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Isn't there a limit as to how much you can buy on margin?as a %?
Something like a 50 / 50 split. You put up $5000 and can buy $10000.
So he is out $5000? Not great to loose but hopefully not a life changing even!!
I have never bought on margin....not a gambler!!
Here is the Confluence GTAT press release. My guess is that the $20 MM cash earn outs may have been in the form of options payable upon hitting certain milestones.There may also have been some options given to key employees to stay on for some period. This would have let GTAT spread out the need for cash. That whole acquisition did not go to plan. Over and above the $60MM up front there was another $30MM +/- spent to setup a facility in St. Louis.........cooling towers and cooling loop, power for the equipment, back up power and 20 or so crystal pullers with continuous feed hoppers.
The operation was mothballed after 14 or so months due to market conditions ....per GT's PR below.
http://investor.gtat.com/releasedetail.cfm?ReleaseID=729616
http://www.renewableenergyworld.com/rea/news/article/2011/08/gt-bought-confluence-solar-to-offer-novel-silicon-wafer-tech
http://www.solarnews.es/2013/01/14/gtat-shuts-its-st-louis-solar-wafer-furnace-plant/
Is there any way to get the transcript of the hearing for the EC.
The official ruling only states that the motion was denied but is silent on the reasoning.
If GTAT's contribution to this contract is Merlin the total revenue will not be that much. I believe that Merlin will be a licensing deal. The major $ are in the cells, panels, inverters and storage if storage is used. Merlin would be used in the cell line only. I do not think GT has any part in the other areas.
From a purist standpoint you are correct but IP does have some value...albeit....much less than its potential with the original company. Interesting link attached.
http://ipmetrics.net/blog/2011/01/26/the-liquidation-value-of-ip/
That is above my pay grade but I would think not.
All the creditors and bond holders would need to be made whole.
The problem with new options is how to set a value.
Option prices are generally set above the perceived current value to "incentivize" the work force. If set too low it cost the company. With a company coming out of bankruptcy I do not know if Black-Sholes works.
Hilco was hired under Docket 485 I think ...to determine a liquidation value for GTAT. This was supposed to be an attempt to come up with a loan value that could be collaterized by the asset value. Not sure this was ever completed and or made public.
I have to believe that if that number is used liabilities will be a lot greater than assets.
That list only includes the "insiders:.....officers and members of the BOD. Most of the next couple of level managers down also have unexercised options and RSU's that could approach this level.
There are / were upwards of 50 employees that had options and or RSU ....maybe not all had vested but a good number had.
This is the link to the SEC site for GTAT. You need to look at each Form 4 and record the qty of shares held after the latest filing date.Only the most recent will be accurate.
https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001394954&type=&dateb=&owner=include&start=0&count=40
FWIW: Here are the shares held as of the latest SEC Form 4 filings
Gutierrez: 111315 9/6/14
Kim: 46563 9/6/14
Ford: 46563 9/6/14
Keck: 46563 9/6/14
Squiller: 247735 8/19/14
Wroe: 24733 6/3/14
Watson: 93484 6/3/14
Switz: 67527 6/3/14
Massengill:129999 6/3/14
Godshalk: 62009 6/3/14
Cote: 57617 6/3/14
Conaway: 84984 6/3/14
--------------
977185
The first 5 are officers of GTAT while the last 7 are on the BOD
I checked for the most recent Form 4 which gives number of shares held after the filing date.
If I recall early on GTAT hired a company that specialized in valuing assets as one would do in a liquidation action. Do not know if that was ever made public but that would at least set a bottom line on value in a liquidation situation. Lets hope it never gets there!!.Seems it was buried in one of the early Docket item 483. The reason given to hire Hilco was to determine an asset value in order to collaterize a DIP loan.
It looked to me to be a way of recovering their $72K.
They sell it at a discount to a third party and then bill GT for new "services rendered" to recover their dead receivables which under the BK rules would be a valid receivable and payable by GT.
Conspiracy theory!!!???
