Struggling semiconductor firm Wolfspeed files for bankruptcy
The North Carolina-based company filed petitions for reorganisation under Chapter 11, according to a statement released on Monday (Jun 30). It expects to emerge out of bankruptcy by the end of the third quarter, it said.
The filing marks one of the largest bankruptcies so far this year, behind only Brazilian airline Azul and satellite company Ligado Networks, according to data compiled by Bloomberg.
A restructuring agreement is supported by a majority of holders of its senior secured notes, its convertible debtholders and Renesas Electronics, a major customer in Japan, the company said. The company expects to further focus on 200mm silicon carbide wafer manufacturing, Robert Feurle, Wolfspeed's chief executive officer, said.
Just days prior to the filing, Wolfspeed said it had struck a restructuring deal and intended to file Chapter 11.
Wolfspeed, which makes semiconductors, has been in discussions with lenders, including Apollo Global Managemen,t on its debt load and sought to refinance convertible bonds due next year. The chipmaker has said it will cut bond debt and a loan from Renesas by swapping that debt for equity in the reorganised company.
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Short sellers, bearish investors who make money when a stock declines, have piled into Wolfspeed this year as the company's woes snowballed.
In the past few months, Wolfspeed announced changes to its management team and had warned of the prospect of a bankruptcy, saying that it had hired advisers to help address its debt load.
To expand production, the firm won a US$750 million award last year from the federal government under the Chips and Science Act, which had been backed by former President Joe Biden. But since Trump took office in January, his administration has been reworking many of the awards.
Wolfspeed has only collected part of the money and has been locked in negotiations with the administration about the award, according to a regulatory filing. BLOOMBERG
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