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A lawyer representing sapphire maker GT Advanced Technologies on Monday said the company has agreed to a new set of terms in its settlement with Apple, with the redrafted arrangement assuaging concerns from jilted creditors seeking to derail proceedings by threatening legal action against Apple.
A New Hampshire bankruptcy court judge signed off on an amended settlement from GT Advanced and Apple meant to stave off creditors that wanted to turn GT's bankruptcy into a litigious free-for-all, reports The Wall Street Journal.
As noted in various court filings, both creditors and Apple are walking away from potential lawsuits stemming from GT's surprise Chapter 11 bankruptcy protection filing from October. GT, Apple and creditors all claim being the victim.
Creditors, which helped finance part of GT's $900 million sapphire gamble, argued Apple could face numerous suits in relation to its actions when in partnership with GT, which failed to provide quality sapphire on a timeline stipulated by a stringent contract. Apple said it was cast in a poor light after privileged documents came to light as part of GT's bankruptcy proceedings, while GT itself previously called Apple's demands "oppressive and burdensome."
As for the new deal, GT Advanced still plans to sell off some 2,000 sapphire furnaces installed at Apple's Mesa, Ariz. facility in a bid to exit bankruptcy protection, but will take more cash per transaction. Along with a higher take of asset sales, GT will also get rights to store outgoing furnaces at Mesa for an additional three months, rent free.
According to in-court reports from Reuters, GT Advanced lawyer Luc Despins said he anticipated furnaces would sell for at least $500,000 each, with Apple getting a $169,000 cut for the first 500 sold. Under the firms' previous agreement, Apple was expecting $200,000 for each of first 500 furnaces sold.
Apple inked a $578 million deal with GT in 2013, hoping to secure a steady supply of sapphire material for use in future products. A solid manufacturer of furnaces and other equipment related to sapphire production, GT had no experience in operating its own machinery, court filings have shown. Instead of outsourcing the job, GT chose to hire its own workforce to run Mesa, though it appears the firm bit off more than it could chew as errors in management, poor yields and other issues quickly led to ballooning production costs.
In September, GT informed Apple of its financial problems and asked for further assistance. Apple offered to pay $100 million of a prescheduled $139 million payment, as well as delay repayment due dates, even though GT had not met contractual production goals. At that point in the relationship, Apple had already paid out over $439 million to GT, not including an additional $700 million spent on infrastructure.
A copy of the amended deal and list of assets currently at Mesa are embedded below: