Wolfspeed expects to cut debt by about 70%

Wolfspeed expects to cut debt by about 70%

Wolfspeed, Inc. (NYSE: WOLF), a leading player in silicon carbide technologies, has secured a significant milestone in its corporate restructuring journey. The company has received court approval for its Plan of Reorganization, setting the stage for a substantial reduction in its debt burden. Wolfspeed aims to reduce its debt by approximately 70%, which translates to a reduction of about $4.6 billion [1]. This move is part of the company's broader strategy to stabilize its finances and position itself for future growth.

The restructuring plan is designed to lower manufacturing costs and streamline operations. Wolfspeed is transitioning its production from 150mm to 200mm silicon carbide wafers, a shift that is expected to significantly reduce production costs. The company is also planning to close its 150mm fabrication facility in Durham, North Carolina, and reduce its workforce to approximately 3,400 employees [1].

The debt reduction is a critical component of Wolfspeed's restructuring efforts. The company's total debt burden is set to decrease by around $4.6 billion, which represents a substantial deleveraging of its balance sheet. Wolfspeed expects to conclude its bankruptcy proceedings by the end of the third quarter of 2025, aiming for an expedited court-supervised process [1].

Despite the ongoing bankruptcy process, institutional investors remain interested in Wolfspeed. Primecap Management Co. maintains a significant stake in the company, with a position exceeding 6 million shares. Additionally, Nuveen LLC acquired 451,818 shares during the first quarter, granting it a 0.35% stake [1].

Wolfspeed's strategic shift and operational overhaul are expected to strengthen its capital structure and enable it to focus on innovation and leadership in the silicon carbide industry. The company's management is optimistic about the potential for future growth and has thanked its stakeholders, including customers, vendors, and the lending group, for their support during this process [2].

Reference List:
[1] https://www.aktiencheck.de/news/Artikel-Wolfspeed_Navigates_Critical_Restructuring_Through_Chapter_11-18980949
[2] https://www.marketscreener.com/news/wolfspeeda-s-plan-of-reorganization-confirmed-clearing-path-to-emerge-from-restructuring-process-a-ce7d59dfd98df322