GT Advanced reaches bankruptcy deal with Apple, selling furnaces to pay debt

GT Advanced (teaser 001)

GT Advanced and Apple have reached a settlement that will allow the two companies to part ways amicably, reports The Wall Street Journal. Under the terms of the deal, GT will be paying Apple back for its $439 million loan by selling off its 2,000+ furnaces.

The news surfaced during GT Advanced’s bankruptcy hearing this afternoon—two weeks ago, the sapphire-maker filed for Chapter 11 bankruptcy protection. Low cash flow was cited as a reason for the filing, but few details are known about the circumstances.

Speculation insists that Apple pledged to loan GT a total of $578 million last fall to help build a new sapphire plant, and in return would get sapphire display covers for its new iPhones. But when the company failed to deliver on time, the partnership began to sour.

The end result is that not only is GT Advanced dealing with bankruptcy, but it’s announced that it will be shutting down the Mesa, Arizona sapphire plant it just opened earlier this year. It plans to wind down operations by December, cutting more than 700 jobs.

Apple, for its part, has been mum on the subject, commenting only that it would be working with GT Advanced and the state of Arizona to save as many jobs as possible. Some were hoping it’d be discussed on yesterday’s earnings call, but the topic was avoided.