Yesterday, an Apple representative told Reuters that the company had been caught off-guard by GT Advanced Technologies’ decision to file for Chapter 11 bankruptcy. Today, The Wall Street Journal has now supplied more information about why Apple was taken by surprise.
According to inside sources, Apple was caught off guard by GT’s filing because it had been working with GT to make sure the latter company would be able to pay all of its debts. Apple, aware of GT’s weak cash position, also reportedly held off on asking for loan repayments on the $439 million GT has received so far.
As part of the loan agreement with GT, Apple was entitled to ask the company for repayment if GT’s cash holdings fell below $125 million. Apple opted not to demand the repayment.
Apple was also attempting to aid GT by helping it to qualify for the final $139 million payment from Apple, which GT has reportedly failed to receive because of not delivering on technical milestones it was obligated to meet under the original terms of the loan agreement.
Apple provided GT with a facility and a loan to buy equipment to manufacture sapphire glass. Although the Cupertino firm had been widely rumored to be using sapphire glass for displays on the iPhone 6 and iPhone 6 Plus, the company opted to not use the hardened glass on this generation of iPhone’s.
GT’s agreement with Apple applied limitations on selling the sapphire glass to other customers, however it dod not require Apple to purchase the sapphire glass produced at the new plant. GT’s reported sapphire manufacturing issues may have impacted their yield numbers, causing Apple to pass on purchasing the glass for their new devices. Apple does use sapphire glass to protect the camera lens and Touch ID sensors on their latest iPhones.
GT Advanced will have its first Chapter 11 bankruptcy hearing on Thursday.
