Court unseals documents in GT Advanced case, Apple says it 'bent over backwards' to help sapphire su

Posted:
in General Discussion edited November 2014
Though bankrupt sapphire maker GT Advanced Technologies has accused Apple of crafting a "classic bait-and-switch" deal, newly unsealed court documents reveal Apple's side of the story, with the iPhone maker claiming it did everything it could to help the struggling supplier.



A New Hampshire court on Friday published hundreds of pages of documents from GTAT's bankruptcy filing, copies of which were obtained by AppleInsider. The materials were previously kept out of the public eye to protect confidentiality agreements between Apple and GT Advanced, but a judge ultimately decided that the information should be made public.
"Far from the villain in these chapter 11 cases, Apple is the largest victim of (GT Advanced's) failure to perform under the agreements it negotiated" - Apple court filing
In the filings, Apple's perspective on the GTAT collapse is revealed. To date, Apple has largely remained silent while GTAT officials have accused the iPhone maker of essentially being a bully. Apple, unsurprisingly, sees the issue differently.

"Apple has bent over backwards to work with the Debtors, including making payments to the company notwithstanding the company's failure to meet performance milestones, in the hope of obtaining usable, economically viable sapphire from the Debtors," Apple wrote. "Apple continued to fund the Debtors' operations at the Mesa facility by making payments under the Prepayment Agreement even though the Debtors failed to satisfy the original payment milestones."

Specifically, GTAT was unable to create sapphire at the 262-kilogram boule size that it had originally agreed to produce. And even on that front, Apple says it was willing to negotiate and accept sapphire produced at a smaller size.

Right up until GTAT's surprise bankruptcy filing last month, Apple says it continued to attempt to work with the supplier, offering what it portrayed as "significant concessions." In an effort to assist GTAT, Apple says it was willing to pay a large portion of the remaining $139 million balance in its prepayment agreement, and it also offered to allow GTAT to sell additional sapphire furnaces to third parties.

"To date, Apple has paid the Debtors $439 million and additionally spent in excess of $700 million in connection with the transaction despite receiving from the Debtors sapphire that was only a small fraction of the Debtors' original commitment," Apple said. "Far from the villain in these chapter 11 cases, Apple is the largest victim of the Debtors' failure to perform under the agreements it negotiated at arms' length and with advice of counsel."




Despite all of the trouble with GT Advanced, Apple has said it is willing to work with the company on a mutually-beneficial agreement. Apple hopes that doing so will not only save jobs at the Mesa, Ariz., facility it purchased for GTAT, but that it will also "bring more sapphire to Apple's customers."

GTAT has signaled that it intends to exit the sapphire production business after its deal with Apple, and the iPhone maker has said it is willing to consider a transfer of the operations at the Mesa facility to another party. But Apple will only consider that option after a 90-day review period, when it intends to "validate the viability of the Mesa facility to produce sapphire for Apple products."
Apple said it plans to see if the Mesa, Ariz., facility it built is still viable for producing sapphire with a different supplier.
Apple's side of the story was disclosed in a letter to the Hon. Henry J. Boroff, U.S. bankruptcy judge, dated Oct. 14. Kept under seal since then, it was made public and obtained by AppleInsider on Friday.

In its own filings made with the court, GT Advanced says its arrangement with Apple was a "classic bait-and-switch" deal that favored the Cupertino, Calif., company. GTAT has said that it assumed all of the risk, while Apple took on none, with an unfairly one-sided contract.

Though the sides disagree about how their arrangement came to a bitter end, they have settled their disputes out of court with a repayment plan that will see GT Advanced return $439 million to Apple over four years. The terms of the agreement must be approved by the court as GTAT puts together its plans to emerge from bankruptcy.

Apple currently uses scratch-resistant sapphire crystal to protect the fingerprint sensor found within the Touch ID home button on its iPhone and iPad lineups. Sapphire also covers and protects the rear iSight camera on the company's iPhones, and will be a key component in two out of three Apple Watch models set to launch in early 2015.

In a rare public comment on the issue, Apple said last month that the sapphire process it hoped to create with GTAT was "ambitious," but that it is "not ready for production." The company has also said it is focused on working with the city of Mesa and Maricopa County to help employees affected by the bankruptcy find work.

