Wolfspeed reduces senior secured note balance by 43% after raising $475.9m in private placements

News: Microelectronics Wolfspeed reduces senior secured note balance by 43% after raising $475.9m in private placementsWolfspeed Inc of Durham, NC, USA — which makes silicon carbide (SiC) materials and power semiconductor devices — has completed its private placements (announced on 19 March) of: $379m of its 3.5% convertible 1.5 lien senior secured notes due 2031; and 3,250,030 shares of common stock (priced at $18.458 each, a 10% premium over the closing price on 18 March) and pre-funded warrants to purchase up to 2,000,000 shares (priced at $18.448 per pre-funded warrant). Each pre-funded warrant is exercisable at the option of the holder for the purchase of one share at an exercise price of $0.01 per share, subject to ownership limitations and customary anti-dilution adjustments. The notes bear interest at a rate of 3.5% per annum, payable semi-annually in arrears on 15 March and 15 September of each year, and mature on 15 March 2031, unless earlier converted, redeemed or repurchased. The notes were issued pursuant to an indenture between Wolfspeed, Wolfspeed Texas LLC and US Bank Trust Company, National Association, as trustee and collateral agent. The gross proceeds of $379m from the notes and $96.9m from the shares and pre-funded warrants were used to redeem $475.9m of the firm’s outstanding senior secured notes due 2030 (reducing the senior secured note balance by 43%), which is expected to lower annual interest expense by about $62m and total debt by about $97m. Wolfspeed concurrently paid the related premiums, accrued interest, fees and expenses for redeeming the senior secured notes, as well as the placement agent, financial advisor and legal fees and other expenses associated with the private placements, using cash on hand.The private placements were backed by a syndicate of investors including accounts advised by T. Rowe Price Associates Inc and Fidelity Management & Research Company, together with several other new and existing anchor investors. Wolfspeed says this reflects confidence in its market opportunity and in the strategic role of silicon carbide in enabling next-generation technologies, as well as being a key step forward in its capital optimization strategy.“With this stronger financial foundation, we believe we are well positioned to accelerate innovation across our silicon carbide solutions, including 300mm silicon carbide wafers to potentially support next-generation AI computing platforms and immersive AR/VR systems, while continuing to advance our long-term growth strategy and reinforcing Wolfspeed’s position as a pioneer in silicon carbide technology,” says chief financial officer Gregor van Issum. Wolfspeed announces subscriptions for $379m of convertible notes and $96.9m of common stock and pre-funded warrantsWolfspeed’s soft demand for EV application offset by 50% quarterly revenue growth for AI data-center applicationCFIUS clears Wolfspeed issuance of equity to Renesas as part of court-approved restructuringWolfspeedwww.wolfspeed.com