GT Advanced Technologies reaches settlement agreement with Apple
GT Advanced Technologies announced today that it reached a settlement agreement with Apple. Under the agreement, GT Advanced will wind down sapphire production at their Mesa, Arizona facility and will completely exit the sapphire production business.
Under terms of the agreement, GT Advanced will retain ownership of all of its sapphire production equipment, effectively putting an end to any rumors that Apple might swoop in and buy the machinery at below cost. As for the loan amounts GT Advanced owes Apple, the settlement agreement stipulates that GT Advanced has four years to pay Apple back, interest free.
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.
GT Advanced and Apple's partnership began in earnest back in late 2013, with the two companies purportedly working together to develop sapphire displays for the iPhone 6. Under terms of the original deal, Apple helped GT Advanced get a manufacturing plant up and running and even financed the purchase of advanced sapphire manufacturing equipment. Per the agreement, Apple's financing was to be accomplished via four separate payment installments to GT Advanced, contingent upon certain operational and technical requirements being met.
Somewhere along the way, though, things started to fall apart. According to the rumor mill, GT Advanced began missing technical requirements as early as February of last year. When Apple withheld its last loan installment last quarter, GT Advanced, with just $85 million in the bank and much more owed to creditors, filed for bankruptcy.
