The deal between Apple and GT Advanced, which involved the former giving the latter a near-$600 million loan, fell apart over iPhone 6 displays, reports The Wall Street Journal. The outlet says Apple expected GT to produce sapphire for the displays of its new handsets, but it either wasn’t tough enough or the yield was too low.
GT Advanced made the surprise announcement on Monday that it would be filing for Chapter 11 bankruptcy protection, and it had its first hearing this afternoon. We expected the proceeding to offer a better explanation of what happened, but GT was granted a secrecy motion that closed the hearing and sealed all documents.
The company said that it was at risk of major damages if details about its relationship with a third party (Apple) went public. According to the Journal, such a move is unprecedented. It inquired about registering a protest over GT’s motion to seal the documents that might explain what happened, but did not receive a response.
For those who haven’t been following the story, Apple agreed to loan GT Advanced $578 million to build a sapphire-making plant in Arizona last fall. Although the terms of their deal were never disclosed, many believe Apple wanted sapphire covers for its iPhone 6 displays. The handset, however, debuted in September without them.
The plot thickened this week, following GT’s bankruptcy announcement. The company’s shares fell some 90% on news of the filing, and its CEO Tom Gutierrez is being investigated for possible insider trading. Apple, for its part, says it was surprised by the bankruptcy and is reportedly committed to working with GT to sort things out.
[WSJ]