Roger Fingas
In order to reduce expenses when it emerges out of Chapter 11 status, former Apple sapphire supplier GT Advanced Technologies is looking to cut 40 percent of its remaining workforce, according to bankruptcy court documents filed on Monday.
The exact number of people who might be affected is uncertain, said the Wall Street Journal. The company did however have about 1,000 workers when declared bankruptcy in October 2014, and it laid off over 700 people at the Mesa, Arizona sapphire plant it operated in conjunction with Apple.
The move should save the company about $20 million annually. GT's bondholders have put up $95 million to fund restructuring, which will ultimately see the company return to making various kinds of solar and industrial equipment.
A variety of issues are unsettled though, such as whether intercompany loan obligations can be classfied as equity contributions instead of regular debt. Another matter is the ownership of over $30 million in tax refunds as well as net operating losses.
To address the situation, GT lawyers have asked to extend the deadline for an exclusive Chapter 11 plan to Oct. 15. If this isn't granted, other interested parties will be able to submit their own ideas. GT is looking to emerge from Chapter 11 in early 2016.
GT Advanced blamed its bankruptcy on Apple pulling a "bait-and-switch" with sapphire demands, making it impossible to keep up, which in turn led to Apple withholding a crucial payment. Apple insisted that it did everything it could to be accommodating. In the end the two firms reached a settlement, giving GT time to sell off furnaces to repay its debt to Apple. The Mesa plant is due to become an Apple datacenter.
Apple currently employs sapphire in two ways: first for middle- and upper-tier Watch displays, and secondly in lens and Touch ID covers for iOS devices. Rumors have periodically suggested interest in using the material for iPhone displays, but none have borne fruit.
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7 Comments
I think "bait-n-switch" refers to GTAT stock. They replaced GTAT, the (self-claimed) world leader in large scale sapphire production with a bankrupt company that couldn't produce working boules for their largest customer.
The company was in the verge of bankruptcy in 2013, a year prior to when it actually filed. It's entire solar business had already collapsed due to the expiration of subsidies combined with strong competition from Chinese companies. The Apple sapphire deal was their last hope to avert bankruptcy and so they promised Apple anything they wanted to hear, then the management team used the year they bought with those empty promises to loot the shareholders by selling big blocks of their own shares when the stock price peaked in the spring and summer, all on the rumors of their technology being used to create sapphire screens for iPhones. In the end, after Apple found them out, the final insult came when they dreamed up the notion of blaming Apple for the whole of their problems.
I hope they start with the CEO and CFO. They've cost staff and shareholders a lot of money.
I hope they start with the CEO and CFO. They've cost staff and shareholders a lot of money.
Why they're still there is what is so baffling.
In order to reduce expenses when it emerges out of Chapter 11 status, former Apple sapphire supplier GT Advanced Technologies is looking to cut 40 percent of its remaining workforce, according to bankruptcy court documents filed on Monday.
The exact number of people who might be affected is uncertain, said the Wall Street Journal. The company did however have about 1,000 workers when declared bankruptcy in October 2014, and it laid off over 700 people at the Mesa, Arizona sapphire plant it operated in conjunction with Apple.
The move should save the company about $20 million annually. GT's bondholders have put up $95 million to fund restructuring, which will ultimately see the company return to making various kinds of solar and industrial equipment.
With 300 workers left and 40% getting cut, that’s 120 out the door.
Savings of $20M = $167K each.
Damn fine job that is.