GT Advanced files for chapter 11 bankruptcy court protection

GT Advanced Technologies Inc., (GTAT), announced today that it had, together with certain of its direct and indirect subsidiaries, commenced voluntary cases under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of New Hampshire. GT 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, in a statement. “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.”

GTAT stock chart

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.”

Source: GT Advanced Technologies Inc.

Related articles:
Apple and GT Advanced rampup sapphire production in Mesa – August 11, 2014
GT Advanced expects sales of sapphire production tools to boost profit; shares surge – August 5, 2014
Apple and GT Advanced open second sapphire plant in Salem, Massachusetts – June 19, 2014
Apple patents method for embedding sapphire displays in LiquidMetal device chassis – May 27, 2014

21 Comments

  1. Needless to say this was a shock this morning and big hit to my investment in the company. I have to believe they did this to delay debt and payments due. Rarely does a company come out of the blue and file Chapter 11 when they just release a better then expected report for the coming quarters. Makes me think that the delay of the Apple Watch was untimely for the company and they are truly protecting themselves until that time when they start receiving income from the iPhone6/plus and the watch.
    Hurts a bit this morning but I was expecting to hold it for 5 years anyway.

      1. C++

        Yup and already dropped $1K on it.

        I can’t help but think that one or two things are happening here.
        1. Possible a hostile take over was in play. Think about if someone had been buying up their debt (Corning) and they filed to protect themselves. Totally feasible because Corning knows the future is Sapphire and they have several billion to do it. I know I would if I was advising Corning.
        2. Filing to “fix” their debt and delay payments because of a possible buy-out. This gives them time to structure the company the way they want. Let’s see…..maybe Apple is going to buy the business and told them to do that to keep other from getting involved. Again, totally feasible because they invested heavily into the company and know what the future holds. Apple forgives any debt and gets the stock for 1/10 the trading price. Apple won’t lose the supplier and they surely don’t want anyone getting in their way.
        It’s the only plays I can think of bexcuse you can’t file a “better then expected” quarterly report, as GTAT did, and then come out 45 days later and say we no longer have future income coming in. Hence the reason this was a surprise this morning and they said , “they are working with the FCC”.

        It’s a good company and I see no one else supplying Apple with Sapphire and that’s why it’s worth putting more of my money in it. Does anyone else? If I’m wrong I lose another $1k….but if I’m right?!

        1. An important question is the form of this “debtor-in-possession financing” that GTAT is seeking. Those arrangements *could* dilute the ownership of holders of common stock.

          The speculation by Observer and others could pay off in a big way. Or they could lose it all if the company slides further into the hole and its assets are sold off to pay its debts. Debt comes first, then preferred stock, then common stock.

          Just go in with your eyes open…

            1. You can if you put in new money…

              There is an old saying about throwing good money after bad. Because individual investors have very little knowledge about what is actually going on, I would classify this as speculation, not investment. Apple knows what is going on better than anyone, and Apple is the one most likely to benefit from the resolution of this bankruptcy (if anyone does).

    1. I’m feeling the same way: this news really, really hurt. But C++ is right: once the stock bottoms out and stabilizes a little, it may be an incredible buying opportunity to recoup our losses.

      Watch this carefully and see which direction it goes. And maybe pray a little.

      1. Folks: DO NOT buy stock in this company while it is in bankruptcy! Unless the company is able to pay all of its creditors in full, stockholders will get zero. Rarely in a Chapter 11 bankruptcy are creditors paid in full. So, the likelihood of existing stockholders getting anything here is highly unlikely.

  2. If Apple sells $50million watches, where will they get the sapphire?
    Apple, buy this company for pennies and rule the sapphire market and bring it to the iPhone/iPod.

  3. My guess is that GT Advanced has had trouble getting their Mesa, AZ plant into production, which is why we on see them supplying sapphire glass for the home button and lens on the iPhone 6 & 6+ and the forthcoming iWatch and not the phone screens, too. They filed to preemtively protect themselves from Apple who has invested greatly in their new Arizon plant.

    1. The speculation is that Apple triggered the bankruptcy by forcing early repayment on the money loaned to GT Advanced to build the AZ manufacturing site. This had to do with financial covenants in the loan agreement.

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