Wolfspeed said it is filing a bankruptcy restructuring deal by July 1 that will reduce the company’s overall debt by $4.6 billion, or 70%, and reduce annual cash interest payments by approximately 60%.
In May, the Durham-based company said it may not be able to continue as a going concern, citing shifting U.S. trade policies and lower demand for its chip.
Wolfspeed said that it reached a restructuring agreement with creditors and the U.S. subsidiary of Tokyo-based Renesas Electronics. The deal includes $275 million in new financing supported by existing creditors.
The company wants approval on the pre-packaged plan so it can emerge from bankruptcy by Sept. 30.
“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,” CEO Robert Feurle said in a release.
Wolfspeed is nearing completion of a nearly $5 billion factory in Chatham County, marking one of the largest capital investments in North Carolina history. It is being supported by major state and local incentives, tied to the company hiring about 1,800 employees.
The company has tried to make a transition to manufacturing high-powered silicone carbide chips, which improve the efficiency of machines and other devices. But federal support promised during the Biden Administration is threatened by the Trump Administration’s efforts to reduce spending and corporate subsidies.
Pending approval of the plan, Wolfspeed says it will have sufficient near-term liquidity to support customers and pay vendors, the company said.
Shares of the company were down more than 10% in early trading. The company’s stock has lost virtually its entire value in the past year. Existing equity will be canceled during the proposed restructuring.
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.