This article first appeared on GuruFocus.
Wolfspeed (NYSE:WOLF) has come out of Chapter 11 with less debt, a slimmer share count and a new board, but the reset came at a brutal cost to existing investors.
The company wiped away 70% of its debt, or $4.6 billion, and stretched maturities to 2030. Annual interest costs are now 60% lower, giving Wolfspeed breathing room to finally lean on its 200mm U.S. factory network. CEO Rober Fuerle called it a new era and pointed to AI, EV and energy markets as the biggest opportunities for its silicon carbide chips.
The board has been almost completely replaced, with Anthony Abate stepping in as chairman. But shareholders paid the steepest price. Old stock was converted at roughly 120 to 1, leaving them with just 3%5% of the new company. At Monday’s close of $22.10, that translated to an 85% hit in value compared with Friday’s math.
Wolfspeed is banking on its nearly finished $5 billion Siler City plant and $750 million in CHIPS Act support to make the turnaround stick. Investors will be watching the next earnings report for proof.
Source link
