Apple’s sapphire glass supplier GT Advanced Technologies (hereinafter referred to as “GTAT”) said on Thursday (9th) that the company will not disclose the reasons for bankruptcy and will ask the court to seal key documents. Later public court documents revealed that GT planned to stop producing sapphire glass.
GTAT was expected to supply sapphire glass for Apple’s future mobile devices. The company told a U.S. Bankruptcy Court on Thursday that it was unable to disclose the information because it was subject to a confidentiality agreement. This is a rare case in which investors suffered huge financial losses.
GTAT unexpectedly filed for bankruptcy protection on Monday and attended its first public hearing on Thursday. Lawyers for the company said at the hearing that they were unable to disclose the reasons for the bankruptcy and recovery plans because of the confidentiality agreement.
GTAT reached an agreement with Apple last year to use a factory in Arizona to exclusively produce sapphire glass for Apple. Apple has always kept product plans strictly confidential, so it often imposes strict confidentiality restrictions on suppliers.
Luc Despins, GTAT’s attorney, also acknowledged the fact that the company’s stock price plummeted 90% in the first three trading days of this week. "I express to all shareholders and creditors that the company is saddened by this collapse in value and will work hard to restore value." He said, "This is only an aspirational statement, not a guarantee."
Despins said the case is complex. "It's like a Russian doll. You open the first one and find four more inside." Lawyers for the U.S. Trustee's Office criticized GTAT for insufficient information disclosure: "The documents submitted do not satisfy the court's requirements." It is unclear whether the court will agree to GTAT's request. GTAT said that if it violates the confidentiality agreement, the company may face compensation of US$50 million.
The court will make a final decision on relevant matters on October 21.
GTAT shares rose 7.2% to $1.18 in regular trading on the Nasdaq market on Thursday.
According to GTAT’s previous agreement with Apple, the two parties will cooperate to set up a factory in Arizona. Apple will provide a total of US$578 million in funding and help install furnaces and other equipment. The factory is owned by Apple and operated by GTAT and is expected to employ 700 people.
Apple said on Wednesday that it was surprised by GTAT's bankruptcy filing and was discussing next steps with Arizona officials.
A Pennsylvania-based GTAT shareholder has filed a class action lawsuit with the court, accusing GTAT executives and directors of providing false and misleading information. It also names Morgan Stanley, Goldman Sachs and Canaccord Genuity, the company's underwriters of last year's stock and bond issuance, as defendants.
ANNA