Wolfspeed, Inc. (NYSE:WOLF) shares are trading higher Thursday after the company announced that it received a conditional loan commitment of up to $1.5 billion from the U.S. Department of Defense’s Office of Strategic Capital.
- Wolfspeed stock is among today’s top performers. What’s driving WOLF stock higher?
Conditional $1.5 Billion, 30-Year Loan Commitment
The commitment letter contemplates a senior secured delayed-draw term loan facility of up to $1.5 billion with a 30-year term. Wolfspeed plans to use the financing to support domestic development and production of silicon carbide materials and wide bandgap power devices, with an additional focus on U.S. national security applications.
Among the planned uses are upgrading its gallium nitride epitaxy capabilities for next-generation communications infrastructure and electronic warfare systems, and developing radiation-hardening capabilities for its silicon carbide and future gallium nitride products.
The multi-year program would also establish, expand or onshore domestic gallium nitride power device production and advance GaN-on-SiC radio-frequency wafer technology. Wolfspeed has domestic manufacturing in North Carolina, New York and Arkansas.
“We believe the scale and 30-year tenor of this conditional commitment reflects the long-term importance of the technology and manufacturing capabilities Wolfspeed has built in the United States,” said Robert Feurle, CEO of Wolfspeed.
If definitive agreements are signed, Wolfspeed would issue the government warrants to purchase up to 7.5% of its fully diluted equity. The warrants would be priced on a volume-weighted average price basis and issued pro rata as financing tranches are funded.
The deal remains subject to substantial due diligence, negotiation of definitive agreements, governmental authorizations and approvals, appropriations and required third-party consents, and Wolfspeed said there is no assurance that any financing will be provided.
Wolfspeed Shares Shoot Higher
WOLF Price Action: At the time of publication, Wolfspeed shares are trading 10.07% higher at $34.48, according to data from Benzinga Pro.
Image via Shutterstock
Login to comment