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.
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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.
Top Rated Comments
(View all)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.
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.
"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.