GT Advanced Technolgies, Apple's partner in a sapphire production facility in Arizona, today announced that it is filing for Chapter 11 bankruptcy protection as it seeks to reorganize its businesses. The company remains positive that it will continue to be able to meet its obligations during this time of transition.
GT indicated that as of September 29, 2014 it had approximately $85 million of cash. In addition, it is now seeking debtor-in-possession financing, which, once obtained, would provide the company with an immediate source of additional funds. These funding sources will enable GT to satisfy the customary obligations associated with the daily operation of its business, including the timely payment of employee wages and other obligations. [...]
"GT has a strong and fundamentally sound underlying business," said Tom Gutierrez, president and chief executive officer of GT. "Today's filing does not mean we are going out of business; rather, it provides us with the opportunity to continue to execute our business plan on a stronger footing, maintain operations of our diversified business, and improve our balance sheet.
"We are convinced that the rehabilitative process of chapter 11 is the best way to reorganize, protect our company and provide a path to our future success. We remain committed to our roots in innovation and our diversification strategy. We plan to continue to operate as a technology leader across our core set of businesses."
GT's finances have taken a significant hit as it has retooled to support its partnership with Apple, turning its focus to ramping up sapphire production for Apple rather than selling furnaces to other companies. Still, with Apple making a series of pre-payments to GT to help fund the new initiative, the circumstances surrounding the bankruptcy filing are not yet clear.
Apple had been widely expected to include sapphire display covers on at least some iPhone 6 models, but the development did not come to pass. With Apple having no commitment to purchase sapphire from GT, it is possible that an unexpected decision by Apple to omit sapphire from the device put GT into a precarious financial position. Apple is planning to use sapphire on some versions of its upcoming Apple Watch, but it is unclear whether it is indeed sourcing sapphire from GT for the product, and if so, whether the quantities involved would be enough to support GT's investments thus far in the area.
Update 7:47 AM: GT's stock, which was halted prior to the announcement, has resumed trading and is currently down 90 percent.
