Wolfspeed Exits Bankruptcy. The Chip Maker’s Stock Is Soaring.

Chip supplier Wolfspeed filed for Chapter 11 bankruptcy in late June. (JIM WATSON/AFP via Getty Images)

Key Points

• Wolfspeed completes its financial restructuring and exits Chapter 11 bankruptcy.
• The company reduced its total debt by about 70% and lowered its annual cash interest expense by roughly 60%.
• Wolfspeed issued new shares, canceling previously issued stock, diluting existing shareholders at an exchange ratio of 0.008352.

Wolfspeed has completed its financial restructuring and exited Chapter 11 bankruptcy, the troubled semiconductor company announced late Monday.

Throughout the restructuring process, Wolfspeed reduced its total debt by about 70% and lowered its annual cash interest expense by roughly 60%, the company said. Wolfspeed also shifted its incorporation to Delaware from North Carolina as part of its exit from bankruptcy.

Wolfspeed said it maintains “ample liquidity” to continue supplying customers with silicon carbide chips, a type of energy-efficient semiconductor used primarily in electric vehicles and industrial power systems.

“As we enter this new era, we do so with much improved financial stability, a scaled, greenfield and vertically integrated 200 mm facility footprint, and our large capital deployment behind us,” CEO Robert Feurle said in a statement.

Shares surged nearly 48% to $32.60 on Tuesday. The benchmark S&P 500 index was down slightly.

The company issued new common stock ahead of Monday’s announcement and canceled previously issued and outstanding shares. The new offering trades under the same ticker symbol, WOLF.

Existing shareholders received their pro rata share of 1.3 million shares of common stock at an exchange ratio of 0.008352, Barron’s previously reported, diluting shareholders of its old stock.

Trading was paused due to volatility multiple times throughout Monday. The New York Stock Exchange said it will delist Wolfspeed’s old common stock on Oct. 10.

Wolfspeed filed for Chapter 11 bankruptcy protection in June. The company vowed at the time that it would continue to operate “as usual” throughout the process.

Write to Elsa Ohlen at elsa.ohlen@barrons.com and Mackenzie Tatananni at mackenzie.tatananni@barrons.com