“GT Advanced Technologies Inc. Chief Operating Officer Daniel Squiller said bankruptcy was necessary because an ‘ambitious’ supply agreement with Apple Inc. had become ‘unsustainable’ and terms couldn’t be reworked,” Dawn McCarty reports for Bloomberg. “Under the terms of the 2013 agreement, Merrimack, New Hampshire-based GT Advanced was required to supply millions of units of sapphire that Apple wasn’t obligated to buy, and had to maintain certain key employees, Squiller said.”
“A few weeks before the bankruptcy filing, he said, executives made a detailed presentation to Apple senior management in charge of the project advising them that GT Advanced was ‘losing substantial amounts’ and terms of the deal needed changing,” McCarty reports. “The company told Apple it was ‘projected to run out of cash in a few weeks.’ ‘While Apple responded with various proposals, after intense negotiations, none of Apple’s proposals solved the economic issues in an effective manner,’ according to Squiller.”
“The company was required to negotiate exclusively with Apple for 30 days if it wanted to sell substantially all assets or its sapphire business, or it would have to pay Apple $1 billion for violating the provision, according to court papers,” McCarty reports. “Still, Squiller endorsed a settlement between the companies announced last week in U.S. bankruptcy court. He said GT Advanced and Apple ‘could assert significant claims against each other’ that could be ‘risky, protracted and expensive.’ The agreement ‘provides GTAT with the ability to end its relationship with Apple in an orderly manner,’ he said.”
Read more in the full article here.
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