| Item 1.01. |
Entry Into or Amendment of a Material Definitive Agreement. |
On June 23, 2023 (the “Issue Date”), in connection with a private placement and sale of $1,250,000,000 aggregate principal amount of senior secured notes due 2030 (the “Senior Notes”) of Wolfspeed, Inc. (the “Company”), the Company and U.S. Bank Trust Company, National Association, as the trustee and collateral agent (the “Agent”), executed an indenture (the “Indenture”) relating to the Senior Notes.
The proceeds of the Senior Notes will be used for general corporate purposes, including for permitted investments, capital expenditures and working capital. The Senior Notes bear interest, (i) during the first three years after the Issue Date, at a rate of 9.875% per annum, (ii) during the fourth year after the Issue Date, at a rate of 10.875% per annum, and (iii) at all times thereafter, 11.875% per annum, and will mature on the earlier of (x) June 23, 2030 and (y) September 1, 2029, if more than $175,000,000 in aggregate principal amount of the Company’s convertible senior notes due 2029 remains outstanding on such date. At the election of the Issuer and subject to the fulfillment of certain conditions precedent, the Issuer may issue and sell additional Senior Notes under the Indenture in an amount not to exceed $750,000,000.
The Indenture requires the Company to make an offer to repurchase the Senior Notes with 100% of the net cash proceeds of certain non-ordinary course asset sales and casualty events, subject to the ability to (so long as no default or event of default exists under the Indenture), reinvest the proceeds of such casualty events and asset sales (other than the proceeds of sales of certain core assets of the Company), at a price equal to the lesser of (i) 109.875% of the principal amount of the Senior Notes being repurchased and (ii) if such disposition or casualty event occurred (x) during the fourth year after the Issue Date, 109.40625% of the principal amount of such Senior Notes being repurchased, (y) during the fifth year after the Issue Date, 104.9375% of the principal amount of such Senior Notes being repurchased and (z) during and after the sixth year after the Issue Date, 100% of the principal amount of such Senior Notes being repurchased (this clause (ii), the “Applicable Redemption Price”). The Company is also required to offer to repurchase the Senior Notes upon a change in control, at a price equal to, (i) if the change of control occurs during the first three years after the Issue Date, a customary make-whole redemption price minus 3.00% of the principal amount of Senior Notes being purchased and (ii) if such change of control occurs after the third anniversary of the Issue Date, the Applicable Redemption Price. The Company may prepay the Senior Notes at any time, subject to: (i) if the prepayment occurs prior to the third anniversary of the Issue Date, by paying a customary make-whole premium and (ii) if the prepayment occurs on or after the third anniversary of the Issue Date, by paying the Applicable Redemption Price. Further, the Company has the right, prior to the third anniversary of the Issue Date, to make an optional redemption of up to 35% of the aggregate principal amount of the Senior Notes with the proceeds of qualified equity issuances, at a redemption price equal to 109.875%.
The Indenture contains certain customary affirmative covenants, negative covenants and events of default, including a liquidity maintenance financial covenant requiring the Company to have an aggregate amount of unrestricted cash and cash equivalents maintained in accounts over which the Agent has been granted a perfected first lien security interest of at least $500,000,000 as of the last day of any calendar month (the “Liquidity Covenant”). Upon the Company achieving 30% utilization at its Mohawk Valley Fab facility and generating at least $240,000,000 of revenue from products sold by the Company’s and its subsidiaries’ power product family business, that are manufactured or produced on wafers that are fabricated at the Mohawk Valley Fab facility (the “MVF Products”), in each case over a sixth month period, the level of the Liquidity Covenant shall be permanently reduced to $325,000,000. Upon the Company’s achieving 50% utilization at its Mohawk Valley Fab facility and generating at least $450,000,000 of revenue from MVF Products, in each case over a six month period, the Liquidity Covenant will be permanently reduced to $0.
The obligations of the Company under the Indenture will be guaranteed by the Company’s material subsidiaries, if any, subject to certain exceptions, and are secured by a pledge (and, with respect to real property, mortgage) of substantially all of the existing and future property and assets of the Company and the guarantors (subject to exceptions), including a pledge of the capital stock of the subsidiaries of the Company and the guarantors, subject to certain exceptions.
The Senior Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the “Securities Act”) or any state securities laws and, unless so registered, may not be offered or sold except pursuant to an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.