WOLF - Wolfspeed dips on $1.3B convertible notes offering

Wolfspeed ( NYSE: WOLF ) shares fell around 7% Wednesday morning after the semiconductor company launched a private offering of $1.3B of its Convertible Senior Notes due 2029.

Initial purchasers may be granted an option to purchase, for settlement within a 13-day period from, and including, the date on which the notes are first issued, up to an additional $200M aggregate principal amount of the notes.

The interest rate, initial conversion rate, repurchase or redemption rights and other terms of the notes are to be determined upon pricing.

The notes will be convertible into cash, shares of Wolfspeed’s common stock, or a combination thereof, at Wolfspeed’s election.

A portion of the net proceeds will be used to fund the cost of entering into the capped call transactions; remainder for general corporate purposes.

Additionally, the firm announced a strategic partnership with BorgWarner ( NYSE: BWA ), wherein BorgWarner to invest $500M in Wolfspeed's financing transaction in exchange for a silicon carbide device capacity corridor.

Under the multi-year deal, BorgWarner ( BWA ) will be entitled to purchase up to $650M of devices annually as requirements increase. The partners are also exploring a deeper collaboration to drive technology development.

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