Wolfspeed wins a conditional $1.5 billion, 30-year Pentagon loan, and Washington gets warrants

Silicon carbide chipmaker Wolfspeed said Wednesday that it received a conditional commitment letter from the Department of War’s Office of Strategic Capital for a senior secured loan of up to $1.5 billion with a 30-year term. The deal is not final and still needs due diligence, definitive agreements and approvals.

The government would receive warrants for up to 7.5 percent of Wolfspeed’s fully diluted equity, issued as loan tranches are funded. The money would pay for gallium nitride upgrades for communications and electronic-warfare uses, plus radiation hardening, at sites in North Carolina, New York and Arkansas.

The stock closed down 1.45 percent at $31.37 before the news, then jumped about 27 percent in after-hours trading, Reuters reported. “SiC and GaN have critical national security applications,” Chief Executive Robert Feurle said.