It has not been a great year for GT Advanced Technologies Inc. (OTCMKTS:GTATQ). The sapphire mobile phone screen glass maker started off the year with high hopes and the goal to have its product on Apple Inc (NASDAQ:AAPL)’s iPhone 6 lineup. Throughout the year, it appeared as if GT Advanced would end up getting the contract, but they were later snubbed. Shortly after the iPhone 6 was unveiled, GT Advanced filed for Chapter 11 bankruptcy. Apple’s new watch does use sapphire glass, however, so it will be interesting to see what impact that will have on GT Advanced and whether or not they will be able to emerge from Chapter 11 successfully.
GT Advanced and Apple’s settlement
GT Advanced and Apple just recently signed an agreement that would break up their business partnership and would end in GT Advanced selling its Advanced Sapphire Furnaces (ASF) to help repay a $439 million settlement with Apple.
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To make matters worse for GT Advanced, the Securities and Exchange Commission has announced they will be launching an investigation into GT Advanced CEO Thomas Gutierrez for selling off all of his stock in GT Advanced one day prior to the Apple unveiling of the iPhone 6. Gutierrez collected an extra $160,000 from the sale and COO Daniel Squiller additionally sold off $1.2 million in shares back in May, and sold off an additional $750,000 in shares in installments leading up to the bankruptcy announcement.
This is a messy situation for GT Advanced because insider trading investigation on top of bankruptcy and losing major assets is never a good combination. The company additionally must restructure its debt and come up with a method to bring down its monster debt load. The next question that comes to mind is that if the company had to sell off its ASF assets, how exactly does the company make money now? Due to the fact that secret details of their business partnership came to light, GT Advanced had to pay a settlement fine to Apple to settle charges, and it did that by selling off assets. Now, if you have some top executives go to jail for insider trading, the future of the company looks even more bleak and it just continues to look dark for the company.
The partnership with Apple was a huge source of gains since they entered business together last year. Unfortunately, Apple’s leaving out the sapphire glass on the iPhone 6 proved to be a very costly pitfall for GT Advanced. Will the company be able to shake off bankruptcy, asset sales, insider trading, debt mountain to regain its footing?