Apollo Global Management Inc., leading a consortium of lenders, is set to provide up to $2 billion in private financing to Wolfspeed Inc., a semiconductor firm planning to expand its US operations, according to a statement reviewed by Bloomberg. The deal provides Wolfspeed with an immediate cash injection of $1.25 billion, with an additional $750 million accessible at a later stage. The arrangement, structured as seven-year secured notes with a 9.875% coupon, permits repayment after three years.
The financing demonstrates how even established companies are finding the private credit sector appealing for funding. Wolfspeed chose this avenue to limit the number of entities with access to its intellectual property and due to the potential for further financing from private lenders in the future. While the deal, which Apollo arranged, remains unrated, a portion has been distributed to two other asset managers.
The financing supports the expansion of two Wolfspeed production facilities, which supply silicon carbide wafers to automakers, including Jaguar Land Rover Automotive Plc. Despite this development, representatives from Apollo and Wolfspeed refrained from making additional comments beyond the statement's content.
Apollo has a history of arranging significant private financings for publicly traded companies, including a $1.8 billion loan for New Media Investment Group Inc.'s acquisition of Gannett Co., and a $1 billion loan for Bombardier Inc. Wolfspeed, headquartered in Durham, North Carolina, has an enterprise value exceeding $7 billion, serving various sectors, including automotive, renewable energy, defense, and aerospace industries.
