Restructuring Negotiations with Creditors Completed
70% Debt Reduction Achieved, Path Opened for New Funding
According to a report by the Financial Times (FT) on June 22 (local time), U.S. semiconductor materials company Wolfspeed is expected to file for bankruptcy soon, following the completion of restructuring negotiations with its creditors.
According to FT and other sources, Wolfspeed stated in an announcement released that day that the negotiations will reduce its existing debt by approximately 70% and have opened the way for new funding.
Robert Peerl, CEO of Wolfspeed, said, "After reviewing various options to strengthen our financial structure and normalize our capital structure, we determined that this strategic decision is the best course of action for the company's future."
Founded in North Carolina in 1987, Wolfspeed manufactures semiconductor wafers and devices based on silicon carbide, which is chemically and materially superior to silicon. The company's silicon carbide devices are mainly used in electric vehicles (EVs) and plug-in hybrid vehicles.
Wolfspeed was set to receive $750 million (approximately 1 trillion won) in subsidies last year under the U.S. CHIPS Act, but management uncertainties increased due to changes in the U.S. trade war and weakening demand. In particular, since May of this year, liquidity issues have intensified, raising the possibility of bankruptcy.
Wolfspeed has reached a restructuring agreement with major creditors and the U.S. subsidiary of Renesas Electronics, and has secured $275 million (approximately 379 billion won) in new funding from some creditors. The company also announced that it expects to reduce its total debt by $4.6 billion (approximately 6.34 trillion won).
Wolfspeed is aiming to exit bankruptcy by the end of the third quarter of this year through court approval of a 'prepackaged bankruptcy' process that was pre-negotiated with creditors.
The creditors are expected to proceed with a formal vote to approve this restructuring plan. Wolfspeed stated that it will continue normal business operations during the restructuring period.
As of March last year, Wolfspeed's cash holdings stood at approximately $1.33 billion, with total debt at around $6.5 billion.
Meanwhile, Wolfspeed is reportedly set to be acquired by its creditors, including Apollo Global Management. Previously, in 2023, Wolfspeed received $1.25 billion in financial support led by Apollo.
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