Sapphire furnace auction proposal needs approval from bankruptcy court
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.
Shareholders also suspicious of new moves that could foreclose on furnaces
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.
Fire out, no injuries; Damage appears extensive
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.
Should return some jobs to Arizona
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.
Operations head played a 'hands-on' role in sapphire deal
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."
Company didn't warn about dangers in Apple contract
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.
Accuses company of forcing GT to take all risk
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.
Inquiry should focus on selloffs linked to Apple woes
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.
Parties agree to waive confidentiality agreements, but some documents remained hidden
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.
Should fully expose GT's accusations against Apple
The New Hampshire judge overseeing GT Advanced's bankruptcy, Henry Boroff, has ordered the unsealing of an affidavit explaining reasons for the sapphire supplier's Chapter 11 filing. Apple has fought to keep the document private, claiming it could harm not only its reputation but its relationship with other suppliers. GT's COO, Daniel Squiller, is said to chronicle attempts to meet Apple demand, claiming that the latter company made mistakes in setting up an Arizona production facility, submitting shifting product specifications, and refusing to negotiate.
Company lost $461M before bankruptcy filing, says it had to assume all risks
Daniel Squiller, the COO of GT Advanced Technologies who was among those slowly selling off his holdings in company over the course of 2014, has told the bankruptcy court that the company lost $461 million before it finally filed for bankruptcy, which he characterized as a last-resort measure to get out of "unsustainable" contracts with Apple. Squiller painted a picture that claimed that GT Advanced assumed all the risk in their joint venture, while Apple took none.
Apple could ask for millions or billions in claims, supplier says
GT Advanced Technologies has to settle legal disputes with Apple because "protracted litigation against one of the largest corporations in the world with over $100 billion of cash would be challenging and expensive," according to a court filing submitted late Monday night. Lawyers for the bankrupt sapphire supplier say that Apple is threatening to hit it with "numerous liquidated damages provisions in the Apple Agreements pursuant to which Apple would likely assert millions, if not billions, of dollars in secured and unsecured claims against certain of the Debtors."
Former sapphire supplier will keep control of Mesa assets
(Updated with Apple response, hints at future initiatives) GT has confirmed its split with Apple via a press release, offering further details on the terms. "GT will be released from all exclusivity obligations under its various agreements with Apple," the statement explains. "GT will retain ownership of all production, ancillary and inventory assets located in Mesa [Arizona] and Apple is provided with a mechanism for recovering its $439 million pre-payment made to GT over a period of up to four years without interest, solely from a portion of the proceeds from ASF sales.
If approved, GT will sell sapphire furnaces to pay back Apple loan
After much bickering in court during bankruptcy proceedings that took Apple and Wall Street by surprise, former sapphire supplier GT Advanced Technologies has worked out an agreement with the iPhone maker that will let it pursue its plan of winding down operations at its Mesa, Arizona plant and laying off nearly 700 employees. Though Apple had initially said it would work to preserve the jobs involved, the deal instead offers incentives to certain employees to help wind down the plant, and provides a way for GT to pay back the money it owes Apple.
Could hit local area hard
GT Advanced plans to lay off 727 workers at its sapphire plant in Mesa, Arizona, according to a mandatory Worker Adjustment and Retraining Notification issued to the Mesa City Council. Affected people are said to include 524 in production, 108 in technical jobs, 70 in management, and 25 in administration. The move comes as GT is planning to "wind down" the Mesa plant, and despite Apple's promise that it would try to preserve jobs.
Supplier says it won't appeal decision
Sapphire supplier GT Advanced Technologies has today had its stock removed from NASDAQ listings, and is not planning to appeal the decision, according to an announcement by the former. NASDAQ based the decision on GT declaring Chapter 11 bankruptcy earlier this month. That event caused GT's stock to drop over 90 percent, and it has since slipped even further, last closing at 44 cents yesterday. Shares can still be bought under the GTATQ symbol on the OTC Pink marketplace.
Company's desire for secrecy could result in another tangle with the DOJ
This Wednesday, the court handling the bankruptcy proceeding for GT Advanced Technology will hear arguments from Apple that its objections to GT's bankruptcy filing should be sealed so as to protect sensitive information, including product plans, research finds and business dealings. The request could bring the iPhone maker into another dispute with the US Department of Justice, which is acting as the US trustee in the case, and the state of New Hampshire -- both of whom want the filings to be public.
Third payment from Apple was delayed two months
GT Advanced may have had problems producing sapphire for Apple as far back as February, the Wall Street Journal notes. Apple's decision to withhold a final payment is believed to be responsible for GT's recent bankruptcy, but securities filings indicate that a third payment -- $103 million -- was owed in February and not delivered until April. The last $139 million was actually due that month, but by August GT was saying it only expected the money in October. Journal sources repeat the view that the last tranche was withheld because GT failed to meet contract requirements.
GT asks for more contract details to be made public
Filings in GT Advanced's ongoing bankruptcy proceedings reveal that the sapphire supplier's contract with Apple included a $50 million penalty for leaking any of the latter's product information, according to the Financial Times. As it prepares for a Wednesday court hearing, GT is asking for more details of the Apple contract to be revealed, which it claims are important to creditors and shareholders. It adds that "Apple has treated the confidentiality agreement itself as 'confidential.'"
Sapphire supplier asks court to void contracts, allow 'wind-down'
Filings submitted today by sapphire supplier GT Advanced call for the court to nullify its contracts with Apple. "As discussed in detail in the Supplemental First Day Declaration, the agreements imposed oppressive and burdensome terms and obligations on GTAT," the company writes in one motion. "The contracts and leases...provide no benefit to GTAT's estates, and GTAT's continued performance under the Agreements is no longer a viable business option. GTAT has determined that the Agreements are no longer necessary for GTAT's business operations. The Agreements also are not a source of potential value for GTAT's future operations, creditors, or interest holders and constitute an unnecessary drain on GTAT's resources."
