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GT Advanced reaches new agreement w/ Apple to pay off $439 million debt

gtat

More than a year ago, Apple’s sapphire supplier GT Advanced Tech announced that it was filing for bankruptcy under Chapter 11, with the company parting ways with Apple as part of the restructuring. Despite the parting being amicable, GT still was in debt $439 million. Today, however, The Wall Street Journal reports that GT and Apple have come to an agreement on how to pay off that debt.

According to documents filed in the U.S. Bankruptcy Court, GT Advanced Tech will auction off the sapphire manufacturing equipment it acquired while constructing its operations to build sapphire displays for Apple. GT will keep up to 600 furnaces as part of the agreement, while all unsold items will go to Apple. GT had originally revealed more than a year ago that it planned to sell the furnaces from its Arizona plant, but it was unable to do so, forcing it to turn to this auction idea.

The items that Apple receives will be disposed of. The company will then erase the loan it gave to GT when the partnership was originally constructed. The earnings from the auction itself will be split between GT and Apple.

Earlier this year, GT Advanced cut another 40 percent of its workforce after initially laying off 700 workers when it announced its bankruptcy.

Before GT and Apple can move on with the auction, a bankruptcy judge must sign off on the plan.

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Comments

  1. What do you mean by “disposed of”? Like the equipment Apple receives will be destroyed? Sounds like a waste…

    • 89p13 - 7 years ago

      Disposed of = Sold for whatever they can get for it.

  2. John B. Abela - 7 years ago

    So, other than some goodwill, what is AAPL really gaining from this?

    • airmanchairman - 7 years ago

      Precious insight into the value of proper due diligence

    • They get all the tech to now make their own sapphire displays, that another company came up with for them. Initially GT had Apple in mind as a primary buyer but Apple had a demand that was unreasonable / they couldn’t make it, combined with them taking longer than they said if I remember correctly. So they essentially went bankrupt with no client for their product, now Apple is buying them for pennies on the dollar. Not sure if their IP or just equipment is included in the deal. Or how much is malicious business practices and how much is GT overstating what they can provide. It just sounds a bit suspect. GT goes all in with Apple as their client, Apple backs out, they go bankrupt, now Apple buys their accumulated research/equipment for cheap leaving GT in the dust. Someone correct me if there is more to it but this is how I saw it.

  3. Relociti (@Relociti) - 7 years ago

    Gaining from this? What can you gain when they’re going BK? They should be happy they’re getting anything!

  4. Andrew Free - 7 years ago

    They get all the tech to now make their own sapphire displays, that another company came up with for them. Initially GT had Apple in mind as a primary buyer but Apple had a demand that was unreasonable / they couldn’t make it, combined with them taking longer than they said if I remember correctly. So they essentially went bankrupt with no client for their product, now Apple is buying them for pennies on the dollar. Not sure if their IP or just equipment is included in the deal. Or how much is malicious business practices and how much is GT overstating what they can provide. It just sounds a bit suspect. GT goes all in with Apple as their client, Apple backs out, they go bankrupt, now Apple buys their accumulated research/equipment for cheap leaving GT in the dust. Someone correct me if there is more to it but this is how I saw it.

Author

Avatar for Chance Miller Chance Miller

Chance is an editor for the entire 9to5 network and covers the latest Apple news for 9to5Mac.

Tips, questions, typos to chance@9to5mac.com