Wolfspeed Stock Plunges Premarket After Confirming Chapter 11 Plan, Restructuring — Retail Stays Pessimistic

Wolfspeed, Inc. (WOLF) confirmed late Sunday that it plans a Chapter 11 bankruptcy filing in the near future and announced a series of steps to strengthen its capital structure.

Durham, North Carolina-based Wolfspeed, a silicon carbide technology company, said it expects to move through the reorganization process expeditiously and emerge from bankruptcy by the end of the third quarter of calendar year 2025.

As part of the reorganization process, the company announced a restructuring support agreement with key lenders, including:

• Holders of more than 97% of its senior secured notes
• Largest customer Renesas Electronics’ wholly owned U.S. subsidiary 
• Convertible debt holders holding more than 67% of the outstanding convertible notes.

The bankruptcy rumors have been swirling since late May. The Wolfspeed stock has fallen over 86% year-to-date.

Wolfspeed said Sunday the transactions envisioned by the agreement would reduce its overall debt by approximately 70%, representing a reduction of approximately $4.6 billion. It would also reduce the annual total cash interest payments by approximately 60%.

The existing equity holder will receive 3%-5% of the new common equity.

According to the company, these proactive steps would better position it to execute its long-term growth strategy and accelerate its path to profitability. 

Robert Feurle, Wolfspeed’s CEO, said, “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.”

“Wolfspeed has tremendous core strengths and great potential. We are a global leader in silicon carbide technology with an exceptional, purpose-built, fully automated 200mm manufacturing footprint, delivering cutting-edge products for our customers.”

After the restructuring, the company expects its operations to be fully funded through cash flow generation. 

On Stocktwits, retail sentiment toward Wolfspeed stock remained ‘bearish’ (36/100) by early Monday, with the message volume at ‘low’ levels.

A  bearish watcher said one cannot expect short covering, given existing equity will be cancelled.

Another user said they jumped out of the stock “very late” but saved themself something. “Honestly [the] biggest investment mistake I've made since $INPX / $XTIA . Might get back in [a] few months after restructuring,” they said.

Wolfspeed stock plunged further into penny stock territory in Monday’s early premarket session, dropping nearly 17% to $0.7523.

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