Initiates Pre-Packaged Restructuring Process with Strong Support of Key Lenders, Expects to Emerge by 3QCY25
Agreement Aims to Better Position Wolfspeed to Execute on Long-Term Growth Strategy and Accelerate Path to Profitability
Company Has ~$1.3B of Cash as of 3QFY25, Providing Sufficient Near-Term Liquidity to Support Customers and Pay Vendors in Ordinary Course
DURHAM, N.C.--(BUSINESS WIRE)--
Wolfspeed, Inc. (NYSE: WOLF), a global leader in silicon carbide technologies, today announced that it has taken the next step to implement its previously announced Restructuring Support Agreement (鈥淩SA鈥�) with key lenders, including (i) holders of more than 97% of its senior secured notes, (ii) Renesas Electronics Corporation鈥檚 wholly owned U.S. subsidiary and (iii) convertible debtholders holding more than 67% of the outstanding convertible notes.
Upon emergence from the process, the Company expects to have reduced its overall debt by approximately 70%, representing a reduction of approximately $4.6 billion and a reduction of its annual total cash interest payments by approximately 60%. By taking this proactive step, the Company expects to be better positioned to execute on its long-term growth strategy and accelerate its path to profitability. Wolfspeed is continuing to operate as usual throughout the process, including delivering silicon carbide materials and devices to its customers and paying its vendors in the ordinary course.
To implement the prepackaged plan, the Company has voluntarily filed petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Wolfspeed expects to move through the process expeditiously and emerge by the end of the third quarter calendar year 2025.
鈥淲e are continuing to move forward with our accelerated restructuring process to strengthen our capital structure and fuel our next phase of growth,鈥� said Robert Feurle, Wolfspeed鈥檚 Chief Executive Officer. 鈥淲ith a stronger financial foundation, Wolfspeed will be better positioned to move faster on our strategic priorities and maintain our position as a global leader in the silicon carbide market. The strong support of our lenders is a testament to their belief in our business and our ability to capitalize on the opportunities ahead, driven by our exceptional, purpose-built, fully automated 200mm manufacturing footprint.鈥�
He continued, 鈥淟ooking ahead, we remain laser-focused on delivering cutting-edge products to our customers and working with our vendors in the normal course. I鈥檇 also like to thank our employees for their hard work and continued commitment to driving the business forward. I am confident that taking this action will better position Wolfspeed to meet the growing demands of the semiconductor market.鈥�
Wolfspeed has filed a number of customary motions with the Court to support ordinary-course operations, including, but not limited to, continuing employee compensation and benefits programs. The Company is continuing 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 in the process. The Company expects to receive court approval for these requests shortly.
For additional information regarding the restructuring, please visit Wolfspeed鈥檚 dedicated microsite at . Information about Wolfspeed鈥檚 Chapter 11 case can be found at or by contacting Epiq, the Company鈥檚 claims agent, at (888) 818-4267 (for toll-free U.S. calls) or +1 (971) 606-5246 (for tolled international calls).
Advisors
Latham & Watkins LLP and Hunton Andrews Kurth LLP are serving as legal counsel to Wolfspeed, Perella Weinberg Partners is serving as financial advisor and FTI Consulting is serving as restructuring advisor. Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel to the senior secured noteholders and Moelis & Company is serving as the senior secured noteholders鈥� financial advisor. Kirkland & Ellis LLP is serving as legal counsel to Renesas Electronics Corporation, PJT Partners is serving as its financial advisor, and BofA Securities is serving as its structuring advisor. Ropes & Gray LLP is serving as legal counsel to the convertible debtholders and Ducera Partners is serving as financial advisor to the convertible debtholders.
About Wolfspeed, Inc.
Wolfspeed (NYSE: WOLF) leads the market in the worldwide adoption of silicon carbide technologies that power the world鈥檚 most disruptive innovations. As the pioneers of silicon carbide, and creators of the most advanced semiconductor technology on earth, we are committed to powering a better world for everyone. Through silicon carbide material, Power Modules, Discrete Power Devices and Power Die Products targeted for various applications, we will bring you The Power to Make It AG真人官方.TM Learn more at .
