Wolfspeed announces bankruptcy!

On June 22, American chip manufacturer Wolfspeed announced that it would file for bankruptcy under a restructuring agreement that would eliminate billions of dollars in debt and give creditors control of the company. Wolfspeed stated that the restructuring plan has received sufficient support from creditors, including semiconductor manufacturer Renesas Electronics and investment firm Apollo Global Management.

Wolfspeed stated that it will continue to seek approval from more creditors before filing for bankruptcy under bankruptcy laws. Robert Feurle, CEO of Wolfspeed, stated in a statement: "After evaluating potential options for strengthening our balance sheet and adjusting our capital structure, we have decided to take this strategic move because we believe it will put Wolfspeed in the best position in the future. ”According to its proposal, creditors' debts will be converted into equity, and existing shareholders will receive at least 3% and up to 5% of new shares. These ratios imply higher shareholder losses, but higher than the typical level of most bankruptcy cases. The company hopes to continue trading on the New York Stock Exchange, but acknowledges in a statement that it may delist "for a period of time," and Wolfspeed promises that this process will not affect its commitments to customers and suppliers.

Wolfspeed expects to emerge from bankruptcy by the end of September after cutting 70% of its debt (approximately $4.6 billion). At that time, the new shareholders will appoint new members of the board of directors. As of the end of March, Wolfspeed held $1.3 billion in cash, which is a significant amount for a company preparing to apply for bankruptcy protection under bankruptcy law. However, the company will face over $6 billion in debt in the coming years, including payments due in 2026, 2028, 2029, 2030, and 2033. The company has rejected the proposal to restructure next year's debt and instead insists on what Wolfspeed's head of investor relations, Tyler Gronbach, previously called a 'comprehensive solution'. According to its bankruptcy proposal, these debts will be reduced, merged, and postponed - with an earliest maturity date of 2030.