(Reuters) -Wolfspeed said on Monday it has filed for Chapter 11 bankruptcy protection, as the chipmaker grapples with huge debt amid slowing demand from electric vehicle and industrial markets.
Shares of the company — which makes chips using silicon carbide, a more energy-efficient material than traditional silicon — rose 64.5% in extended trading.
Wolfspeed raised going-concern doubts in May, as deepening economic uncertainty stemming from changing U.S. trade policies, combined with weakening demand, triggered a series of financial challenges.
The company said it had $1.3 billion in cash as of the third quarter and expects to emerge from the Chapter 11 by the end of the quarter.
“Wolfspeed is continuing to operate as usual throughout the process, including delivering silicon carbide materials and devices to its customers and paying its vendors in the ordinary course,” it said in a statement.
Upon emergence from the bankruptcy, Wolfspeed expects to have reduced its overall debt by about 70%, or nearly $4.6 billion, as well as a reduction of its annual total cash interest payments by approximately 60%.
Earlier this month, Wolfspeed said it had reached a restructuring agreement with creditors and Renesas Electronics’ U.S. subsidiary, which would result in $275 million in fresh financing backed by some existing creditors and help reduce debt.
(Reporting by Jaspreet Singh in Bengaluru and Juby Babu in Mexico City; Editing by Alan Barona)
Comments