GT Advanced Technologies and seven subsidiaries including Advanced CZ LLC filed for bankruptcy protection today. Under the chapter 11 filing the company will be allowed to restructure, and GT says that it will continue business as usual while developing a reorganization plan.
The shock filing follows news in September that Apple will make its own screens for the iPhone 6 instead of using GT’s sapphire screens, which prompted an estimated 35% drop in stock prices. GT’s Sapphire products are being used for the iPhone 6 camera and the Apple Watch, and the company still holds a US$578 million, multi-year supply contract with Apple from November 2013.
It does seem to be related very closely to the Apple deal that never was, notes GTM Research Lead Upstream Analyst Shyam Mehta. Solar has been tough for the last few years, but it wasn’t the straw that broke the camel’s back.
GT says that it is currently seeking debtor-in-possession financing to secure immediate funds. The company says that along with the US$85 million in cash that it currently holds, it will be able to continue to pay wages on time as well as meeting other obligations.
This current cash position is a far cry from the $333 million that GT reported at the end of the second quarter, and the company declined to comment on this. The company has invested heavily in a new sapphire facility in Arizona related to the Apple deal, including cash prepayments of $103 million in the second quarter of 2014.
GT has some interesting solutions for the next wave in the PV industry, notes GTM Research’s Mehta. It’s sad and a little upsetting that their plans would be waylaid because of the bankruptcy proceedings.
GT has warned that NASDAQ may temporarily halt trading of shares, which dropped from around $11 to under $2 before 11 AM.