Forward-Looking Statements:
This press release contains forward-looking statements involving risks and uncertainties, both known and unknown, that may cause Wolfspeed鈥檚 actual results to differ materially from those indicated in the forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, including estimates, forecasts, and projections about possible or assumed future results of Wolfspeed鈥檚 business, financial condition, liquidity, results of operations, plans, and objectives and Wolfspeed鈥檚 industry and market growth. Words such as 鈥渃ould,鈥� 鈥渨ill,鈥� 鈥渕ay,鈥� 鈥渁ssume,鈥� 鈥渇orecast,鈥� 鈥減osition,鈥� 鈥減redict,鈥� 鈥渟trategy,鈥� 鈥渆xpect,鈥� 鈥渋ntend,鈥� 鈥減lan,鈥� 鈥渆stimate,鈥� 鈥渁nticipate,鈥� 鈥渂elieve,鈥� 鈥減roject,鈥� 鈥渂udget,鈥� 鈥減otential,鈥� 鈥渇orward鈥� or 鈥渃ontinue鈥� and similar expressions are used to identify forward-looking statements. All statements in this press release that are not historical are forward-looking statements, including statements regarding the timing and implementation of the transactions contemplated by the RSA and Wolfspeed鈥檚 chapter 11 plan of reorganization (the 鈥淧lan鈥�), Wolfspeed鈥檚 ability to continue operating in the ordinary course, including continuing to serve customers and pay vendors and employees in the ordinary course, the potential benefits of the transactions contemplated by the RSA and the Plan, and the potential effects of such transactions on Wolfspeed鈥檚 financial position, capital structure, outstanding debt, interest expense, profitability, and growth. Actual results could differ materially due to a number of factors, including but not limited to, risks and uncertainties associated with voluntary petitions filed by Wolfspeed under Chapter 11 of the U.S. Bankruptcy Code (the 鈥淐hapter 11 Cases鈥�) in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the 鈥淐ourt鈥�); the effects of the Chapter 11 Cases on Wolfspeed and Wolfspeed鈥檚 relationship with its various stakeholders, including vendors and customers; Wolfspeed鈥檚 ability to develop and implement the transactions contemplated by the Plan and whether the Plan will be approved by the Court and the ultimate outcome of the Chapter 11 Cases in general; the length of time Wolfspeed will operate under the Chapter 11 Cases; the potential adverse effects of the Chapter 11 Cases on Wolfspeed鈥檚 liquidity and results of operations; Wolfspeed鈥檚 ability to confirm and consummate the Plan; the timing or amount of recovery, if any, to Wolfspeed鈥檚 stakeholders; uncertainty regarding Wolfspeed鈥檚 ability to retain key personnel; the diversion of management鈥檚 attention as a result of the Chapter 11 Cases; increased administrative and legal costs related to the Chapter 11 Cases; changes in Wolfspeed鈥檚 ability to meet its financial obligations during the Chapter 11 Cases and to maintain contracts that are critical to its operations; the effectiveness of the overall restructuring activities pursuant to the Chapter 11 Cases and any additional strategies that Wolfspeed may employ to address its liquidity and capital resources and achieve its stated goals; the actions and decisions of equity holders, creditors, regulators, and other third parties that have an interest in the Chapter 11 Cases, which may interfere with the ability to confirm and consummate the Plan; risks relating to the potential delisting of Wolfspeed鈥檚 common stock from the New York Stock Exchange and future quotation of the common stock; ongoing uncertainty in global economic and geopolitical conditions, such as the ongoing military conflict between Russia and Ukraine and the ongoing conflicts in the Middle East; changes in progress on infrastructure development or changes in customer or industrial demand that could negatively affect product demand, including as a result of an economic slowdown or recession, collectability of receivables and other related matters if consumers and businesses defer purchases or payments, or default on payments; risks associated with Wolfspeed鈥檚 expansion plans, including design and construction delays, cost overruns, the timing and amount of government incentives actually received, including, among other things, any direct grants and tax credits, issues in installing and qualifying new equipment and ramping production, poor production process yields and quality control, and potential increases to Wolfspeed鈥檚 restructuring costs; Wolfspeed鈥檚 ability to obtain additional funding, including, among other things, from government funding, public or private equity offerings, or debt financings, on favorable terms and on a timely basis, if at all; Wolfspeed鈥檚 ability to take certain actions with respect to its capital and debt structure; the risk that Wolfspeed does not meet its production commitments to those customers who provide Wolfspeed with capacity reservation deposits or similar payments; the risk that Wolfspeed may experience production difficulties that preclude it from shipping sufficient quantities to