Wolfspeed Strengthens Finances Ahead of Scalable Growth
Wolfspeed, Inc. (NYSE: WOLF) has announced a major financial restructuring initiative aimed at significantly strengthening its capital structure to support long-term scalable and profitable growth. The company has entered into a Restructuring Support Agreement (RSA) with key stakeholders, including over 97% of its senior secured noteholders, Renesas Electronics Corporation’s U.S. subsidiary, and holders of more than 67% of its outstanding convertible notes.
This agreement is expected to dramatically reduce Wolfspeed’s debt by approximately 70%, equating to a reduction of about $4.6 billion. Additionally, the Company anticipates a 60% decrease in annual cash interest payments, significantly improving its financial flexibility. These measures are part of Wolfspeed’s broader plan to accelerate its growth trajectory while reinforcing its leadership in the rapidly expanding silicon carbide (SiC) market.
“After carefully evaluating our strategic options, we determined this was the most effective path to enhance our financial foundation and position the company for a strong future,” stated Robert Feurle, CEO of Wolfspeed. “Our leadership in silicon carbide technology, coupled with a highly automated 200mm manufacturing footprint, places us at the forefront of electrification trends across multiple industries. This restructuring will allow us to concentrate on delivering cutting-edge solutions to our customers while scaling operations in high-growth verticals.”
Feurle emphasized the importance of stakeholder support: “We deeply appreciate the confidence our lenders have shown in our strategy. This agreement not only highlights their belief in our vision but also ensures our continued ability to innovate. I want to thank our dedicated employees for their resilience and our customers and partners for their unwavering commitment.”
Key Components of the Restructuring Plan
- New Financing: Wolfspeed will receive $275 million in new capital via second lien convertible notes. This financing is fully backstopped by existing convertible debtholders, providing immediate liquidity to support ongoing operations.
- Senior Secured Note Repayment: The agreement includes a $250 million paydown of Wolfspeed’s senior secured notes at a premium rate of 109.875%, coupled with modifications aimed at reducing future cash interest obligations and easing minimum liquidity requirements.
- Debt Exchange: A pivotal aspect of the RSA is the exchange of $5.2 billion in existing convertible notes and Renesas’ loan for $500 million in new notes and 95% of the restructured company’s new common equity. Renesas is also entitled to additional consideration if specific regulatory approvals are delayed or not obtained by an agreed deadline.
- Equity Adjustments: The current equity will be canceled. Existing shareholders will receive a pro rata share of 3% to 5% of the new equity, subject to further dilution and reduction based on certain conditions.
- Unsecured Creditors: Wolfspeed intends to pay all other unsecured creditors in the normal course of business, thereby preserving key commercial relationships and business continuity.
Chapter 11 Filing and Implementation
To implement the restructuring, Wolfspeed plans to file a voluntary petition for Chapter 11 reorganization under the U.S. Bankruptcy Code. The company expects to gain expedited approval for its pre-packaged plan and emerge from bankruptcy protection by the end of the third quarter of the 2025 calendar year.
During this period, Wolfspeed will continue normal operations, supplying industry-leading silicon carbide materials and components. It has filed an All-Trade Motion to ensure vendors continue to be paid on time, and all vendors are expected to remain unaffected by the restructuring.
Wolfspeed will also request customary relief from the Bankruptcy Court to maintain everyday operations, including employee wages, benefits, and compensation programs, minimizing disruption for its workforce and customers.
Additional information about the restructuring process will be detailed in a forthcoming Form 8-K filing with the U.S. Securities and Exchange Commission. Wolfspeed has also launched a dedicated microsite, wolfspeedforward.com, to provide stakeholders with up-to-date information on the restructuring.
Advisors and Legal Counsel
To guide this complex process, Wolfspeed has retained a comprehensive team of legal and financial advisors:
- Wolfspeed: Latham & Watkins LLP and Hunton Andrews Kurth LLP (legal counsel); Perella Weinberg Partners (financial advisor); FTI Consulting (restructuring advisor)
- Senior Secured Noteholders: Paul, Weiss, Rifkind, Wharton & Garrison LLP (legal counsel); Moelis & Company (financial advisor)
- Renesas Electronics Corporation: Kirkland & Ellis LLP (legal counsel); PJT Partners (financial advisor); BofA Securities (structuring advisor)
- Convertible Debtholders: Ropes & Gray LLP (legal counsel); Ducera Partners (financial advisor)
A Strategic Reset for Growth
Wolfspeed’s financial reset comes at a time of transformative opportunity in the power electronics industry. The adoption of silicon carbide solutions is expanding rapidly across automotive, energy, and industrial sectors. Wolfspeed’s 200mm fab capability gives it a unique edge in meeting this surging demand.
With a reduced debt load, lower interest payments, and a more sustainable capital structure, Wolfspeed is poised to capitalize on this momentum. The Company believes this restructuring will unlock the next phase of scalable, profitable growth, aligning financial health with its technological leadership.
This is more than a balance sheet adjustment,” said Feurle. “It’s a comprehensive, strategic move to align Wolfspeed’s financial framework with the massive growth opportunity we see in electrification. We’re confident that this puts us on a clear path to long-term success.”
