Wolfspeed greenshoe exercised, lifts convertibles to $1.75 billion

By Devika Patel

Knoxville, Tenn., Nov. 29 – Underwriters for Wolfspeed Inc.’s offering of 1.875% seven-year convertible senior notes exercised their over-allotment option in full for $225 million more of the convertibles, increasing the size of the issue to $1.75 billion, the company said in an 8-K filing with the Securities and Exchange Commission.

As previously reported, the company sold $1.525 billion of the convertibles at par on Nov. 16 in a Rule 144A offering via joint bookrunners Morgan Stanley & Co. LLC (lead left) and Wells Fargo Securities LLC.

The convertibles have an initial conversion premium of 35% and an initial conversion price of $118.88, which equals a conversion rate of 8.4118.

The issuer initially sought to sell $1.3 billion of convertibles with a greenshoe of $200 million.

The notes are non-callable until Dec. 4, 2026 and then subject to a 130% hurdle.

In connection with the offering, the company entered into capped call transactions with a cap price of $202.5380, which represents a premium of 130% over the stock reference price.

BorgWarner, a Durham, N.C.-based automotive supplier, announced in a separate press release a strategic partnership with Wolfspeed where it would invest $500 million in the financing transaction entitling it to purchase $650 million of devices annually.

Approximately $238.7 million of the proceeds were used to cover the cost of the call spread with the remaining amount earmarked for general corporate purposes.

Wolfspeed is a Durham, N.C.-based bandgap semiconductor developer.

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