Apple, GT Advanced strike 'amicable' deal over debt repayments
GT Advanced, which earlier had a deal with Apple to supply sapphire for displays, will sell the furnaces in its factory to repay Apple.
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Apple and would-be sapphire supplier GT Advanced Technologies revealed on Tuesday that they signed an agreement for an "amicable parting of the ways."
Under the deal, GT Advanced will try to sell more than 2,000 furnaces from its Mesa, Ariz., sapphire plant to pay back the debt it owes Apple, according to reports from The Wall Street Journal and other outlets. Apple provided the financing to buy the furnaces in the first place, and there has been some speculation in recent days that the Cupertino, Calif., electronics giant would try to take possession of them.
Apple and GT Advanced didn't immediately respond to requests for comment.
GT Advanced earlier this month filed for Chapter 11 bankruptcy protection, a surprise move that came less than a year after it signed a $578 million deal to supply Apple with sapphire, a scratch-resistant, transparent material that can be used for screens on tech gadgets. A few days after its filing, GT Advanced said it would reject about a dozen agreements with Apple and wind down its massive sapphire-production facility in Mesa.
The company had seen its stock surge after it inked a $578 million deal with Apple in November 2013 to create sapphire products for the tech giant. While many industry watchers and investors had expected those products to be displays for the next iPhone, they were disappointed to find that Apple stayed with a glass display when it unveiled the new iPhone 6 last month. Since then, GT's stock has fallen as some analysts expected the company to cut its financial guidance for the year. The Apple Watch smartwatch, due to start selling next year, will include a sapphire display in certain models.
In bankruptcy-court filings made public October 10, GT came forward with an explanation for its surprise Chapter 11 bankruptcy protection filing, saying the cash burn from operating the Arizona sapphire-production plant for Apple wasn't sustainable and that GT needed to end work there to preserve the company.
In its requests to the court, GT said "the agreements imposed oppressive and burdensome terms and obligations" on the company, adding that "continued performance under the Agreements is no longer a viable business option." It also said in court papers that it found operating under its agreements with Apple "constitute an unnecessary drain" on its resources and it wanted to reject the deals under the bankruptcy code.
Both companies have been criticized for filing documents under seal and not giving more information to creditors. As part of the agreement unveiled Tuesday, GT Advanced and Apple will "file a revised explanation" for GT Advanced's bankruptcy filing, The Wall Street Journal said, which would "ultimately erase from the public record the court papers that set out what went wrong in the relationship between the two companies."