23.06.2025 22:26
US semiconductor manufacturer Wolfspeed experienced a dramatic 30% stock plunge on Monday, triggered by the announcement of its impending bankruptcy filing. This strategic move, part of a comprehensive restructuring plan, aims to significantly alleviate the company's substantial debt burden.
The restructuring agreement, finalized with major creditors, will slash approximately $4.6 billion—or 70%—of Wolfspeed's debt, simultaneously securing crucial new liquidity. This preemptive action demonstrates a proactive approach to addressing financial instability and securing the company's long-term viability.
The Wall Street Journal reported that Wolfspeed has already secured agreements with the majority of its senior and convertible noteholders, pending creditor approval of the restructuring terms. This pre-market trading saw a 12% share decline, underscoring the immediate market reaction to the news. Year-to-date, Wolfspeed shares have plummeted over 86%, a significant drop exacerbated by a 59% plunge following initial bankruptcy rumors in May.
Wolfspeed's recent pivot towards manufacturing semiconductors for electric vehicle (EV) drivetrains and charging systems, unfortunately, coincided with a confluence of negative factors. Stringent US tariffs, coupled with weakening EV demand, severely strained the company's financial resources, leading to an unsustainable debt load that necessitated this drastic action.
CEO Robert Feurle stated that, after exploring various options, the bankruptcy filing was deemed the most strategic path to strengthen the company's financial position and optimize its capital structure. He believes this restructuring will position Wolfspeed for future success. While the restructuring will provide a cleaner balance sheet and new funding opportunities, equity holders face near-complete dilution.
This restructuring endeavor seeks to secure $275 million in fresh funding, providing the financial runway necessary to navigate the challenges ahead and pursue future growth initiatives. The outcome hinges on securing the approval of its creditors and successful completion of the restructuring process.
