**Wolfspeed Inc. Plans Bankruptcy Filing to Restructure $4.6 Billion Debt**
Wolfspeed Inc., a prominent chipmaker, is set to file for bankruptcy by July 1, aiming to reduce its debt by approximately $4.6 billion and transfer control to convertible noteholders. The company, which has been affected by the shifting landscape of tech subsidies under President Donald Trump, announced on Sunday that it has reached a restructuring agreement with a majority of its creditors, including Renesas Electronics Corp., a key customer from Japan. This deal will enable Wolfspeed to cut its debt by 70% and lower its annual interest expenses by 60%.
Recent reports indicated that the Durham, North Carolina-based firm was in discussions with creditors, including Apollo Global Management Inc., to facilitate a prepackaged bankruptcy filing. As part of the restructuring plan, existing shareholders of Wolfspeed will retain a stake of up to 5% in the newly restructured company. Following the announcement, Wolfspeed’s shares plummeted by as much as 32.2% on Monday.
The company anticipates emerging from court protection by the end of the third quarter of this year, pending court approval. In May, Wolfspeed had signaled the possibility of bankruptcy, revealing that it had engaged advisors to help manage its debt situation. To bolster production capabilities, the firm received a $750 million award from the federal government last year under the Chips and Science Act, which was supported by former President Joe Biden. However, since Trump took office, his administration has been revising many of these awards. Wolfspeed has only received a portion of the funds and is currently negotiating with the administration regarding the award.
The restructuring agreement has been accepted by 97% of Wolfspeed’s senior secured noteholders and 67% of convertible noteholders. Renesas has agreed to convert its $2.1 billion deposit into convertible notes, common stock, and warrants. Additionally, as part of the restructuring, the company will issue $275 million in new second-lien convertible bonds to some of its existing holders.
In summary, Wolfspeed’s strategic move to file for bankruptcy and restructure its debt is a significant step towards stabilizing its financial position and ensuring future growth in a challenging market environment.
**FAQ**
**What is Wolfspeed Inc. planning to do regarding its debt?**
Wolfspeed Inc. plans to file for bankruptcy by July 1 to restructure approximately $4.6 billion in debt, aiming to reduce it by 70% and lower annual interest expenses by 60%.