May back claims that collapse was Apple-related
A confidentiality agreement prevents GT Advanced from revealing the cause of its bankruptcy, or its plans to recover, according to a lawyer for the company. Reuters reports that Paul Hastings lawyer Luc Despins made the statement to a judge earlier today in a New Hampshire court. GT has moreover asked the court to close hearings to the public, and seal documents referring to a third party, since those would also violate confidentiality terms and potentially cost the company up to $50 million per infraction.
Sources say Apple withheld final contract payment
(Updated with extra details on Apple's involvement) Breaking its silence, Apple has issued a formal statement on the bankruptcy of sapphire supplier GT Advanced. "We are focused on preserving jobs in Arizona following GT's surprising decision, and we will continue to work with state and local officials as we consider our next steps," a representative says. The quote is referring to a GT-operated factory in Mesa, Arizona, which is technically owned by Apple.
Lack of money caused sapphire maker's cash-on-hand to dip below contractual minimums
Details are still emerging from the surprise bankruptcy filing of Apple sapphire supplier and partner GT Advanced, with new stories of possible stock shenanigans by CEO Thomas Gutierrez and speculation that the bankruptcy was brought on, at least in part, by a withheld payment from Apple. On Monday, the first day of trading following the announcement, the company's stock dropped 93 percent from $11 to around 80 cents; it rose Tuesday to close at $1.21 per share.
May be connected to Apple, recent bankruptcy
The CEO of sapphire supplier GT Advanced Technologies, Tom Guitierrez, is facing scrutiny for a $160,000 sale of company stock he made on September 8. The Wall Street Journal reports that the sale came just a day before Apple announced the iPhone 6 and 6 Plus, which some rumors had suggested would use sapphire screen covers. Instead, the phones were revealed to be using a variant of Corning Gorilla Glass, and GT's share price fell from $17.38 to around the $11 mark. Yesterday, the company filed for Chapter 11 bankruptcy protection, causing shares to plummet below $1. They have since rebounded slightly to over $1.50.
Blow comes despite lucrative Apple deal
Sapphire supplier GT Advanced has filed for Chapter 11 bankruptcy protection, according to a Monday press release. Trading of the company's stock was halted in advance of the announcement, and once resumed caused shares to drop over 90 percent of their value. GT says it will continue to operate while under Chapter 11, but that as of September 29, it had $85 million in cash.
Smaller facility may be purely for test production
Apple and GT Advanced have opened up a second sapphire manufacturing facility in Salem, Massachusetts, according to a filing submitted to the US Securities and Exchange Commission this week. GT already owned the 50,000-square-foot space in Salem, but has used part of Apple's recent $578 million prepayment to retrofit it with furnaces like the primary sapphire plant in Mesa, Arizona. Previously, the Salem complex was used as a research lab.
GT Advanced facility up to over 2,500 furnaces
Apple should have enough sapphire to cover the displays of both the iWatch and its 4.7- and 5.5-inch iPhones, claims Seeking Alpha's Matt Margolis. Based on supply chain checks, he suggests that GT Advanced's Mesa, Arizona sapphire plant -- which is dedicated to Apple -- will have "ample supply" for all three devices this year. "Additionally, the maximum sapphire screen capacity of the Mesa facility is likely to exceed 200m annual units," he writes.
Fraction of planned furnaces reportedly online
The Arizona sapphire plant operated by Apple and GT Advanced Technologies started production last month in a 100-furnace trial, claims UBS analyst Stephen Chin. The material was allegedly shipped to one of Apple's manufacturing partners in China. From there, it's believed to have gone into the Touch ID sensors and camera lens covers for the iPhone 5s, which already use sapphire from other suppliers.
Expansion thought to be geared toward increasing yields
Even though the core facility still isn't finished, Apple and GT Advanced are already planning to expand their sapphire factory in Mesa, Arizona, AppleInsider reports. The site claims that several companies have already stepped up with bids for the expansion. The plant and its grounds currently occupy 83 acres; the expansion may grow into land directly behind it, which records show are vacant and more than large enough to support a bigger complex.
Financial forecast hints at sapphire coming to iWatch or new iPhones
GT Advanced's partnership with Apple on sapphire production is "progressing well," according to a statement in the company's latest quarterly earnings report. CEO Tom Gutierrez notes that build-out of the Apple-oriented sapphire plant in Arizona began last quarter, and that hiring started around the same time. Although he doesn't reveal when mass production will start, he says that GT should return to profitability in the second half of 2014.
New solar and geothermal power projects underway
Both the city of Mesa and the state of Arizona acted aggressively to lure Apple and GT Advanced Technologies into building their sapphire plant in the Mesa area, according to a new Bloomberg report. The publication notes that since Arizona lost out on an Apple operations center that ended up in Austin, Texas, local government was eager to make concessions in order to attract the company's jobs and business. Apple is said to have received a $10 million grant from the state to support hiring and building improvements, as well a special designation for its land, slashing the company's property taxes by over 70 percent.
Leaked shipping data points to factory working on display tech
GT Advanced's sapphire plant in Mesa, Arizona -- built to produce goods for Apple -- appears poised to produce anywhere between 100 million and 200 million five-inch display covers, a new report suggests. Import records show that in January, the company acquired machines labeled as Intego Sirius Sapphire Display Inspection Tools. The machines are large, and able to process several slabs of screen covers at once.