"Only if GT winds down these operations will it be able to stop its
mounting losses and re-focus its resources on the operation of its
core business of selling sapphire furnaces and other products," the
company said on Friday.
GT Advanced said it was burning through $1 million a day at the
operations it intended to close.
"GT believes that it has many claims against Apple arising out of
its business relationship with Apple," the company said in a filing
with the U.S. Bankruptcy Court in Manchester, New Hampshire.
The company said it could not pursue the unspecified claims at the
outset of its bankruptcy, but that the claims would allow GT
Advanced to terminate several Apple agreements that it said were
burdensome and of no value.
Apple responded by pointing to its earlier statement that it remains
committed to preserving jobs in Arizona and was consulting with
state and local officials on its next steps.
Shares of Rubicon Technology Inc <RBCN.O>, a rival maker of sapphire
material, surged about 23 percent to $4.93 on Nasdaq.
"It looks like if GT has its way, they will wind down their sapphire
operations, and thatís a positive for the industry generally, and
more specifically, as a primary supplier, for Rubicon, too," said
Andrew Abrams, an analyst at JG Capital.
However, Srini Sundararajan of Summit Research said Rubicon's rally
was "an over-reaction to GTAT shutting down."
GT Advanced filed for Chapter 11 bankruptcy with little warning on
Monday, sending its shares plummeting 90 percent to below $1.
The company has provided only scant details of the cause of its
bankruptcy and turnaround plans.
The company said in Friday's court filing it needed to wind down
operations in Mesa, Arizona and Salem, Massachusetts as soon as
possible to preserve its dwindling cash. The process would take
until the end of the year, it noted.
[to top of second column]
GT Advanced reached an agreement with Apple last year to transform
itself from a supplier of sapphire furnaces to a manufacturer of
sapphire for Apple. The iPad maker provided $578 million in funding
for the Arizona plant, and GT Advanced agreed to repay the money
over five years, starting in 2015.
The first sign of trouble came in September when Apple indicated its
iPhone 6 would use rival Gorilla Glass instead of sapphire material.
GT Advanced asked the bankruptcy court to end 13 contracts with
Apple, including a confidentiality agreement that has forced the
bankruptcy to be conducted with unusual secrecy.
GT Advanced would be liable for $50 million for each violation of
the confidentiality agreement, court papers show.
On Nasdaq, GT fell 38 percent to 80 cents, and Apple was little
changed at $101.05 late Friday afternoon.
A hearing will be held on GT Advanced's requests on Wednesday in
The bankruptcy case is In re: GT Advanced Technologies Inc, U.S.
Bankruptcy Court, District of New Hampshire, No. 14-11916
(Reporting by Tom Hals in Wilmington, Delaware; Additional reporting
by Edwin Chan in San Francisco; Editing by Richard Chang)
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