Bankrupt Apple Sapphire Supplier Is Getting Out Of The Sapphire Business
The company will shut down its factories in Mesa, Arizona and Salem, Massachusetts, the company said in a statement on Thursday.
Under the terms of the agreement, GT Advanced will be released from all exclusivity obligations with Apple and a mechanism will be provided for the iPhone maker to recover its $439 million pre-payment to GT Advanced, without interest.
In pre-market trade following the news, GT Advanced shares that were trading over the counter under the ticker 'GTATQ' were up about 14% to about $0.60.
The announcement from GT Advanced follows the company's initial bankruptcy announcement on October 6, which caught the market flat-footed and sent shares of the company tumbling by more than 90%. GT Advanced shares closed below $1 on a Monday after closing near $11 the previous Friday.
Following that announcement, many on Wall Street and in the industry were left scratching their heads, though at least one analyst Business Insider spoke to at the time surmised that something must have gone awry in the agreement between Apple and GT Advanced.
In November 2013, Apple and GT Advanced announced a $578 million supply agreement with Apple to manufacture sapphire materials for the company. And ahead of Apple's iPhone 6 launch, many speculated that the new phone would feature a full sapphire display, and shares of GT Advanced took a huge hit after that failed to materialized.
In a statement on Thursday, GT Advanced CEO Tom Gutierrez said, "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."
As a result of GT's decision to close its sapphire operations, it will lay off approximately 650 employees at its Mesa, Arizona plant, which the company initially built to produce sapphire for Apple.
You can read the full statement from GT Advanced here.