meet customer orders or that result in higher production costs, lower yields and lower margins; Wolfspeed鈥檚 ability to lower costs; the risk that Wolfspeed鈥檚 results will suffer if it is unable to balance fluctuations in customer demand and capacity, including bringing on additional capacity on a timely basis to meet customer demand or scaling back its manufacturing expenses or overhead costs quickly enough to correspond to lower than expected demand; the risk that longer manufacturing lead times may cause customers to fulfill their orders with a competitor鈥檚 products instead; product mix; risks associated with the ramp-up of production of Wolfspeed鈥檚 new products, and Wolfspeed鈥檚 entry into new business channels different from those in which it has historically operated; Wolfspeed鈥檚 ability to convert customer design-ins to design-wins and sales of significant volume, and, if customer design-in activity does result in such sales, when such sales will ultimately occur and what the amount of such sales will be; the risk that the markets for Wolfspeed鈥檚 products will not develop as it expects, including the adoption of Wolfspeed鈥檚 products by electric vehicle manufacturers and the overall adoption of electric vehicles; the risk that the economic and political uncertainty caused by the tariffs imposed or announced by the United States on imported goods, and corresponding tariffs and other retaliatory measures imposed by other countries (including China) in response, may continue to negatively impact demand for Wolfspeed鈥檚 products; the risk that Wolfspeed or its channel partners are not able to develop and expand customer bases and accurately anticipate demand from end customers, including production and product mix, which can result in increased inventory and reduced orders as Wolfspeed experiences wide fluctuations in supply and demand; risks related to international sales and purchases; risks resulting from the concentration of Wolfspeed鈥檚 business among few customers, including the risk that customers may reduce or cancel orders or fail to honor purchase commitments; the risk that Wolfspeed鈥檚 investments may experience periods of significant market value and interest rate volatility causing it to recognize fair value losses on Wolfspeed鈥檚 investment; the risk posed by managing an increasingly complex supply chain (including managing the impacts of supply constraints in the semiconductor industry and meeting purchase commitments under take-or-pay arrangements with certain suppliers) that has the ability to supply a sufficient quantity of raw materials, subsystems and finished products with the required specifications and quality; risks relating to outbreaks of infectious diseases or similar public health events, including the risk of disruptions to Wolfspeed鈥檚 operations, supply chain, including its contract manufacturers, or customer demand; the risk Wolfspeed may be required to record a significant charge to earnings if its remaining goodwill or amortizable assets become impaired; risks relating to confidential information theft or misuse, including through cyber-attacks or cyber intrusion; Wolfspeed鈥檚 ability to complete development and commercialization of products under development; the rapid development of new technology and competing products that may impair demand or render Wolfspeed鈥檚 products obsolete; the potential lack of customer acceptance for Wolfspeed鈥檚 products; risks associated with ongoing litigation; the risk that customers do not maintain their favorable perception of Wolfspeed鈥檚 brand and products, resulting in lower demand for its products; the risk that Wolfspeed鈥檚 products fail to perform or fail to meet customer requirements or expectations, resulting in significant additional costs; risks associated with strategic transactions; the risk that Wolfspeed is not able to successfully execute or achieve the potential benefits of Wolfspeed鈥檚 efforts to enhance its value; the substantial doubt about Wolfspeed鈥檚 ability to continue as a going concern; and other factors discussed in Wolfspeed鈥檚 filings with the Securities and Exchange Commission (the 鈥淪EC鈥�), including Wolfspeed鈥檚 report on Form 10-K for the fiscal year ended June 30, 2024, and subsequent reports filed with the SEC. These forward-looking statements represent Wolfspeed鈥檚 judgment as of the date of this press release. Except as required under the U.S. federal securities laws and the rules and regulations of the SEC, Wolfspeed disclaims any intent or obligation to update any forward-looking statements after the date of this press release, whether as a result of new information, future events, developments, changes in assumptions or otherwise.
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Investor Contact:
Wolfspeed Investor Relations
[email protected]
Media Contact:
Rachel Chesley / Rose Temple
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Source: Wolfspeed, Inc.
