Wolfspeed will focus the new funding on expanding two of its production facilities and ultimately boosting productivity.
The plans of chip maker Wolfspeed to expand into the United States may have just received a significant boost. This follows after a Sunday Bloomberg report claimed that Apollo Global Management has committed to supporting the firm.
Per the report, Apollo Global has put together a consortium of private lenders that is set to invest up to $2 billion in Wolfspeed.
Meanwhile, it might be interesting to note that Wolfspeed will not have immediate access to the full amount. Reports claim that only $1.25 billion will be injected into the firm for now, while the remaining $750 million will be made available later on.
Additionally, the deal is structured as seven-year secured notes with a 9.875% coupon, and in a way that repayment can be made after three years.
Chip Maker Wolfspeed Taps into the Growing Popularity of Private Funding
Though the deal is yet to be officially announced, an interesting part of it is how it highlights the fast-rising appeal of the private credit sector. Like many who opt for private funding, Wolfspeed may be seeking to protect its intellectual property. But more importantly, the firm also wants to position itself for further financing from private lenders in the near future.
For now, however, Wolfspeed will focus the new funding on expanding two of its production facilities and ultimately boosting productivity. The facilities are responsible for supplying silicon carbide wafers to automakers, including Jaguar Land Rover Automotive Plc.
In the case of Apollo, the firm is not new to private financing for publicly traded companies. It supported New Media Investment Group Inc.’s acquisition of Gannett Co. with a $1.8 billion loan. Apollo also invested a $1 billion loan in Bombardier Inc. at another time.
As of publication, there haven’t been any more comments on the deal from either Wolfspeed or Apollo.
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