US chipmaker Wolfspeed announced plans to file for bankruptcy under a restructuring deal agreed with key lenders that will see it cut debt by 70 per cent.
In a statement, the company said the “proactive step” will put it in a better postion to execute its long-term growth strategy and accelerate its path to profitability.
Under the Restructure Support Agreement, which it has struck with creditors and Renesas Electronics’ US subsidiary, it will cut debt by approximately $4.6 billion and reduce the company’s total cash interest payments by 60 per cent. It will also result in fresh financing to the tune of $275 million.
Its prepacked bankruptcy plan still needs to be approved before a filing can be submitted. It then expects to emerge from bankruptcy protection by the end of the third quarter calendar year 2025.
The company stated in May it had entered into choppy waters due to economic uncertainty from US trade policies and weak demand.
CEO Robert Feurle said the company evaluated potential options to strengthen its balance sheet and it had decided on the restructure process because it will put the company “in the best position possible for the future”.
He pointed to its leadership position in silicon carbide technology through a fully automated 200mm manufacturing footprint. Through a stronger financial foundation it will look to focus on innovation and scale verticals, he added.