GT Advanced Technologies Inc. and Apple have reached a settlement agreement under which GT will wind down its sapphire materials production in the company’s Mesa, AZ and Salem, MA locations. The company indicated that it will exit from the market as a producer of sapphire materials and will refocus its business as an equipment supplier, manufacturing and developing sapphire growth systems and processes.
Under the terms of the settlement agreement, which is subject to approval by the Bankruptcy Court, GT will be released from all exclusivity obligations under its various agreements with Apple. GT will retain ownership of all production, ancillary and inventory assets located in Mesa and Apple is provided with a mechanism for recovering its $439 million pre-payment made to GT over a period of up to four years without interest, solely from a portion of the proceeds from ASF® sales. The agreement provides for a mutual release of any and all claims by both parties. As a result of the agreed upon terms, GT retains control of its intellectual property and will be able to sell its sapphire growth and fabrication technology, including ASF and Hyperion™, without restrictions.
GT and Apple will continue their technical exchange involving the development of processes for growing next generation sapphire boules as GT continues to build on its successfully deployed ASF115Kg technology and expand its range above 165Kg.
“We are pleased with the settlement that we have negotiated with Apple,” said Tom Gutierrez, president and chief executive officer, in a statement. “We realize that our filing for Chapter 11 protection has caused uncertainty and hardship for many of our important stakeholders. We have been working diligently to develop a restructuring plan that will allow us to emerge from Chapter 11 as quickly as possible and with the operating flexibility and resources to position GT for long-term success. This agreement with Apple is an important step in that direction as it will allow us to monetize our advanced sapphire growth and fabrication technologies in an unrestricted manner. In addition to continuing to sell our industry leading sapphire equipment, we remain committed to advancing our Merlin™, Hyperion™ and next-generation PV and polysilicon solar solutions.”
As a result of the decision to wind down its sapphire materials operations, earlier this week GT initiated the process of shutting down the Mesa facility and approximately 650 Mesa employees have been laid off. A group of Mesa employees will remain on board to help with the wind down of the facility over the coming months. The company expects that there will be additional reductions-in-force implemented in the coming days, which will impact its Salem, MA, Merrimack, NH and select Asia locations.
“We recognize and regret the impact that these actions have on our valued employees and their families and we are committed to supporting them through this transition,” Gutierrez concluded. A redacted version of the Settlement Agreement is available (.pdf) here.
GT will file its motion seeking bankruptcy court approval of the settlement agreement on Monday October 27, 2014, and the Bankruptcy Court is scheduled to hear such motion on November 25, 2014.
Source: GT Advanced Technologies Inc.
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