Durham-based chipmaker Wolfspeed plans to file for bankruptcy

DURHAM, N.C. (WTVD) -- Durham based silicon chip manufacturer Wolfspeed said it will file for bankruptcy.

"After evaluating potential options to strengthen our balance sheet and right-size our capital structure, we have decided to take this strategic step because we believe it will put Wolfspeed in the best position possible for the future," said Robert Feurle, Wolfspeed's Chief Executive Officer in a press release announcing the planned move. "Wolfspeed has tremendous core strengths and great potential. We are a global leader in silicon carbide technology with an exceptional, purpose-built, fully automated 200mm manufacturing footprint, delivering cutting-edge products for our customers. A stronger financial foundation will enable us to focus acutely on innovation in rapidly scaling verticals undergoing electrification where quality, durability and efficiency matter most."

The company says it's part of a restructuring agreement that will eliminate about $4.6 billion in debt and give its creditors control over the company.

Wolfspeed said the reorganization plan has enough support from creditors to proceed.

In a statement to ABC 11, a spokesperson wrote:

To implement the transactions envisioned by the RSA, Wolfspeed intends to solicit approval of the pre-packaged plan of reorganization and then file voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the near future.

Wolfspeed is operating as usual as we implement this agreement-any decisions regarding headcount will be based on the needs of the business and will be determined at the appropriate time. The Siler City facility is central to Wolfspeed's long-term silicon carbide growth strategy and remains on track to open in the near future.

In addition, a lot of outlets are not correctly reporting / emphasizing the following, so we wanted to draw your attention to the fact that Wolfspeed also plans to continue to pay vendors in the ordinary course of business for goods and services delivered throughout the restructuring process via an All-Trade Motion, and vendors are expected to be unimpaired in the process.

Post-restructuring, Wolfspeed operations are expected to be fully funded through cash flow generation, which means our current business plan does not require additional capital- whether that be private or public funding. That being said, we will still consider and pursue potential federal funding to support the future growth of the business. We maintain a constructive dialogue with the Trump Administration and believe there remains interest in supporting Wolfspeed and protecting America's silicon carbide leadership.

The announcement comes days after Wolfspeed announced that it would cut more than 50 jobs from its facility in Siler City.

Last year, the company announced it would be closing one of its layoffs at its factory in Durham due to shifting demand in its products..

In 2022, Wolfspeed announced it had chosen the Chatham-Siler City Advanced Manufacturing Site for its new facility. The agreement included a High-Yield Job Development Investment Grant, approved by the state's Economic Investment Committee. Funding for the program is provided based on the company hitting certain benchmarks.

A company spokesperson clarified that it's "not eligible yet for any JDIG grants and wouldn't be eligible until well after we will have emerged from the Chapter 11 proceeding."

The North Carolina Department of Commerce told ABC11 in a statement that Wolfspeed has kept the department informed about its situation and that the department is continuing to support Wolfspeed's efforts to grow.

"Wolfspeed is a valued North Carolina company that's navigating challenging market conditions. The company has kept us informed of their situation, and we continue to support their efforts to enhance and grow their business in our state.

Regarding the Job Development Investment Grant (JDIG) that was awarded in September 2022 - the first active year of that grant is 2026, so no payments have yet been made on this grant.

Regarding the separate state appropriation for site preparation: The Department has an agreement with the company to reimburse eligible site prep expenses. $57.5 million for this purpose was disbursed to the company in January of 2024. If the company fails to create 1,800 eligible positions or invest $4.8 billion by December 31, 2030, the company must repay a proportionate amount of the funds received based upon the percentage of eligible positions actually created or investment made relative to the targets. The company is obligated to reimburse all funds received if they fail to commence or maintain operations at the project site prior to December 31, 2030.

Wolfspeed said it will continue trying to get approval from more creditors until it files for bankruptcy under Chapter 11.

News of the planned bankruptcy triggered a sharp sell-off on Wall Street, with the stock dropping more than 31% on the day, closing at 62 cents per share. The stock is down more than 90% year-to-date.