Word surfaced yesterday that GT Advanced Technologies filed for bankruptcy. The company was responsible for producing the millions of sapphire glass displays that were long rumored to come with the iPhone 6, but missing that deadline threw the company into a tragic spiral that seems to grow worse with each day. Earlier this morning a report surfaced that the CEO cashed in just before Apple’s iPhone 6 announcement, and now reports state that Apple withheld a payment that could have saved it from bankruptcy.
Early this morning, The Wall Street Journal reported that GT CEO Thomas Gutierrez sold his approximately 9,000 shares of the company’s stock for $160,000 on September 8, just a day ahead of Apple’s announcement of the iPhone 6. The report states that this was “two days after he received 15,902 previously restricted shares. (Gutierrez forfeited the remaining 6,670 shares to cover tax obligations.)” And that’s just recently. The report also claims that Gutierrez has sold more than 700,000 shares since February, all for a total of around $10 million.
The timing is rather suspicious, to say the least, and critics maintain that it ventures close toward insider trading. For its part, GT Advanced Technologies claims that the stock sales were part of a “pre-arranged plan put in place on March 14, 2014.” The problem with that claim, the Journal notes, is that there’s no pattern to his sales that suggests such a preconceived plan.
Source: CityLab
The Wall Street Journal also reported this afternoon that Apple withheld its final $139 million payment to the company for its sapphire production, although sources aren’t clear as to why. In the Journal’s words, “That may have led to the company’s filing, since its cash, at $85 million, was below a $125 million trigger point that would allow Apple to demand repayment of about $440 million in loans it had advanced.”
As the report states, GT Advanced effectively “bet the house” on the new sapphire technology and on Apple. Apple itself had poured cash into the company already, to the tune of a $578 million loan to purchase new equipment and to build the dedicated facility in Mesa, Arizona. It’s thought that such a large loan came with significant milestone requirements that GT Advanced was unable to meet due to poor yield, and that may have contributed to Apple’s decision to withold payment.
To make matters worse, Apple was reportedly under no obligation to buy the sapphire glass it had loaned so much money to help create, while GT had to deal with “exclusivity provisions” that prevented the company from selling the material elsewhere.
The bankruptcy news hit GT Advanced hard, as share prices dropped by 90 percent and have made very little recovery. All the same, Gutierrez claims that the company plans to continue operations despite some necessary reorganization.
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