Wolfspeed Faces Debt Crisis, Shares Plunge 51.86%

According to reports, Wolfspeed, a leading American manufacturer of silicon carbide substrates and devices, saw its stock price plummet by 51.86% on Friday, March 28, closing at $2.59 per share, marking its lowest closing price since April 22, 1997. The sharp decline was attributed to concerns over the company's potential inability to reach a debt exchange agreement with creditors and the uncertain future of U.S. government subsidies under the "CHIPS Act."

In a statement issued on March 28, Wolfspeed confirmed that it is exploring alternative options for convertible debt with advisors and is continuing negotiations with bondholders, including Apollo Global Management and Renesas. The company also noted that discussions with the U.S. White House and Department of Commerce remain "constructive," with efforts to secure CHIPS Act subsidies still ongoing.

Reorg Research previously reported that Wolfspeed had not finalized a debt exchange agreement with bondholders and had excluded previously restricted parties from the negotiations. This prompted the company to issue the aforementioned statement.

In its update, Wolfspeed also revealed that it had received a $192 million cash tax refund from the U.S. Internal Revenue Service, which includes refunds for the 2023 and 2024 fiscal years, along with accumulated interest. Under Section 48D, the company expects a total refund of $1 billion. Wolfspeed plans to use this amount to strengthen its capital structure and support general operational needs.

The company provided updated guidance for the third quarter of fiscal year 2025, expecting continuing operations revenue to range from $170 million to $200 million. Adjusted Non-GAAP gross margins are anticipated to be between -3% and 7%, and Non-GAAP diluted earnings per share are projected to range from a loss of $0.88 to $0.76.

Looking ahead, Wolfspeed expects capital expenditures for fiscal year 2026 to reach between $150 million and $200 million, with capital expenditures for fiscal year 2027 projected at $30 million to $50 million. The company anticipates achieving positive free cash flow following a refinancing effort in fiscal year 2027.

Additionally, Wolfspeed announced on March 27 that it has appointed semiconductor industry veteran Robert Feurle as its new CEO, effective May 1.