Wolfspeed (WOLF) has announced its plans to file for bankruptcy in the United States as part of a restructuring agreement with creditors. This move is aimed at providing the struggling chipmaker with fresh financing and reducing its debt by almost 70%. The company has been facing financial challenges due to deepening economic uncertainty caused by changing U.S. trade policies and weakening demand.
The restructuring agreement, which has been reached with creditors and Renesas Electronics’ U.S. subsidiary, will involve $275 million in fresh financing supported by existing creditors. Additionally, it will help Wolfspeed reduce its debt by $4.6 billion. The company intends to seek approval for its pre-packaged plan and aims to emerge from bankruptcy by the end of the third quarter of 2025.
In a prepackaged bankruptcy, companies work with their creditors to agree on a reorganization plan before filing for bankruptcy. This plan is then voted on by the creditors. Throughout the restructuring process, Wolfspeed plans to continue its regular operations.
As of March, Wolfspeed had around $1.33 billion in cash and $6.5 billion in debt obligations. Last week, Bloomberg News reported on the company’s plans to file for a prepackaged bankruptcy, with creditors, including Apollo Global Management, potentially taking over the firm.
In 2023, Wolfspeed secured $1.25 billion in debt financing led by Apollo, with the option to increase the total to as much as $2 billion to support its expansion in the United States. The company has undergone several leadership changes in recent months, appointing industry veteran Robert Feurle as CEO in March and David Emerson as COO in May. In May, Wolfspeed also announced that it would be reducing its senior leadership team by 30%.
The company’s decision to file for bankruptcy comes as a strategic move to address its financial challenges and restructure its operations for future growth. The leadership team is focused on navigating through this process and emerging stronger on the other side.
This article was reported by Rhea Rose Abraham and Kanjyik Ghosh in Bengaluru and edited by Rashmi Aich and Mrigank Dhaniwala.
