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Apple objects to GT Advanced financing plan after Mesa plant fire

Apple on Friday formally objected to a financing plan by its bankrupt former sapphire supplier, GT Advanced Technologies, on the basis of provisions tied to a May fire at its one-time plant in Mesa, Arizona.




GT said it needs to collect enough money from its insurance company to repair any damage done to the sapphire furnaces in Mesa —the alternative being defaulting on a proposed $95 million loan agreement, according to court documents obtained by Re/code. Apple argued that GT has already indicated damage was small, and that the proposed terms would give lenders too much leverage to foreclose on the furnaces if an insurance payout is deemed too low to make repairs.

GT would face the choice of defaulting either on its loan or the settlement it reached with Apple in 2014, the latter party said. A collection of GT shareholders have also complained, asking why the firm needs to raise money nine months into bankruptcy protection.

The fire in question began on the roof of the Mesa building, but was extinguished in about 35 minutes. At the time it wasn't clear what damage had been caused beyond wrecking some of the plant's solar panels.

Apple and GT partnered on the facility in 2013 with the goal of mass-producing sapphire for devices such as iPhones. GT declared bankruptcy in October 2014 however, later saying that Apple had engaged in "bait-and-switch" tactics and made unreasonable demands. Apple responded by claiming it had "bent over backwards" to accommodate the supplier's setbacks.