Wolfspeed to file for Chapter 11 in deal cutting 70% of debt
(2025/06/23)
- Reference: 1750683543
- News link: https://www.theregister.co.uk/2025/06/23/wolfspeed_chapter_11/
- Source link:
Wolfspeed, maker of bandgap chips for power and radio frequency applications, is to file for Chapter 11 bankruptcy in the "near future" after striking an agreement with creditors to cut its $6.5 billion debt by roughly 70 percent.
The business, which specializes in silicon carbide and gallium nitride materials used in electric vehicles and inverters for solar/wind power, [1]issued a statement yesterday to confirm a Restructuring Support Agreement (RSA) with major lenders.
"The transactions envisioned by the RSA are expected to reduce the company's overall debt by approximately 70 percent, representing a reduction of approximately $4.6 billion, and reduce the company's annual total cash interest payments by approximately 60 percent," the company stated.
[2]
Some $5 billion of unsecured debt – $3 billion of convertible bonds and a $2 billion loan from Renesas Electronics – will be converted into nearly all of the new shares in Wolfspeed. Existing equity holders are to receive 3-5 percent of new common equity.
[3]
[4]
The proposed pre-packaged plan of reorganization will eradicate most shareholder equity. The US-based chip biz, which had a market cap of $4 billion in 2024, had taken on eye-watering levels of debt to pay for production plants in the US.
Creditors including Apollo Global Management, which led a debt refinancing of Wolfspeed in 2023, are expected to take over the company, and rubber-stamp the reorganization blueprint ahead of Wolfspeed filing for Chapter 11.
[5]Builder.ai coded itself into a corner – now it's bankrupt
[6]From MP3 to Web3 to now 3D, Napster gets a new owner
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"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," said CEO Robert Feurle.
Under the terms of the agreement, Wolfspeed will receive $275 million in fresh funding and says it had $1.3 billion of cash, as of March, to provide liquidity to pay vendors and support customers. It intends to file for Chapter 11 and "move through this process expeditiously and emerge by the end of third quarter calendar year 2025."
[9]
Wolfspeed will continue to operate throughout the process, it said. The business hired Feurle as CEO in March and brought on board David Emerson as COO last month following confirmation it would slash its leadership team by 30 percent. It [10]reported a net loss of $939 million [PDF] in the nine months to March 30, 2025, versus a $689 million loss a year earlier.
Trade had suffered at the hands of the Trump administration's policy shift away from prioritizing electric vehicles and renewable energy production. Wolfspeed revenues for those nine months fell to $560.6 million from $606.5 million in 2024.
Wolfspeed was in line for $750 million worth of US CHIPS Act funding with the caveat that it settled a debt payment in 2026. That agreement was terminated once the Biden administration was booted out at the last election. ®
Get our [11]Tech Resources
[1] https://www.wolfspeed.com/company/news-events/news/wolfspeed-takes-proactive-step-to-strengthen-financial-foundation-anticipating-scalable-profitable-growth/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aFl6E2bFpHz7u5rqzY9yigAAAE0&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aFl6E2bFpHz7u5rqzY9yigAAAE0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aFl6E2bFpHz7u5rqzY9yigAAAE0&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2025/05/21/builderai_insolvency/
[6] https://www.theregister.com/2025/03/27/napster_gets_new_owner/
[7] https://www.theregister.com/2025/03/24/23andme_bankruptcy_protection/
[8] https://www.theregister.com/2025/01/02/microsoft_endpoint_change/
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aFl6E2bFpHz7u5rqzY9yigAAAE0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[10] https://s29.q4cdn.com/278875087/files/doc_earnings/2025/q3/earnings-result/Wolfspeed_Q3_2025_Earnings_Release.pdf
[11] https://whitepapers.theregister.com/
The business, which specializes in silicon carbide and gallium nitride materials used in electric vehicles and inverters for solar/wind power, [1]issued a statement yesterday to confirm a Restructuring Support Agreement (RSA) with major lenders.
