WSJ: Bankruptcy Court Approves Amended Settlement Deal Of GT Advanced, Apple

(RTTNews) - GT Advanced Technologies, Inc. (GTAT), a supplier of sapphire material to Apple, Inc. (AAPL), on Monday received bankruptcy court approval for its amended settlement deal with Apple that was initially reached on October 23, according to a Wall Street Journal report on Monday. The settlement was reportedly approved at a hearing in the U.S. Bankruptcy Court for New Hampshire.

The companies had to tweak the initial agreement a bit, which would now provide GT Advanced a larger share of the sales of sapphire furnaces, and additional three months of rent-free time to wrap up the operation of its giant Mesa, Arizona-based facility. The adjustment was made to win over GT's unsecured creditors and a group of bondholders who had threatened to derail the agreement.

In the initial deal, Apple had agreed to release GT from all exclusivity obligations under its various agreements with Apple. A settlement was also reached with Apple under which GT will wind down its sapphire materials production in the company's Mesa, Arizona and Salem, Massachusetts locations.

Additionally, Apple was 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.

GT also indicated that it will exit from the market as a producer of sapphire materials and will refocus its business as an equipment supplier that manufactures and develops sapphire growth systems and processes.

GT was pushed into bankruptcy after it spent $900 million to pursue the transformative supply in connection to supply agreements with Apple, including money raised from shareholders and bondholders.

In November 2013, GT entered a multi-year supply agreement with Apple to provide sapphire material for a consideration of $578 million. GT was to reimburse Apple over five years, starting in 2015, for the prepayment of $440 million that was provided by Apple to fully fund its capital outlays related to the project in Arizona.

The deal would have seen GT making synthetic sapphire crystals for producing large quantities of scratch and shatter resistant smartphone screens. However, Apple later unveiled its latest iPhone with glass screens and did not use GT's sapphire for the screens. GT's business was shattered in its effort to become an Apple screen material supplier.

AAPL closed Monday's regular trading at $108.22, down $1.51 or 1.37% on a volume of 67.22 million shares.