GT Advanced has a deal with Apple to provide sapphire to the company. The company expects the court will authorize the company to continue to conduct business as usual while it devotes renewed efforts to resolve its current issues and develops a reorganization plan.
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.
As a result of the filing, and as is customary with public companies, NASDAQ may temporarily halt trading in the company's stock pending the receipt of additional information on the company's financial condition. The company is cooperating with NASDAQ and will be providing any requested information as promptly as possible.
"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."
The company indicated that it expects to provide additional details with respect to the chapter 11 filing as soon as they are available. More information, including access to court documents, can be accessed at www.KCCllc.net/gtat (court- appointed claims agent site); or www.nhb.uscourts.gov, the official Bankruptcy Court web site.
Additional information can also be found by visiting the "About Us" section of the company's website at http://www.gtat.com/about-us-overview.htm and clicking the link for "Restructuring Information."
GT Advanced was widely rumored to be provided sapphire display covers for the iPhone 6; however, that never materialized. A recent report claimed that sapphire screens missed the iPhone 6 launch by weeks.
"Finishers were still having trouble creating the sapphire edges and yields were only at 25% or less. I am under the impression that GT’s management knew about this last minute shift away from sapphire screens prior to the August 5th conference call and it may have resulted in lower guidance for 2014 by $100m."
It's possible that this is what prompted GT Advanced to file for bankruptcy. The company may be good going forward as the sapphire screens for the iPhone that did not pass quality checks were apparently converted into Apple Watch screens. Also, there's always the iPhone 6s.
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