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Apple and GT Advanced Reach Deal to End Partnership, GT to Sell Furnaces to Pay Debt
GT Advanced and Apple have reached a deal that will see the two companies dissolving their partnership, according to documents submitted to the court earlier today, reports The Wall Street Journal. According to GT Advanced attorney Luc Despins, the agreement between the two companies marks an "amicable parting of the ways."
Under the terms of the deal, GT Advanced will sell off more than 2,000 sapphire furnaces, with some of the proceeds going to Apple as repayment for the $440 million loan the company gave GT to purchase the sapphire equipment.
Apple and GT Advanced have also agreed to file a revised explanation for the company's bankruptcy filing, which will be provided to the court at a November 25 hearing, but the original court papers remain sealed. If approved, the settlement between GT Advanced and Apple will see original court papers stricken from the court record, keeping the details of what went wrong between the two companies quiet.
Rumors have suggested that the deal between GT Advanced and Apple began falling apart early on, with GT Advanced missing technical milestones as early as February. A failure to produce high-quality sapphire led Apple to withhold a final $139 million loan payment, which may have been the reason behind GT Advanced's Chapter 11 bankruptcy protection filing in early October.
GT Advanced will begin winding down operations at its sapphire plant in the near future, eliminating the jobs of more than 727 employees in the coming weeks. GT Advanced plans to prepare existing sapphire boules for sale, clean and sell furnaces, and then close the plant for good by December 31.
Under the terms of the deal, GT Advanced will sell off more than 2,000 sapphire furnaces, with some of the proceeds going to Apple as repayment for the $440 million loan the company gave GT to purchase the sapphire equipment.
Mr. Despins said the proposed settlement allows GT Advanced to try to sell the furnaces at the Mesa, Ariz. sapphire-manufacturing facility, and give the money to Apple, which financed the equipment. GT Advanced would surrender its claims against Apple, under the deal, and agree not to disparage the technology giant, Mr. Despins said.There was some speculation that GT Advanced was aiming to force Apple into taking over the sapphire operation, but it appears that Apple is not interested as both parties seem to want out of the deal. With GT planning to sell off all of the furnaces, it is unclear whether Apple will be able to source enough sapphire from other suppliers in order to incorporate sapphire into the iPhone display in the future.
Apple and GT Advanced have also agreed to file a revised explanation for the company's bankruptcy filing, which will be provided to the court at a November 25 hearing, but the original court papers remain sealed. If approved, the settlement between GT Advanced and Apple will see original court papers stricken from the court record, keeping the details of what went wrong between the two companies quiet.
Rumors have suggested that the deal between GT Advanced and Apple began falling apart early on, with GT Advanced missing technical milestones as early as February. A failure to produce high-quality sapphire led Apple to withhold a final $139 million loan payment, which may have been the reason behind GT Advanced's Chapter 11 bankruptcy protection filing in early October.
GT Advanced will begin winding down operations at its sapphire plant in the near future, eliminating the jobs of more than 727 employees in the coming weeks. GT Advanced plans to prepare existing sapphire boules for sale, clean and sell furnaces, and then close the plant for good by December 31.
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57 months ago
Liquidations are never fun.
My very first job ended with a liquidation sale. :( That was the first time I realized that it's all BS. I can't explain how it really made me feel. I'd never had to 'deal with' anything before that. I was just a kid.
Good luck to the employees there. Chances are not many knew they were about to lose their jobs.
57 months ago
I can guess how this will turn out. American companies are only interested in making money and not product. So what could GTAT possibly do with the sapphire furnaces and American labor in AZ? Nothing.
Who is going to buy the furnaces and the boules? My guess is a new company in China or thereabouts with which Apple will have contracts to manufacture the sapphire Apple needs.
Further, this deal will be successful.
America makes war and diabetes and fat people. That's about it.
Who is going to buy the furnaces and the boules? My guess is a new company in China or thereabouts with which Apple will have contracts to manufacture the sapphire Apple needs.
Further, this deal will be successful.
America makes war and diabetes and fat people. That's about it.
57 months ago
"SOME of the proceeds"? So Apple will lose money on this? Sounds like they got the short end of the stick.
$155B in the bank. They'll be fine.
57 months ago
I smell a rat here, the CEO talked a good talk. He was able to convince Apple to invest when in reality he knew they would never make the grade. Then just before iPhone 6 gets announced he dumps the shares and makes a lot of money....
57 months ago
If GT couldn't make it work well enough, why would Apple be able to?
Because Apple can do anything better than any other company on earth, even if they know nothing about it. Or at least that's the impression I get from reading this forum everyday. :D
57 months ago
speculation
1/ apple will not lose any money. the prices that can be obtained by GT on used sapphire kilns and sapphire boules will cover the amount owed to apple
2/ fact: GT CEO and COO both were able to sell off millions of dollars in shares of GT stock while knowing it was all coming down
3/ all employees will lose their jobs. operation will shut down. there will be words from both GT managers and even from apple about how they want to avoid hardships for the employees but these will be just words
4/ apple has already re-sourced their Watch supply of sapphire to other vendors
5/ going forward, sapphire is dead in the water as a replacement for gorilla glass for smartfones
my opinion: court in Arizona should NOT accept this "amicable agreement between apple and GT". it should be rejected and the employees be given an opportunity to reach an arrangement with an outside holding company to give the operation a chance to continue under new control with the current employees.
1/ apple will not lose any money. the prices that can be obtained by GT on used sapphire kilns and sapphire boules will cover the amount owed to apple
2/ fact: GT CEO and COO both were able to sell off millions of dollars in shares of GT stock while knowing it was all coming down
3/ all employees will lose their jobs. operation will shut down. there will be words from both GT managers and even from apple about how they want to avoid hardships for the employees but these will be just words
4/ apple has already re-sourced their Watch supply of sapphire to other vendors
5/ going forward, sapphire is dead in the water as a replacement for gorilla glass for smartfones
my opinion: court in Arizona should NOT accept this "amicable agreement between apple and GT". it should be rejected and the employees be given an opportunity to reach an arrangement with an outside holding company to give the operation a chance to continue under new control with the current employees.
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