Something looks odd between dockets 956 and 1080.
Is there a lawyer out there that can interpret these?
A law firm assigns its Recievables to third party and then gets hired as Ordinary Course Professionals ??
I do not believe that the furnaces used for the "proof of concept" boules differed from those ultimately installed in Mesa.
The recipe may well have been changing.
Both Salem or Merrimack had operational systems back to early 2012. In one of the early Docket items Apple actually listed yield data indicating that Mesa was making some acceptable boules in the 265 Kg size....just nowhere near agreed upon yields. There were very few that fully met the specs and some larger qty had "some" yield.
The contract between GT and Apple was announced in early Nov 2013.
The pictures of boules from the "boule graveyard" were released by Apple. It is a leap of faith that all of those were made in Mesa. The intent of the release was to shed a negative light on the situation so defective boules regardless of origin would have achieved the desired goal.
http://appleinsider.com/articles/13/11/04/apple-signs-578m-sapphire-deal-with-gt-advanced-technology
If I recall correctly there were some "proof of concept" boules grown in the Salem, NH operation. This was right around the time of final negotiations. Even though the boules "failed" both GT and Apple agreed to close the deal. At that time I do not believe that there were any systems outside of either Salem, NH.....the old Crystal Systems plant or Merrimack, NH. the corporate HQ.
I was talking to an old business associate who is selling to Chinese sapphire furnace manufacturers. The furnace that GT sold back in 2012 has not changed that much. There was a lot of "dead"space in the furnace and by using larger crucibles they could get larger boules. The challenge was in scaling the process.
Theory only gets you about 1/3 to the goal. The rest is trial and error...which takes time and GT grossly underestimated the amount required ...or ignored the technical staff's input.
I went to the big PV / Solar trade show in Shanghai a few years ago and there were 3 or 4 knockoffs of GT's DSS furnace ...and within 50 yards of the GT booth. They copied everything down to the smallest detail. Cutout for wire ways, stiffening gussets, color!!!, decal placement.......everthing.
Selling the Mesa furnaces will not be a slam dunk. There is at least one and probably more companies in China that make knockoffs of the GTAT ASF furnace.
http://www.bridge-salon.jp/report_bridge/archives/eng/6890/20120626.html
This company was selling DSS Silcon furnaces soon after the first intro into China. Although the recent Tera Xtal indicated sales prices in the $700K range these Chinese companies will severely undercut that price.
https://www.kccllc.net/gtat/document/1411916150121000000000022
Put this someplace in your DD as you see fit.
CSI is a key member of the unsecured creditors committee and privy to inside info.. They also hold the notes that GT issued.
They want to put up a fire wall between the committee and the trading group so as to be able to buy and or sell their GT bonds.
This is a tricky operation that needs to assure that there is no leakage of info / data between the two groups.
Collectively the Sr. management and members of the BOD hold around 1 MM+ shares that will also be worth zero if they do not do a good job. They have a huge self interest to get this right and all equity holders would benefit. If someone wants to go thru the SEC filings the exact number of shares held by individual can be determined.
I believe that all these sales pre date the Apple agreement. These date back to late 2011 thru mid 2012 +/-. The Apple exclusivity agreement was effective in late 2013 I believe and is now null and void.
The timing of these orders was before the advent of the large boules. I think the boule size was 85 Kg or 115 Kg. There were technical issues not related to process that may have been the root cause although the Mesa ramp up may have trumped these orders. I do not know when these orders were placed nor what the agreed to deliveries were.
Not sure where this fits but it is worth looking into.
Here is a link to a Chinese press release about GT ASF furnaces not performing to spec. These might have been potential customers for the 2000 Mesa units?? Dates back to Oct.2014 so there may be later news.
http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20141014000114&cid=1102
I believe that past practice was to get 20% to 40% of the PO price up front...typically non refundable. The down payment was based on PO size and size and health of the customer. For Tera Xtal I would guess that it was 20% of the PO price.
