Chipmaker Wolfspeed shares rise 1,100% within three days, shareholders to receive new ordinary shares - here's the reason

Wolfspeed Inc’s stock skyrocketed after a bankruptcy restructuring plan was aimed at cutting its debt by 70%. Existing shareholders will receive new shares in the restructured company. Wolfspeed shares are rising on the restructuring plan (AFP) -based Chipmaker Wolfspeed Inc. (Wolf) shares rose on Monday afternoon after announcing a reorganization plan. Under the plan, shareholders will receive new ordinary shares in exchange for their existing shares. The stock rose to 1,450 percent after the restructuring and corporate changes of Chapter 11, which was approved by an American court in early September. In July, the Chipmaker applied for bankruptcy for a creditor’s plan to reduce $ 4.6 billion in debt, which has submitted one of the largest bankruptcies so far this year. How will the restructuring benefit the business? Wolfspeed’s approved plan will enable the company to leave bankruptcy protection in the coming weeks. The restructuring is expected to significantly reduce its debt by 70 percent, from $ 6.5 billion to $ 2 billion, and reduce interest payments by about 60 percent. The company makes chips used in applications such as electric vehicles, solar converters and industrial power systems. According to financial media firm Benzinga, Wolfspeed will also change its incorporation from North Carolina to Delaware in the United States as part of the process. What is in the store for shareholders? As a result of these changes recorded by the company, the New York Stock Exchange suspended the trading of Wolfspeed’s old ordinary share on Monday 29 September. The company’s old ordinary share will be delisted on October 10 this year. The existing shareholders will receive the new ordinary share in the reorganized company. However, the restructuring involves significant dilution, which will result in the current shareholders receiving only 3-5% of the new equity, as creditors will take the company’s ownership. This massive share price boom can be attributed to speculative trading fueled by the massive debt reduction. Benzinga said this boom stops in the midst of various stories. Wolfspeed’s share price Wolfspeed (Wolf) shares are trading at $ 14.97 on Monday, with approximately 1.137 percent compared to the previous closing price of $ 1.17 on Friday 26 September.