Noteholders To Probe GT Advanced Technologies Inc (GTATQ) & Apple Inc (AAPL) Settlement

Noteholders of GT Advanced Technologies Inc (OTCMKTS:GTATQ) are questioning the furnace maker’s  settlement deal with Apple Inc (AAPL), noting the possibility that the iPhone maker might have been given leeway to go off easily. In a report by Reuters, some of the noteholders argued that the allegations against Apple make it necessary for an investigation to see if the settlement is adequate. In its bankruptcy filing, GT Advanced claimed that Apple made use of a “classic bait and switch” strategy to force the furnace maker into a deal that it says has ultimately lead it into its demise. Under that deal, Apple loaned more than $500 million for GT Advanced to outfit an Apple factory in Mesa, Arizona with furnace to be used in manufacturing sapphires exclusively for Apple.

GT Advanced Technologies Inc (GTAT)

Apple Inc. (NASDAQ:AAPL) buffed the allegations from GT Advanced Technologies Inc (OTCMKTS:GTATQ), saying that its statements  was intended to vilify Apple and make it appear as a coercive bully. A detailed commentary in the Wall Street Journal shows images of defective sapphire boules manufactured by GT Advanced. Apple sent the images to creditors of GT Advanced, noting that such boules are completely unusable. GT Advanced’s bankruptcy filing indicates that it used $900 million to maintain the sapphire factory, an amount that is more than twice bigger than the $439 million that Apple Inc. (NASDAQ:AAPL) provided. Daniel Squiller, GT’s chief operating officer, said that GT cannot make the 40% margin it wanted because Apple dictated the price, turning GT into a captive supplier that bore all the cost and risk.

The settlement deal, which will now allow GT Advanced Technologies Inc (OTCMKTS:GTATQ) to sell its supply of more than 2000 sapphire furnaces, needs to be approved by Judge Henry Boroff of the U.S. Bankruptcy Court.  GT noteholders asked the court for cancellation of settlement hearing scheduled on November 25 pending completion of their own probe of the deal, and also demanded to be granted access to internal records and documents of both GT Advanced Technologies Inc (OTCMKTS:GTATQ) and Apple Inc. (NASDAQ:AAPL). GT Advanced said that any delay in its settlement with Apple would impair it of its capability to reorganize and and repay creditors. For its part, Apple says that it is interested in working with local officials to  repurpose the Mesa, Arizona sapphire factory, although there is no clear signs yet as to how the company will do it.

This article was written by Nonito Guntan.

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