Wolfspeed, a chip maker, gets $2B in private funding for US expansion.
Chip maker Wolfspeed’s plans to expand into the United States have received a boost. This is due to a report from Bloomberg on Sunday, which claimed that Apollo Global Management has committed to supporting the firm.
The report states that Apollo Global has formed a group of private lenders that will invest up to $2 billion in Wolfspeed.
However, it should be noted that Wolfspeed will not have immediate access to the full amount. Reports indicate that only $1.25 billion will be invested in the company for now, while the remaining $750 million will be made available at a later time.
Furthermore, the deal is structured as seven-year secured notes with a 9.875% coupon and allows for repayment after three years.
Chip Maker Wolfspeed Taps into the Growing Popularity of Private Funding
Although the deal has not been officially announced, it highlights the increasing appeal of the private credit sector. Like many companies that opt for private funding, Wolfspeed may be looking to protect its intellectual property. However, more importantly, the company also wants to position itself for further financing from private lenders in the near future.
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For now, Wolfspeed will use the new funding to expand two of its production facilities and increase productivity. These facilities supply silicon carbide wafers to automakers, including Jaguar Land Rover Automotive Plc.
Apollo is no stranger 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. At another time, Apollo also invested a $1 billion loan in Bombardier Inc.
As of now, there have been no further comments on the deal from either Wolfspeed or Apollo.
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