Apple withheld $139 million from GT before sapphire maker's bankruptcy filing
Apple reportedly withheld $139 million it was due to pay GT Advanced Technologies, the company’s sapphire crystal supplier that recently filed for bankruptcy.
Now left with $85 million, GT burned through cash, spending as much as $248 million in just one quarter, according to The Wall Street Journal:
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. Apple had agreed to lend GT a total of $578 million to help get a large sapphire factory in Arizona up and running. The tech giant reportedly withheld the last $139 million payment it was due to make, although it isn’t clear why.
Apparently, GT had been largely dependent on Apple. It had “exclusivity provisions” that limited its supply of sapphire to other customers, even as Apple was not obligated to buy from it.
Apple was widely rumored to use sapphire for the displays of the iPhone 6 and the iPhone 6 Plus. But it ultimately proved the sapphire scuttlebutt wrong come the new devices’ unveiling last month, perhaps on account of the fact that GT’s Arizona factory wasn’t yet primed for volume production.
However, sapphire is already used by Apple as covering for the Touch ID and camera components on the iPhone 5s, the iPhone 6, and the iPhone 6 Plus. It’s also expected to be found on the Apple Watch, as Apple has tasked GT to produce sapphire for its wearable device due for launch early next year.
GT announced yesterday that it had filed for bankruptcy court protection under Chapter 11. The filing, according to GT president and CEO Tom Gutierrez, “does not mean we are going out of business; rather, it provides us with the opportunity to continue to execute our business plan on a stronger footing, maintain operations of our diversified business, and improve our balance sheet.”
