The silicon-carbide chipmaker's shares reversed to about $29.87 in a broad semiconductor selloff, below Wednesday's close. No new filing has changed the terms of the conditional $1.5 billion loan.
The rally that followed Wolfspeed's government financing announcement lasted only minutes into the regular session.
After Wednesday's close, Wolfspeed said the Pentagon's lending arm had conditionally agreed to provide up to $1.5 billion over 30 years in exchange for warrants on as much as 7.5% of the company. Late Wednesday the shares changed hands as high as $40.49, against a regular-session close of $31.37.
On Thursday it opened at $35.00, about 12% higher, and reached $35.49 in the first half hour. It then fell for most of the session. By early afternoon it traded at $29.87, down about 4.8% from Wednesday's close, about 15% below the open and about 26% below the after-hours peak. Volume reached about 19 million shares.
The loan terms
Wolfspeed has made no new filing since Wednesday, so the hurdles are unchanged. The largest is that the company must first bring in up to $750 million of its own money, part of it from new share sales, before the government's money flows. Congressional approval and consent from existing creditors are also required, and the opening $600 million tranche would go to retiring existing notes.
The sector backdrop
The reversal came during a broad decline in chip stocks. The iShares Semiconductor ETF fell about 3.7%, ON Semiconductor about 3.6% and STMicroelectronics, another silicon-carbide producer, about 6.3%. Wolfspeed's 4.8% decline was within that range.
Two interpretations
One reading is that Thursday's selling reflected the sector rather than the loan, and that a 30-year government credit line at a narrow spread over Treasuries still improves Wolfspeed's position once conditions are met.
Another reading is that investors reread the conditions overnight. Much of the money arrives only after Wolfspeed raises its own capital, part of it in new shares, and the government's warrants and governance rights add dilution on top.
The next filing
The first concrete sign of progress would be a stock sale or a swap of convertible notes into shares, since $50 million of fresh equity has to be in hand before the facility starts. Neither the final loan documents nor a vote in Congress has been scheduled.