News: Microelectronics
23 June 2025
Wolfspeed’s restructuring deal with lenders to reduce debt by 70% and interest payments by 60%
As part of its efforts to strengthen its capital structure, Wolfspeed Inc of Durham, NC, USA — which makes silicon carbide (SiC) materials and power semiconductor devices — has entered into a restructuring support agreement (RSA) with key lenders, including (i) holders of more than 97% of its senior secured notes, (ii) Renesas Electronics Corp’s US subsidiary, and (iii) convertible debtholders holding more than 67% of the outstanding convertible notes. The transactions envisioned by the RSA are expected to reduce the firm’s overall debt by about 70% ($4.6bn) and to reduce annual total cash interest payments by about 60%.
As a result, Wolfspeed expects to be better positioned to execute on its long-term growth strategy and accelerate its path to profitability. This marks the culmination of discussions between the Wolfspeed and key lenders to restructure its capital structure on an expedited basis and to help to ensure that the firm maintains its position as a leader in the silicon carbide market.
“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,” says CEO Robert Feurle. “We are a global leader in silicon carbide technology with an exceptional, purpose-built, fully automated 200mm manufacturing footprint, delivering cutting-edge products,” he adds. “A stronger financial foundation will enable us to focus acutely on innovation in rapidly scaling verticals undergoing electrification where quality, durability and efficiency matter most.”
Key terms of the RSA are as follows:
- Wolfspeed will receive $275m of new financing in the form of second lien convertible notes, fully backstopped by certain existing convertible debtholders.
- The RSA contemplates a paydown of its senior secured notes of $250m at a rate of 109.875%, with certain modifications to reduce go-forward cash interest and minimum liquidity requirements.
- The RSA also contemplates an exchange of $5.2bn of existing convertible notes and Renesas’ existing loan for $500m of new notes and 95% of the new common equity, subject to dilution from other equity issuances, with Renesas loan claims entitled to additional incremental consideration to the extent that certain regulatory approvals are not obtained by an agreed upon deadline.
- Existing equity will be cancelled, and the existing equity holders will receive their pro rata share of 3% or 5% of new common equity, subject to dilution from other equity issuances and potential reduction from certain events.
- All other unsecured creditors are expected to be paid in the ordinary course of business.
To implement the transactions envisioned by the RSA, Wolfspeed intends to solicit approval of the pre-packaged plan of reorganization and then file voluntary petitions for reorganization under Chapter 11 of the US Bankruptcy Code in the near future. The firm expects to emerge from this by the end of third-quarter 2025.
Wolfspeed says that it is continuing to operate and serve customers with silicon carbide materials and devices throughout the process. It plans to continue to pay vendors in the ordinary course of business for goods and services delivered throughout the restructuring process via an All-Trade Motion. Vendors are expected to be unimpaired. Wolfspeed also intends to file customary motions with the Bankruptcy Court to support ordinary-course operations including, but not limited to, continuing employee compensation and benefits programs.
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