Renesas boost from Wolfspeed Chapter 11 bankruptcy
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Renesas Electronics of Japan is set to own a substantial share of US silicon carbide (SiC) chip maker Wolfspeed.
Wolfspeed has agreed a Restructuring Support Agreement (RSA) with key lenders and debt holders to be filed with a US court for Chapter 11 bankruptcy protection by 1st July to restructure its debts. The RSA will have to be agreed by a court, but would reduce the debt by $4.6bn. Shareholders will receive between 3% and 5% of the value of the holding in new shares.
The restructuring leaves Renesas, which had pre-purchased $2bn of SiC wafers and is owed $500m, with 38% of the company and significantly follows a decision by Renesas earlier this month to put its own SiC chip production plans on hold. Wolfspeed has been struggling with a cash crisis over the last six months and had been in negotiations with its largest creditor, Apollo Management.
The company says it has $1.3bn of cash on hand to continue to pay vendors and that the deal will leave the company fully funded through to cash flow generation, although not profitability, with $275m of new funds. It raised $2.5bn back in November to try to bridge the gap in funding. It is also closing its older fab in North Carolina to focus on its fully automated 200mm fab in Mohawk Valley, New York.
“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,” said Robert Feurle, Wolfspeed’s Chief Executive Officer.
Wolfspeed says it is continuing to supply customers with silicon carbide materials and devices throughout the process and pay vendors.
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