Mikey Campbell
As new information about GT Advanced Technologies' dire financial straits slowly comes to light, a report on Tuesday claims Apple held back a $139 million loan installment from its partner sapphire supplier for unknown reasons, possibly leading to the firm's filing for Chapter 11 protection.
According to The Wall Street Journal, Apple was due to pay GT Advanced a final $139 million advance of a promised $578 million contract, but reportedly refused due to unknown circumstances.
Speculation points to GT's cash on hand, which stood at only $85 million as of Sept. 29, days before the company filed for bankruptcy protection on Monday. The figure is well below a $125 million threshold that would contractually allow Apple to recoup the approximately $440 million already advanced to GT in support of ramping up sapphire production at a dedicated factory in Mesa, Ariz.
Apple's reasoning may be unclear at this time, but more details are expected to surface as GT's bankruptcy process progresses in the coming weeks.
Prior to Apple's unveiling of the iPhone 6 and iPhone 6 Plus, multiple market analysts were confident that sapphire material sourced from GT Advanced would be used for the handsets' cover screens. Predictions turned out to be overzealous as the iPhone 6 and 6 Plus feature ion-strengthened aluminosilicate glass, better known as Corning's Gorilla Glass brand.
Earlier today, it was learned that GT Advanced CEO Tom Gutierrez offloaded $160,000 worth of company stock just ahead of Apple's iPhone 6 announcement, though the firm claims the selloff was planned. Filings show Gutierrez did not sell any GTAT shares in 2013, but this year sold almost 70,000 units worth some $10 million.
It was revealed in November of last year that GT Advanced won a $578 million deal to supply sapphire material to Apple for use in unannounced products. At the time, Apple's use of sapphire was restricted to protective covers for the iPhone's rear-facing camera and Touch ID fingerprint reader. The company announced expanded deployment in upcoming Apple Watch models bound for release in early 2015.
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11 Comments
...though the firm claims the selloff was planned.
Riiiiight
Tim isn't dumb. My guess is they discovered some kind of shenanigans and realized the company was going under.
Tim isn't dumb. My guess is they discovered some kind of shenanigans and realized the company was going under.
Who knows what the details were for the original agreement on the $578 Million. It seems just as likely that GT was not able to meet commitments for the full amount.
" The company announced expanded deployment in upcoming Apple Watch models bound for release in early 2015." Was this before Apple announced it?? That would spell instant doom as an Apple vendor.
Riiiiight
Why the sarcasm. He sold 10 million in stock this year using SEC rule 10b5-1. This sale was planned six months ago....well before Apple pulled the plug.