GT Advanced Technologies (GTATQ) announced in a Springfield, Mass., bankruptcy court Tuesday that it had signed an agreement with Apple Inc., its largest creditor.
Under the terms of the deal, GT will retain ownership of 2,036 furnaces in Mesa, Arizona, that it was using to grow sapphire crystals for the screens and lenses of Apple devices. Over the next year, GT will attempt to sell those furnaces and use the proceeds from those sales — if any — to pay its debt to Apple.
Apple, for its part, has agreed to accept an undisclosed portion of those proceeds as full settlement of GT’s debt to Apple, currently valued at $439 million, and waiving all other claims against its former subcontractor.
Luc Despins, an attorney representing GT, described the arrangement as “an amicable parting of the ways.”
“This is extremely good news for the estate,” he said. “It will save millions of dollars.”
In an earlier filing GT claimed it was losing $1.5 million every day it had to keep the plant running.
What went wrong with the GT-Apple deal — hailed less than a year ago as a shot in the arm for both GT and the state of Arizona — is still a mystery.
As a condition of the settlement, certain documents that Apple has been fighting to keep out of the public record — including the original contract and an affidavit filed by GT chief operating officer Daniel Squiller — would remain sealed and all copies of the so-called Supplemental Squiller Declaration “(paper or electronic)” destroyed.
That didn’t sit well with some of three dozen lawyers in the room, including the assistant attorney general of New Hampshire, where GT is headquartered, and a lawyer representing Dow Jones, publisher of the Wall Street Journal. Both argued that the public had a right to know why hundreds of workers are being laid off and creditors owed millions of dollars are being asked to accept a fraction of what they are owed.
At issue, according to Dow Jones, is whether Apple’s nondisclosure agreements (NDAs) — enforced, we learned from this case, by damages of $50 million per violation — trump the public’s and the creditors’ right to know.
At the end of the day, Judge Henry Boroff gave GT the green light to begin winding down its Mesa operations. But it’s not clear whether he’s changed his mind about the Squiller Declaration. At a hearing last week he warned Apple that he was inclined to unseal it.
By cutting this deal with GT, Apple may have found a way to avoid that.