Shares of US semiconductor firm Wolfspeed plunged 30% after the company announced plans for bankruptcy as part of a debt restructuring.
Market Reaction to Wolfspeed's Plan
Following the bankruptcy announcement, shares fell 12% in premarket trading. The company has lost over 86% of its value year-to-date, affected by prior bankruptcy rumors.
Restructuring Goals and Plans
Wolfspeed signed a restructuring agreement with its top creditors to reduce its debt by 70%, approximately $4.6 billion. The firm aims to unlock $275 million in new financing.
Debt Burden and Financial Status of the Company
Increasing US tariffs and slowing EV demand have made the company's debt load unsustainable. Wolfspeed plans to emerge from bankruptcy by the end of Q3, maintaining its operations.
The restructuring plan could help Wolfspeed stabilize its financial situation, even though existing shareholders will face significant equity dilution.
