Wolfspeed emerges from Ch. 11, appoints five new members to its board of directors

[Macro close up of Silicon Carbide black sand size. Fine particle silicon carbide pile up, White background Isolated, particle element object]
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Wolfspeed (NYSE:WOLF [https://seekingalpha.com/symbol/WOLF]) has emerged from its Chapter 11 restructuring process in a tumultuous series of events that included a drastic reduction in the number of shares, significant debt reduction, relocating its headquarters from North Carolina to Delaware and an overhaul of its board of directors.

Through the process, Wolfspeed said it reduced its total debt by about 70%, or $4.6B, with maturities extended to 2030, and lowered its yearly cash interest cost by 60%. The company now believes it is ready to leverage its 200mm manufacturing footprint in a secure U.S.-based supply chain.

"As we enter this new era, we do so with much improved financial stability, a scaled, greenfield and vertically integrated 200mm facility footprint, and our large capital deployment behind us," said Wolfspeed CEO Rober Fuerle. "We firmly believe that we are well positioned to capture rising demand in end markets, such as AI, EVs, industrial and energy, that are rapidly growing and recognizing silicon carbide's potential."

Wolfspeed has also appointed five new members to its board of directors. This includes Anthony M. Abate, Mike Bokan, Eric Musser, Hong Q. Hou, and, pending certain regulatory approvals, Aris Bolisay. Abate will replace Tom Werner as the chairman of the board. Mark Jensen and Paul Walsh are the only board members remaining. Werner stepped down along with Glenda Dorchak, John Hodge, Darren Jackson, Duy-Loan Le, Stacy Smith and Marvin Riley.

"They bring extensive semiconductor and industry knowledge, deep accounting and finance expertise, and experience guiding companies towards profitability," Fuerle said. "Their insight and leadership will be instrumental as we build on the current momentum underway, oversee the execution of Wolfspeed's strategic priorities, and strengthen our position in the global silicon carbide market."

Part of the restructuring process included a significant loss to shareholders.

"Existing equity holders are expected to receive their pro rata share of 3.0% or 5.0% of New Common Stock," according to a Form 8-K [https://seekingalpha.com/filing/10116946] filed with the U.S. Securities and Exchange Commission in June.

As of Monday, Wolfspeed's stock float was 25.8M compared to 156.5M for the old listing. The SEC paused trading on Monday for several hours due to extreme volatility during market action. The new shares were up 25% during pre-market trading on Tuesday.

"On Monday, Wolfspeed announced that existing shareholders received their pro rata share of the 'new' company: 1,306,903 shares at an exchange rate of 0.008352. In other words, 120 (119.7, to be exact) 'old' shares turned into 1 'new' share," said Seeking Alpha analyst Vince Martin [https://seekingalpha.com/article/4826800-after-the-chaos-wolfspeed-stock-looks-normal-again-upgrade-hold]. "This is a brutal outcome for shareholders, who owned WOLF at $1.21 per share on Friday; that price suggested that 'new' WOLF would need to trade at $145 per share for the equity value in the new company to be equivalent. Monday's close of $22.10 on its face thus suggests a loss of about 85%."

Wolfspeed has neared completion of its $5B plant in Siler City, N.C., about 60 miles west of Raleigh, which will produce 200mm silicon carbide crystals. The company was also approved for $750M from the U.S. CHIPS and Science Act.

MORE ON WOLFSPEED

* After The Chaos, Wolfspeed Stock Looks Normal Again [https://seekingalpha.com/article/4826800-after-the-chaos-wolfspeed-stock-looks-normal-again-upgrade-hold]
* Why I'm More Bullish On Wolfspeed Now Than Ever [https://seekingalpha.com/article/4822030-why-im-more-bullish-on-wolfspeed-now-than-ever]
* Wolfspeed: The Math Still Doesn't Quite Work [https://seekingalpha.com/article/4821688-wolfspeed-the-math-still-doesnt-quite-work]
* Wolfspeed share volume shrinks as it switches incorporation from N.C. to Del. [https://seekingalpha.com/news/4499919-wolfspeed-switches-incorporation-from-nc-to-del]
* Wolfspeed slides as company officially rolls out 200mm silicon carbide portfolio [https://seekingalpha.com/news/4495275-wolfspeed-jumps-as-company-officially-rolls-out-200mm-silicon-carbide-portfolio]