Wolfspeed will focus the new funding on expanding its two production facilities and ultimately increasing productivity.
Chip maker Wolfspeed’s plans to expand into the United States just got a significant boost. This Sunday comes after Bloomberg reports claimed that Apollo Global Management is committed to backing the firm.
As per the report, Apollo Global has formed a consortium of private lenders which are ready to invest up to $2 billion in Wolfspeed.
In the meantime, it may be interesting to note that Wolfspeed will not have immediate access to the entire amount. The report claims that only $1.25 billion will be given to the company now, while the remaining $750 million will be made available later.
Additionally, the deal is structured as seven-year secured notes with a 9.875% coupon, and in such a way that repayment can be made after three years.
Chip maker Wolfspeed takes advantage of the growing popularity of private funding
While the deal has yet to be officially announced, an interesting part of it is how it highlights the rapidly growing appeal of the private lending sector. Like many who opt for private funding, Wolfspeed will be looking to protect its intellectual property. But more importantly, the company also wants to prepare itself for further financing from private lenders in the near future.
For now, however, Wolfspeed will focus the new funding on expanding its two production facilities and ultimately increasing 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 acquired New Media Investment Group Inc. with a loan of $1.8 billion. K supported the acquisition of Gannett Company. Apollo at another time Bombardier Inc. Also invested $1 billion in debt.
At the time of publication, there has been no further comment on the deal from Wolfspeed or Apollo.
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