Wolfspeed Nears Prepackaged Bankruptcy Deal with Apollo
Wolfspeed is reportedly on the verge of a prepackaged bankruptcy deal with creditors, including Apollo Global Management. This arrangement aims to significantly reduce the company's multi-billion dollar debt.
Key Details of the Proposed Deal
According to a Bloomberg News report, the plan involves a restructuring support agreement, followed by a creditor vote and a subsequent Chapter 11 bankruptcy filing.
Stock Market Reaction
Despite this news, Wolfspeed's stock saw a 3% increase to $1.29 on Wednesday, although it has plummeted 81% year-to-date.
Wolfspeed's Financial Challenges
Wolfspeed, a chipmaker specializing in silicon carbide technology, previously expressed concerns about its ability to continue operations due to economic uncertainties and declining demand. The company's financial challenges include approximately $6.5 billion in debt obligations against $1.33 billion in unrestricted cash and short-term investments as of March.
The prepackaged bankruptcy allows for shareholders to potentially recover up to 5%. Apollo Global Management previously led a $1.25 billion debt financing for Wolfspeed in 2023 to support US expansion.
