Wolfspeed Stock: Shares Soar After Bankruptcy Filing

Semiconductor manufacturer Wolfspeed's stock paradoxically surged over 150% after filing for Chapter 11 bankruptcy protection, as investors responded positively to the company's strategic financial restructuring plan. The Durham-based chip specialist aims to slash its crushing $6.67 billion debt burden by approximately 70%, significantly improving its financial outlook. The company has already secured agreements with over 97% of senior secured noteholders, paving the way for a swift reorganization. This dramatic debt reduction will cut annual interest payments by 60%, freeing up essential capital for operational needs.

Japanese Partner Absorbs Major Impact

Renesas Electronics, Wolfspeed's Japanese partner and primary creditor, will bear the brunt of this restructuring. The Japanese chip manufacturer, which provided $2.1 billion in silicon carbide wafer prepayments last year, now faces a staggering loss of approximately 250 billion yen ($1.7 billion). As compensation, Renesas will receive a substantial 38.7% stake in Wolfspeed through the conversion of debt into convertible bonds, equity, and warrants. Despite the bankruptcy proceedings, Wolfspeed plans to maintain normal business operations, continuing to serve customers and pay suppliers while targeting completion of the Chapter 11 process by the third quarter of 2025.

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Source StockWorld