September & November 2023
Case Study

BorgWarner
/ Wolfspeed

BorgWarner supplies engineered systems and components primarily for automotive powertrain applications, and held a strategic investment in Wolfspeed, a leading manufacturer of semiconductor products, through an investment in Wolfspeed's convertible notes.

Transaction Terms
Transaction
Secondary convertible bond sale
Security
Wolfspeed 1.875% convertible senior notes due 2029
Principal Amount
$500MM
Issuer
Wolfspeed, Inc. (WOLF)
Execution
Secondary sale via relationship banks
$500MM
Aggregate principal
amount monetized
2
Tranches executed
Sept & Nov 2023
#1
One of the largest known corporate
secondary CB transactions in recent history
Situation Overview

Monetizing a
strategic investment

BorgWarner began a strategic relationship with Wolfspeed, Inc., a manufacturer of semiconductor products. In November 2022, Wolfspeed issued a $1.75B convertible bond due 2029. In conjunction with their deepening strategic relationship, BorgWarner agreed to purchase $500MM of the CB.

With the passage of time and with HudsonWest's support and analysis, BorgWarner decided to exit its convertible position and use the sale proceeds to fund other priorities — thus requiring a carefully managed secondary sale process.

HudsonWest’s Role

Advising on a complex
secondary sale

01
Strategic Alternatives Analysis

HudsonWest worked closely with BorgWarner to consider a variety of strategies, including various hedging transactions — before advising on the optimal path of a secondary sale.

02
Sale Process Advisory

BorgWarner decided to sell the CB to more traditional convertible investors, leveraging its relationship banks to aid in the sale process. HudsonWest advised on the sale process, including evaluating economics and structuring the approach to maximize proceeds.

03
Stock Price Re-Hedging Risk Management

A critical element of the advisory mandate was evaluating and managing stock price re-hedging risks to ensure BorgWarner maximized proceeds from the sale — a technically complex consideration in large secondary CB transactions.

04
One of the Largest in Recent History

The transaction was executed across two tranches in September and November 2023, and was one of the largest known secondary convertible bond transactions by a corporate in recent history.

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