News: Microelectronics
1 February 2022
Wolfspeed prices private offering of $650m of convertible senior notes
Wolfspeed Inc (formerly Cree Inc) of Durham, NC, USA – which makes silicon carbide materials as well as silicon carbide (SiC) and gallium nitride (GaN) power-switching & RF semiconductor devices, for applications such as electric vehicles (EVs), fast charging, 5G, renewable energy and storage, and aerospace & defense – has announced the pricing of $650m of its 0.25% convertible senior notes due 2028 in a private offering to qualified institutional buyers (pursuant to Rule 144A under the Securities Act of 1933, as amended). The offering size was increased from the previously announced $500m.
In addition, Wolfspeed has granted the initial purchasers of the notes an option to purchase (for settlement within a 13-day period from, and including, the date on which the notes are first issued) up to an additional $100m of notes (again, upsized from the previously announced $75m).
The sale of the notes to the initial purchasers is expected to settle on 3 February (subject to the satisfaction of customary closing conditions) and is expected to yield about $634.6m in net proceeds (or $732.3m if the initial purchasers exercise their option to purchase additional notes in full) after deducting the initial purchasers’ discount and estimated offering expenses payable by Wolfspeed.
The notes will be unsecured, senior obligations of Wolfspeed. They will bear interest at a rate of 0.25% per year, payable semi-annually in arrears on 15 February and 15 August of each year, beginning on 15 August 2022. The notes will mature on 15 February 2028, unless earlier repurchased, redeemed or converted.
Wolfspeed intends to use about $93.7m of the net proceeds to fund the cost of entering into capped call transactions. The firm intends to use the remainder of the net proceeds for general corporate purposes. If the initial purchasers exercise their option to purchase additional notes, then Wolfspeed intends to use a portion of those proceeds to fund the cost of entering into additional capped call transactions.
The initial conversion rate for the notes is 7.8602 shares of Wolfspeed’s common stock per $1000 of notes (equivalent to an initial conversion price of about $127.22 per share of Wolfspeed’s common stock). Conversions of the notes will be settled in cash, shares of Wolfspeed’s common stock or a combination thereof, at Wolfspeed’s election. The initial conversion price represents a conversion premium of about 35% over the last reported sale price of $94.24 per share of Wolfspeed’s common stock on the New York Stock Exchange on 31 January.
In connection with the pricing of the notes, Wolfspeed entered into privately negotiated capped call transactions with one or more of the initial purchasers of the notes or their affiliates. The capped call transactions cover (subject to anti-dilution adjustments substantially similar to those applicable to the notes) the number of shares of Wolfspeed’s common stock that will initially underlie the notes. If the initial purchasers exercise their option to purchase additional notes, Wolfspeed expects to enter into additional capped call transactions with the option counterparties.
The cap price of the capped call transactions will initially be $212.04 per share, which represents a premium of 125% over the last reported sale price of $94.24 per share of Wolfspeed’s common stock on the New York Stock Exchange on 31 January, and is subject to certain adjustments under the terms of the capped call transactions.
Wolfspeed revenue grew 11% in December quarter despite supply constraints