COGS was in the $250+ K range and 40% to 50% GM was the target so $500 to $625 would be a reasonable guess as to sell price.
Boule size was 85Kg to 115Kg.
The chamber size for this order was the same as those installed in Mesa. The hot zone and other internals may have had some redesign to accommodate a larger crucible for the larger boule size. 265 Kg would fit into this chamber. The tech problem is that crystal growth does not scale easily and there are ALOT of variables to tune. 265 Kg seems achievable but the allowed time frame was unrealistic. It took 30 days to grow a 265Kg boule and that was for one set of variables. With so many variables 9 months would not surprise me. Granted they could be running multiple recipies in multiple chambers but if the cooling water loss and loss of power was as bad as stated there was a lot of wheel spinning and waster / loss time.
I may be way off base here but I have to believe that the total number of shares held by readers of this forum is in the background noise. If the large institutional holders were leading the charge it might make sense. Some investor betting on the wrong side....not so much.
Based on my accounting background....limited....The PO would be set up with multiple line items. Equipment, Setup and Service.
A customer would like to expense as much as they can so service and Setup would be an expense and equipment would be capatalized.
From GT' side all would be revenue but they would probably book a loss on the $200 K sale as the standard cost is probably in the $230K range. Negative gross margin on the equipment!!
Not sure how the BK affects classical accounting practices.as in the difference between book costs and sales price.
Maybe as part of the BK reorg a new cost basis is established.
Here is the roadmap for semi development:
https://www.jsap.or.jp/english/images/academic_roadmap/arm_e_09.pdf
About hyperion.....Its prime function is to cleave thin layers of single crystal materials so as to reduce losses due to more typical cutting methods...diamond blades and wire saws.
With typical cutting the thinnest wafers are up to 5 or more times thicker that needed to convert light to elec. They are that thick due to handling issues as the get too thin. A Hyperion cut wafer would need to be mounted to a carrier...a cheap one but still another operation. With Sapphire the same principal holds. A thin sheet of sapphire could be mounted to a glass carrier to get the scratch resistance......You still need to worry about capacitance if it is going to be a touch screen and there is a lot of wizadery there alone.
Wire saw technology has about reached its limits with respect to wire diameter. The dia. is about the same as wafer thickness.
The wire has to be kept under tension to cut and track properly and below a certain diameter the tension breaks the wire. A slower feed rate might work but then the cutting time goes thru the roof and becomes uneconomical. The cost of the time exceeds the cost of the yield loss. There are a bunch of tradeoffs.
I do not see a direct link between Hyperion and GaN unless someone has bulk single crystal GaN. Then Hyperion could slice the boule into thin sheets and maximize material utilization.
I believe that Sumitomo was making crucibles for Mesa. The crucibles are made of Molybdenum, are single use and cost about $4000 each. There was a lot of work to minimize material use and get multiple crystals per crucible.
Plansee may also be listed as a big creditor.
http://www.sumitomoelectricusa.com/products/tungsten-molybdenum-products/crucible
Not sure that there is enough bandwidth here for a full explanation. Growing single crystal GaN is a real challenge...high pressures and temperatures. The real world deposits a vapor of GaN onto a substrate or carrier that could be Silicon or Sapphire. The critical parameter is that the orientation of the substrate be such that the GaN will deposit with the correct orientation. If orientation is not maintained the material will not function correctly as a semiconductor.
Silicon is cheap and there is a hugh installed base that can be adapted to GaN deposition. Epitaxy is common with making circuits on Silicon. I believe that Silicon is cut off axis to optimize the crystal lattice. Alumina aka sapphire has a better lattice match that does Silicon but still has its limitations. The match is not perfect and the sapphire and GaN do not move together with changes in temp which results in defects that affect component yield. I do not believe that maximum operating temps can be achieved with Silicon vs. Sapphire so some performance is lost but with big $ savings. The holy grail is single crystal GaN but that is a long ways away for commercially available qtys. There may be prototype material available for military applications.
