GT Advanced Technologies, Apple's former would-be sapphire supplier, has agreed to end its partnership with the iPhone maker and tie up all loose ends after the New Hampshire-based manufacturer initially criticized Apple for its "oppressive and burdensome terms" that supposedly led to GT Advanced's surprising bankruptcy.
In Tuesday's hearing at the U.S. Bankruptcy Court of New Hampshire, GT Advanced lawyer Luc Despins the settlement marked an "amicable parting of ways" for the two companies. Both have agreed that GT Advanced will file a revised bankruptcy filing that will allow the company to share more details of its bankruptcy soon. However, this will ultimately remove from the record the initial court documents filed under seal, which means the GT Advanced's creditors and the general public will never be able to know the company's reasons for bankruptcy. GT Advanced has also agreed to drop all claims against Apple in the future and refrain from disparaging the iPhone maker.
Other parties, including U.S. Trustee William Harrington, New Hampshire Attorney General Joseph Foster, Dow Jones & Co. and GT Advanced's bondholders, are unhappy with the agreement.
"What is the deal?" says lawyer Michael Stamer, who represents GT Advanced's bondholders to whom the company owed $185 million. "The centerpiece of this whole case is the Apple relationship. It has been in a black box since the beginning."
Apple has long held a reputation for driving hard bargains with its suppliers, calling for exacting demands and nearly leaving no room for its partners to make profits. However, many suppliers choose to bite the bullet since partnering with Apple can be just as rewarding as it is risky.
The settlement will allow GT Advanced to sell the 2,039 sapphire furnaces that it purchased with a $439 million loan from Apple, with proceeds of the sale to be routed to Apple as payment of the loan. The loan was part of a $578 million financing agreement that Apple entered into with GT Advanced. However, Apple withheld the remaining $139 million for undisclosed reasons, but analysts believe it was due to GT Advanced failing to meet certain technical milestones. Apple has also agreed to let GT Advanced to use its Mesa, Arizona facility for one year rent-free to allow the company to wind down its sapphire operations, where more than 770 people are set to lose their jobs.
Earlier this month, GT Advanced surprised everyone from Wall Street to Apple when it filed for Chapter 11 protection before the bankruptcy courts. What was even more unusual was the company requested to keep the court filings under seal, citing an agreement with third parties, which later turned out to be Apple that orders GT Advanced to pay up to $50 million in fines for every disclosure.
