly owned U.S. subsidiary, and convertible debtholders representing over 67% of outstanding convertible notes, is expected to significantly reduce the company’s debt burden while enhancing its liquidity and operational flexibility.
A Transformative Restructuring Plan
The RSA outlines a comprehensive plan to restructure Wolfspeed’s capital structure, reducing total debt by approximately 70%, or $4.6 billion, and cutting annual cash interest expenses by roughly 60%. This substantial deleveraging is anticipated to provide the company with the financial stability needed to focus on innovation, customer service, and long-term growth in the rapidly evolving silicon carbide (SiC) market.
Under the proposed pre-packaged plan of reorganization, Wolfspeed will receive $275 million in new financing through second lien convertible notes, fully backstopped by certain existing convertible debtholders. Additionally, the company plans to pay down $250 million of its senior secured notes at a rate of 109.875%, with modifications aimed at reducing ongoing cash interest payments and minimum liquidity requirements. Existing convertible notes and Renesas’ loan will be exchanged for $500 million in new notes and 95% of the new common equity, subject to dilution from other equity issuances. Existing equity holders will retain a pro rata share of 3% to 5% of the new common equity, also subject to dilution.
Ensuring Business Continuity During Restructuring
Wolfspeed remains committed to maintaining seamless operations throughout the restructuring process. With approximately $1.3 billion in cash as of the third quarter of fiscal year 2025, the company has sufficient near-term liquidity to continue serving its customers, paying vendors, and supporting day-to-day operations. Vendors are expected to remain unimpaired, and the company intends to file motions with the Bankruptcy Court to ensure continuity in employee compensation, benefits programs, and other critical business functions.
“We are taking this proactive step to strengthen our balance sheet and right-size our capital structure because we believe it positions Wolfspeed for long-term success,” said Robert Feurle, Wolfspeed’s Chief Executive Officer. “As a global leader in silicon carbide technology, we have unparalleled strengths, including a state-of-the-art, fully automated 200mm manufacturing footprint and a robust portfolio of cutting-edge products. A stronger financial foundation will enable us to focus on driving innovation in high-growth verticals undergoing electrification, where quality, durability, and efficiency are paramount.”
Feurle expressed gratitude to key lenders, employees, customers, and partners for their continued support during this pivotal time. “We are grateful for the confidence of our lenders, who share our vision for the future and recognize the immense potential of Wolfspeed. Our team’s resilience and dedication have been instrumental in navigating this process, and we are committed to emerging stronger and better positioned to deliver value to all stakeholders.”
Accelerating Toward Profitability
Post-restructuring, Wolfspeed anticipates being fully funded through cash flow generation, allowing the company to prioritize profitability and sustainable growth. The management team will focus on leveraging Wolfspeed’s core competencies in SiC technology to capitalize on opportunities in rapidly scaling industries such as electric vehicles (EVs), renewable energy, and industrial applications. These sectors are increasingly adopting SiC solutions due to their superior efficiency, performance, and reliability compared to traditional silicon-based technologies.
The restructuring process is expected to proceed swiftly, with Wolfspeed aiming to emerge from Chapter 11 reorganization by the end of the third quarter of calendar year 2025. To facilitate this, the company plans to solicit approval for its pre-packaged plan of reorganization and file voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the near future.
A Commitment to Innovation and Leadership
Wolfspeed’s decision to restructure underscores its commitment to maintaining its leadership position in the SiC market. As the demand for energy-efficient technologies continues to grow, Wolfspeed is well-positioned to meet the needs of its customers with innovative, high-performance solutions. By addressing its debt obligations and securing a stronger financial footing, the company can focus on advancing its mission to drive the global transition to a more sustainable, electrified future.
Additional details about the RSA and the restructuring process will be disclosed in a Form 8-K filing with the U.S. Securities and Exchange Commission (SEC). This announcement does not constitute an offer to sell or purchase securities, nor does it represent a solicitation to vote on the bankruptcy plan. All such actions will be conducted in accordance with applicable laws and definitive documentation.
About Wolfspeed, Inc.
Wolfspeed (NYSE: WOLF) leads the market in the worldwide adoption of silicon carbide technologies that power the world’s most disruptive innovations. As the pioneers of silicon carbide, and creators of the most advanced semiconductor technology on earth, we are committed to powering a better world for everyone. Through silicon carbide material, Power Modules, Discrete Power Devices and Power Die Products targeted for various applications, we will bring you The Power to Make It Real.TM Learn more at www.wolfspeed.com.
