GT Advanced Technolgies, Apple's partner in a sapphire production facility in Arizona, today announced that it is filing for Chapter 11 bankruptcy protection as it seeks to reorganize its businesses. The company remains positive that it will continue to be able to meet its obligations during this time of transition.
GT indicated that as of September 29, 2014 it had approximately $85 million of cash. In addition, it is now seeking debtor-in-possession financing, which, once obtained, would provide the company with an immediate source of additional funds. These funding sources will enable GT to satisfy the customary obligations associated with the daily operation of its business, including the timely payment of employee wages and other obligations. [...]
"GT has a strong and fundamentally sound underlying business," said Tom Gutierrez, president and chief executive officer of GT. "Today's filing does not mean we are going out of business; rather, it provides us with the opportunity to continue to execute our business plan on a stronger footing, maintain operations of our diversified business, and improve our balance sheet.
"We are convinced that the rehabilitative process of chapter 11 is the best way to reorganize, protect our company and provide a path to our future success. We remain committed to our roots in innovation and our diversification strategy. We plan to continue to operate as a technology leader across our core set of businesses."
GT's finances have taken a significant hit as it has retooled to support its partnership with Apple, turning its focus to ramping up sapphire production for Apple rather than selling furnaces to other companies. Still, with Apple making a series of pre-payments to GT to help fund the new initiative, the circumstances surrounding the bankruptcy filing are not yet clear.
Apple had been widely expected to include sapphire display covers on at least some iPhone 6 models, but the development did not come to pass. With Apple having no commitment to purchase sapphire from GT, it is possible that an unexpected decision by Apple to omit sapphire from the device put GT into a precarious financial position. Apple is planning to use sapphire on some versions of its upcoming Apple Watch, but it is unclear whether it is indeed sourcing sapphire from GT for the product, and if so, whether the quantities involved would be enough to support GT's investments thus far in the area.
Update 7:47 AM: GT's stock, which was halted prior to the announcement, has resumed trading and is currently down 90 percent.
Top Rated Comments
why don't u explain it then
Look at it this way.
You owe $10000 to VISA because you decided to buy a maxed out Mac Pro, but you can't pay your debt this month. First thing that happens to you? Your credit line is closed, no one can help you out, your credit score is destroyed. In other words, you're financially f-ed.
Getting a "Chapter 11" bankruptcy protection means that a higher entity (court) will guarantee that VISA will get its money back one way or another. This allowes VISA itself to "extend" your debt over time, or to find other solutions that do not damage you. VISA, as your creditor, WANTS your money, it does not want to put you out of business so your business can stay alive while it "restructures". However, VISA itself it needs some level of reassurance, and that is exactly what Ch. 11 is for.
http://investor.gtat.com/releasedetail.cfm?ReleaseID=804195
Did Apple inadvertantly screw their business partner by having them sign this exclusive contract? Should Apple at least explore a possible buyout of this company or at least license the tech?
Mixed feelings about Apple's business practices at times. :(
I think you're on to something.
My hunch is, GT bet BIG on Apple using sapphire for the 6, Apple probably told them they'd need to have production at X by May or something, and they missed the deadline.
Apple went ahead with "ion strengthened glass" (lol), and told GT that they'd still use them for other things, but not the 6.
Because GT went "all-in" they can't afford this, and have capacity out the yin-yang, but no use for it. Chapter 11.