Durham chipmaker Wolfspeed announced it will reorganize to consolidate debt under Chapter 11 bankruptcy.
According to a statement from Wolfspeed, it reached a restructuring support agreement with key lenders that they say will “proactively strengthen the company’s capital structure.”
On Thursday, WRAL reported that the company was in talks with lenders that would help the company reorganize under a Chapter 11 bankruptcy plan.
According to the company, the plan would wipe out roughly 70 percent of its $6.7 billion overall debt. The proposal would also give Wolfspeed’s creditors control of the company.
CEO Robert Feurle says Wolfpseed’s biggest lenders are already on board, and he’s confident the others will approve the plan.
The restructuring is part of the company’s effort to pay down debt and cut costs amid softer demand for semiconductors.
Among the other challenges the company faces is a shift away from older facilities and the Trump administration’s opposition to the Biden-era CHIPS and Science Act. The act would have given Wolfspeed roughly $1.75 billion in federal grants and tax credits, but now that is uncertain.
Since 2024, Wolfspeed’s share price has dropped by about 96%.
If the proposal is approved, Feurle believes the company will emerge from bankruptcy by the end of September and be in a stronger position for long-term growth going forward.