"The transactions envisioned by the RSA are expected to reduce the company's overall debt by approximately 70 percent, representing a reduction of approximately $4.6 billion, and reduce the company's annual total cash interest payments by approximately 60 percent," the company stated.
[2]
Some $5 billion of unsecured debt – $3 billion of convertible bonds and a $2 billion loan from Renesas Electronics – will be converted into nearly all of the new shares in Wolfspeed. Existing equity holders are to receive 3-5 percent of new common equity.
[3]
[4]
The proposed pre-packaged plan of reorganization will eradicate most shareholder equity. The US-based chip biz, which had a market cap of $4 billion in 2024, had taken on eye-watering levels of debt to pay for production plants in the US.
Creditors including Apollo Global Management, which led a debt refinancing of Wolfspeed in 2023, are expected to take over the company, and rubber-stamp the reorganization blueprint ahead of Wolfspeed filing for Chapter 11.
[5]Builder.ai coded itself into a corner – now it's bankrupt
[6]From MP3 to Web3 to now 3D, Napster gets a new owner
[7]23andMe's genes not strong enough to avoid Chapter 11
[8]Edgio bankruptcy results in endpoint change for Microsoft
"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," said CEO Robert Feurle.
Under the terms of the agreement, Wolfspeed will receive $275 million in fresh funding and says it had $1.3 billion of cash, as of March, to provide liquidity to pay vendors and support customers. It intends to file for Chapter 11 and "move through this process expeditiously and emerge by the end of third quarter calendar year 2025."
[9]
Wolfspeed will continue to operate throughout the process, it said. The business hired Feurle as CEO in March and brought on board David Emerson as COO last month following confirmation it would slash its leadership team by 30 percent. It [10]reported a net loss of $939 million [PDF] in the nine months to March 30, 2025, versus a $689 million loss a year earlier.
Trade had suffered at the hands of the Trump administration's policy shift away from prioritizing electric vehicles and renewable energy production. Wolfspeed revenues for those nine months fell to $560.6 million from $606.5 million in 2024.
Wolfspeed was in line for $750 million worth of US CHIPS Act funding with the caveat that it settled a debt payment in 2026. That agreement was terminated once the Biden administration was booted out at the last election. ®
Get our [11]Tech Resources
[1] https://www.wolfspeed.com/company/news-events/news/wolfspeed-takes-proactive-step-to-strengthen-financial-foundation-anticipating-scalable-profitable-growth/
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aFl6E2bFpHz7u5rqzY9yigAAAE0&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aFl6E2bFpHz7u5rqzY9yigAAAE0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aFl6E2bFpHz7u5rqzY9yigAAAE0&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2025/05/21/builderai_insolvency/
[6] https://www.theregister.com/2025/03/27/napster_gets_new_owner/
[7] https://www.theregister.com/2025/03/24/23andme_bankruptcy_protection/
[8] https://www.theregister.com/2025/01/02/microsoft_endpoint_change/
[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aFl6E2bFpHz7u5rqzY9yigAAAE0&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[10] https://s29.q4cdn.com/278875087/files/doc_earnings/2025/q3/earnings-result/Wolfspeed_Q3_2025_Earnings_Release.pdf
[11] https://whitepapers.theregister.com/
Utterly criminal
ecofeco
No company should EVER be allowed to exist to the point of a billion in debt and unable to pay.
Not even a million. But especially a billion. The knock on after effect will ruin thousands of average people's lives. (like they care about us plebes, but you get the point)
That's "unable to pay", not temporary cap ex debt for operation expansion.
Curious
gecho
I'm curious what the backstory is. Are they just a particularly badly managed company or is the US courting disaster onshoring semiconductor manufacturing? Wolfspeed is in a particularly hot sector of the semiconductor industry making components for high power EV inverters, compact electronically scanned radar, and communications.
wipe out most shareholders
Damn.
I think shareholders (and the stock market in general) are parasites that suck money away from the actual employees of companies...but wiping them out? That's a bit drastic don't you think?