GT was making 3" and 4" SiC...Silicon Carbide wafers for high temp, high freq applications. Not making active components but selling the growth furnaces to OEM's. Cree is the biggest player in SiC. I will post a Semiconductor road map that I foung on line a year or so ago. You might find it interesting if you follow this arena.
Link in my post of 1/11/15 9:01:04 for reference
Yole had the price at $700 K back in 2012 ...for what ever was available then....85Kg I believe. Not sure what the other sapphire players are doing....selling material like Rubicon or equipment like Arc Energy.
This is a bit dated but may help get a better picture of the tech and who is who.
http://www.yole.fr/iso_upload/Mag/IndustryReview_iLEDmarch_web.pdf
GT is based in Merrimack NH and up thru 2012 2013 had centralized
Design Engineering and R & D located there. As they went on an acquisition spree the commonality of the underlying technologies became more diffused and tended to concentrate at the new acquisitions. Crystal Systems was an exception as the two facilities are within a one hour drive. Polysilicon reactors are based out of Misoulla MT, Merlin out of Calif...part of the Thermal Tech acquisition. Hyperion is from the Twin Creek acquisition and is out of Danvers MA. I believe that all Silicon related technology...DSS..multi and mono, HiCz and PV are not in Misoulla. The only Engineering in MMK is some special crystal growth activities...SiC and maybe GaN. They also have licensing agreements with Kyma..another specialty crystal growth co.
The key point is that GT is not a monolithic engineering co. They have diverse technologies via acquisition and the cultures are diverse.
They are each their own profit centers and therefore compete among themselves for resources...cash!!!
On the plus side is that they could be spun off quite easily as the only connections back to MMK is / was administrative and not Engr or Sales or Mkt.
What was left of central engineering was decimated after the BK.
Probably 25 to 30 were released in the Design group. The cut was deep and affected ME, EE and Software.
Not sure where this fits in everyone's DD but FWIW
Here is some propaganda from YouTube that GT put out.
Gives a pretty good high level explanation of the tech.
I did not phrase my second question very well.
If new shares are issued under a reorg is the debt accrued under the original shares voided? Are the credit holders in worse shape?
That seems higher that I would have guessed. It would be nice to understand how these firms value factorable accounts receivables.
It must be done using publicly available data as part of the analysis. The nuts and bolts f the algorism is probably proprietary to each company but the bottom line is that they are approaching even odds that there will be a payoff and that GTAT will remaine solvent in the long run. Not sure how issuing new stock as part of the reorg...that would render GTATQ worthless....affects trade creditors.
If new stock affects creditors the same was as equity holders then that adds substance to the positive outcome of the reorg.
Does this make sense?
Mine were at under $4 so I am not going to loose my house.!
The one thing that I find interesting is the large amount of account receivables that are being bought by factoring houses.
I would love to know what the discount is that they are buying at.....5% of 10% of base??
They do this for a living so must have some way to eval risk.
Maybe the high risk / reward is within their risk tolerance for their portfolio. Probably some pretty sophisticated calculations behind it.
I had some shares and dumped half at $20 ands have half left.
Right now it is worth a tax loss carry forward!!!I am not underwater as a lot may be. I have not bought any post BK shares.
So I will hold and see where this goes. I am not going to add to my holdings even at $.15. This, is a real crap shoot and I do not day trade....long haul hold. I use an investment house as I do not have the time or inclination to do that much work on a myriad of individual stock. GT is a special situation as I know a lot of ex employees and have worked in that technical arena in the past.
I do chuckle at some of the technical IP comments that I see here.
Plausible but wildly optimistic.
Just curious to know the spread between pre and post BK chatter / investors on this board....any guesses?
I agree....this is a "bid vs. asked" situation. The seller asks for X but is offered Y. The offered price is the market price in an arms length situation. There is no reason to under bid the market price. It is my understanding that the original 115 Kg systems went in the $500 + range so there is good reason to believe that a 265 Kg system would command more. Although performance at BK was sub par GT can and will get to spec given sufficient time and less outside "help"