GT Advanced to Close Arizona, Massachusetts Sapphire Plants
1:00p ET October 10, 2014 (Dow Jones) Print
GT Advanced to Close Arizona, Massachusetts Sapphire Plants
By Joseph Checkler
Apple Inc. supplier GT Advanced Technologies Inc. said Friday the closure of its Arizona and Massachusetts sapphire plants will cost 890 people their jobs.
In filings with U.S. Bankruptcy Court in New Hampshire, GT Advanced called its agreements with Apple to produce sapphire materials for iPhones "oppressive and burdensome" and that terminating their deal was the only way to stop the bleeding.
One of the filings seeks to reject GT Advanced's contract with Apple, while the other seeks court permission to wind down its sapphire manufacturing plants in Mesa, Ariz., and Salem, Mass.
"The cash burn at GTAT's sapphire manufacturing operations for the benefit of Apple is not sustainable," lawyers for GT Advanced said in the request to wind down the facilities.
While the company said it regrets the potential lost jobs, winding the facility down by the end of the year will help "stop its mounting losses." The company said it would seek to close the plant during a court hearing Thursday.
As part of the wind-down, GT Advanced is seeking permission to pay incentive bonuses totaling up to $64,700 to some 13 employees who will help wind down the plant.
In seeking to reject the agreements with Apple, GT Advanced said it wants permission to assert further claims against Apple in the future.
"GTAT believes that it has many claims against Apple arising out of its business relationship with Apple," the company said in the fling.
Apple declined to address GT Advanced latest court filings, but reiterated its statement from Wednesday. "We are focused on preserving jobs in Arizona following GT's surprising decision and we will continue to work with state and local officials as we consider our next steps."
GT Advanced filed for bankruptcy earlier this week, a surprise to many investors and those who follow the company closely.
In GT Advanced's bankruptcy court debut Thursday, Judge Henry Boroff ruled the company could keep details of the Apple arrangement confidential. Judge Boroff also authorized GT Advanced to seal court papers that explain what went wrong in the financing and supply arrangement with Apple, GT's largest creditor and once its potentially largest customer.
The lack of information in GT's initial court filings about the status of its relationship with Apple left trade creditors, owed $145 million, and bondholders, owed about $434 million, eager for more details.
Daisuke Wakabayashi and Peg Brickley contributed to this article.
Write to Joseph Checkler at joseph.checkler@wsj.com
