Copyright © 2016
Tag - GT Advanced
Former Apple manufacturing partner and sapphire crystal furnace manufacturer GT Advanced Technologies may soon be able to emerge from bankruptcy, following the filing of a new plan with the court that would see $60 million in new debt and $20 million in preferred stock put up by lenders early next year -- however, the plan does not include any compensation for shareholders or other investors. Under the proposal, ownership of the company would be transferred to creditors, which may still include Apple.
GT Advanced has made an agreement with Apple over a proposed settlement for how the company will pay off its $439 million debt. The settlement will potentially allow the sapphire glass producer to free itself from the massive debt, by holding an auction later this month and selling off its sapphire glass production equipment, among other items going up for sale.
On Friday, Apple filed an objection in bankruptcy court to a new financing plan brought forward by GT Advanced Technologies, its former partner in sapphire glass production. The new financing report from GT Advanced claims that it has to collect enough insurance money over a fire that damaged the plant Apple owns in May, to cover a $95 million loan agreement for repairs. Apple says that GT Advanced is trying to weasel out of its obligations.
The Apple facility in Mesa, Arizona -- formerly owned by GT Advanced -- had a roof fire earlier today, over a loading dock. The fire is currently contained, and for the moment, appears to have been limited to portions of the roof and solar installation only. Firefighters from three stations were called to fight the fire, which required the evacuation of 12 people from inside the facility.
Apple will be spending $2 billion over the course of 10 years to convert GT Advanced's failed sapphire plant in Mesa, Arizona into a datacenter, according to an official announcement. The company claims that the project is "one of the largest" investments it has ever made, and should add over 600 engineering and construction jobs to the area, though the facility will only have 150 permanent workers. It's also promising to use entirely renewable power, "much" of which will come from a future 70MW solar farm it's building.
A committee of bondholders and unsecured creditors for GT Advanced have asked for Apple's senior VP of Operations, Jeff Williams, to be made available for a "short, half-day deposition," according to the Wall Street Journal. The request was made through a Monday filing with the US Bankruptcy Court in New Hampshire. The committee states that "it is clear that Williams played an important, substantial and hands-on role in managing the relationship between GTAT and Apple in connection with the matters that are directly relevant to the Apple settlement motion."
A Louisiana lawfirm, Smith Segura & Raphael, has filed a class action lawsuit against GT Advanced on behalf of investors. The case alleges that GT "failed to disclose the significant risk" it would incur in its sapphire supply deal with Apple, which it announced on November 4 of last year. Apple agreed to pay GT $578 million in four installments, with the expectation the latter would start paying it back in 2015. GT was unable to meet Apple demands though, which resulted in delayed payments, the withholding of the final one, and ultimately GT's bankruptcy on October 6, followed by the company being delisted from the NASDAQ.
As scheduled, the court overseeing GT Advanced's bankruptcy has unsealed more documents regarding the relationship between the sapphire supplier and former client Apple, which it blames for ultimately causing the collapse. In an unedited affidavit from GT COO Daniel Squiller, Apple is accused of using a "bait-and-switch" strategy in which it offered "an onerous and massively one-sided deal" in 2013. He says that Apple originally promised to buy sapphire furnaces for GT and let them operate them, but later demanded a "fundamentally different deal" in which Apple would only lend the furnaces and have no obligation to buy them, nor buy any of the sapphire GT produced.
The US Securities and Exchange Commission has opened up an inquiry into potentially suspect share trading at former Apple supplier GT Advanced Technologies. Although the information was only revealed today, the SEC sent a letter to GT on October 15, requesting "certain information regarding trading activity in the Company's securities," plus more data on its sapphire business and securities, dating back to January 1 of last year.
The judge in the bankruptcy case involving GT Advanced Technologies and its chief client Apple ordered more documents unsealed and made public in the proceeding on Tuesday. Both Apple and GT Advanced came to an agreement regarding the papers that waived the confidentiality conditions of the two companies' original contracts, allowing GT Advanced to drop its objections to making the documents public. A statement made by GT Advanced officials detailing the firm's agreement with Apple is among the papers that will be made public.