Wolfspeed Stock Soars Over 47% on Bankruptcy Exit Plan
Court approval of Chapter 11 reorganization paves the way for the chipmaker to slash debt by nearly $4.6 billion.
Shares of chipmaker Wolfspeed (WOLF) skyrocketed over 47% on Tuesday following a pivotal court decision that sets the stage for its emergence from bankruptcy. The dramatic rally, which saw trading volume swell to more than 134 times its daily average, came after the U.S. Bankruptcy Court for the Southern District of Texas .
The restructuring is poised to significantly strengthen Wolfspeed's financial position, cutting its debt by approximately 70%, which amounts to a reduction of nearly $4.6 billion. The company, which filed for Chapter 11 protection in June, anticipates that the court's approval will allow it to officially exit bankruptcy in the coming weeks. CEO Robert Feurle commented that the court's decision "clears the path for us to complete our restructuring process."
Wolfspeed's plan focuses on streamlining operations and recapitalizing its balance sheet to better compete in the burgeoning market for silicon carbide chips, which are crucial for electric vehicles and renewable energy infrastructure. While the path out of bankruptcy is now clear, the reorganization will involve significant equity dilution for existing shareholders, a common outcome in Chapter 11 cases.
The company's journey through bankruptcy has been closely watched by the semiconductor industry. stood in contrast to the high demand for its products, highlighting the capital-intensive nature of chip manufacturing. Investors now appear optimistic that a leaner balance sheet will enable the company to capitalize on its technology and market position. The court's approval marks a critical turning point, offering Wolfspeed a fresh start and a renewed opportunity to deliver on its growth promises.