A group of lenders led by private-equity firm Apollo Global Management (NYSE:APO) Inc is providing as much as $2 billion to Wolfspeed Inc to support the semiconductor maker’s expansion in the US, according to Bloomberg.
The news agency reported that the financing makes $1.25 billion of cash immediately available to the Durham, North Carolina-based chip maker, while another $750 million can be drawn later.
It was structured as seven-year secured notes that carry a coupon of 9.875% and can be paid back after three years, added Bloomberg.
Founded in 1987, the US powerhouse semiconductor company focuses on silicon carbide and gallium nitride technologies.
Meanwhile, The Information noted that the deal could be announced in the coming days and would be one of the “largest direct lending deals of the year” that doesn’t involve a takeover. This form of private credit has grown dramatically in the last decade.
Challenges in the banking system are expanding the opportunities available to direct lenders and may represent a sea change in private credit. According to analysts, direct lending, where private equity firms and other investors lend money in place of banks, has really taken off in the past year.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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