Wolfspeed Stock Sinks as Convertible Refinancing Deal Hits Snag

Wolfspeed Inc. is struggling to reach a deal with investors to refinance its $575 million convertible bonds due next year. 

The Durham, North Carolina-based chipmaker has been working with JPMorgan Chase & Co. on the refinancing effort, according to people with knowledge of the matter, who asked not to be identified discussing private talks. 

Wolfspeed shares have sunk roughly 49% to $2.72 as of 1:25 p.m. New York time. Based on where the company’s stock is currently trading, a conversion to equity is unlikely unless that price reaches $47.32. The notes were quoted at around 60 cents on the dollar as of Friday afternoon New York time, according to data compiled by Bloomberg. 

“Wolfspeed continues to explore alternatives with regard to its convertible notes, in partnership with its advisers, and remains in a dialogue with lenders,” including Apollo Global Management Inc. and Renesas Electronics Corp., the company said in a statement Friday. 

A representative for Wolfspeed declined to comment further than the statement. A representative for JPMorgan declined to comment.

Last year, Wolfspeed signed a tentative deal with the US Commerce Department for as much as $750 million in grants through the US Chips and Science Act, seen as a welcome shot in the arm for the company, which hasn’t posted an annual profit in the last decade. 

The funding was intended to help cover a portion of the company’s more than $6 billion in planned spending at the time for factories in North Carolina and New York. It also spurred Apollo to lead $750 million in financing for Wolfspeed. 

Wolfspeed’s problems stem from production snarls at one of the largest production plants for silicon carbide wafers, on which its chips are built. Inadequate supply of those wafers stifled manufacturing at its chip plant in Mohawk Valley, New York, forcing the company to rely on an older factory that carries higher costs.

Since the deal was reached, US President Donald Trump has called on lawmakers to revoke the 2022 Chips Act, calling it a “horrible, horrible thing.”

Wolfspeed “maintains constructive dialogue with the White House” as part of its efforts to secure federal funding, the company said in the Friday statement. 

In October, Wolfspeed halted a plan to build a $3 billion semiconductor factory in Germany, another setback in the country’s plans to shore up its domestic supply chain. Wolfspeed originally planned to start production of semiconductors for use in electric vehicles at the Saarland factory by 2027, partnering with German auto supplier ZF Friedrichshafen AG.

With assistance from Lynn Doan.

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