Though GTAT will be exiting the sapphire production business, officials at the company hope they will be able to emerge from bankruptcy and refocus the business as an "equipment supplier" that would manufacture and develop "sapphire growth systems and processes."
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Comments

  • Reply 1 of 62
    paul94544paul94544 Posts: 1,027member
    Because Apple is a wildly successful company, the usual suspects i.e. trolls, apple haters, shills etc assume it is behaving badly and of course even when real evidence turns up to prove them wrong they find ways to continue their lies. Just watch... The darkness hates the light...
    racerhomie3
  • Reply 2 of 62

    I have a sneaking suspicion that if GTA is investigated for stock fraud or some such charge, their assets will be tied up for years.

  • Reply 3 of 62
    lilgto64lilgto64 Posts: 1,147member
    Oh so maybe the 'unsustainable' we heard about was they were no longer able to take money from Apple and give nothing in return.
  • Reply 4 of 62
    rezwitsrezwits Posts: 631member
    I am telling you, GTA was like "Let's get more money from them", and Apple said NO. The GTA said, ok Bankruptcy! (OPINION)
  • Reply 5 of 62
    peteopeteo Posts: 370member
    Waiting for the video where apple held a gun to GTA's head and said you must sign this agreement.
    If they had issues with the agreement why sign it? Most likely to cash in on their stock.
    GTA administrators (and board members) over promised and could not deliver and decided to screw its workers and investors for their own greed. They should go to jail.
  • Reply 6 of 62
    mpantonempantone Posts: 1,432member
    Quote:
    Originally Posted by SpamSandwich View Post

     

    I have a sneaking suspicion that if GTA is investigated for stock fraud or some such charge, their assets will be tied up for years.




    Shareholders are the low man on the totem pole concerning indemnification.

     

    Major creditors will be addressed and paid first, not some class-action shareholder lawsuit. That's why this judge is dealing with the Apple v. GTAT case now.

     

    A stock fraud investigation will likely take time, it is unlikely that the assets will be frozen until the conclusion of that investigation. 

  • Reply 7 of 62
    Asses are being served on silver platters as we speak...
  • Reply 8 of 62
    My guess with what happened was that GT Advanced told Apple that they can produce a lot of Alumina (it is not a gem), which got Apple to invest. Then, GT Advanced couldn't deliver on their promises, because Alumina is manufactured by sintering and sintering is a less reliable manufacturing method than many others (I've personally have experience with sintering). When GT Advanced couldn't deliver, Apple would cut them off and potentially initiate legal action. GT Advanced knowing the inevitable is coming, decided to beat Apple to the punch and ask for bankruptcy protection. GT Advanced probably knew they couldn't fulfill their contractual obligations and the executives performed their little farce merely to enrich themselves.
  • Reply 9 of 62
    jungmarkjungmark Posts: 6,719member
    GTAT = scum. You willingly signed the contract. You over promised. You under delivered. Yet it's Apple's fault.
  • Reply 10 of 62

    To be fair... I don't see any objective opinion coming from a third party in this article. This, so far, just looks like he said-she said.

     

    Regardless... it has been worked out to the satisfaction of both parties.

  • Reply 11 of 62
    ceek74ceek74 Posts: 324member
    Classic get-rich scheme for the asshats running GTAT.
  • Reply 12 of 62
    gatorguygatorguy Posts: 21,289member
    I expected AI to have linked the docs, but if they did I'm missing it. For those interested in the unedited affidavit you can find it here:

    https://www.kccllc.net/gtat/document/1411916141107000000000003

    EDIT: From page 10, Apple to GT, "Put on your big boy pants and sign the contract" :lol:

    Page 8 begins the summary of contract issues GT wants to complain about in hindsight.
  • Reply 13 of 62
    solipsismysolipsismy Posts: 5,099member
    sog35 wrote: »
    Told you GTAT was full of SCUM, FRAUDS, and CRIMINALS.

    Where are the fools that said I was over reacting a few weeks ago?
    Where are the fools that said I need to wait for more evidence?  BS.

    The CEO/CFO/COO are all CRIMINALS and deserve jail time for misleading shareholders and Apple.

    I know how FRAUDS and CRIMINALS act.  GTAT executives are the protypical white collar CRIMINALS.

    Personally I wish Apple was less civil and sued the living sh1t out of the CEO for damages.

    You did jump to conclusion. You didn't show proof. You had an emotional reaction and decided that was better than being rational, logical, or showing any facts. Potentially being right is just dumb luck… and I do mean dumb,
  • Reply 14 of 62
  • Reply 15 of 62
    solipsismysolipsismy Posts: 5,099member
    sog35 wrote: »
    No its not dumb.  Its called common sense.

    When a CEO is willing to FLAT OUT LIE and DECEIVE tens of thousands of investors he's a CRIMINAL.  Go check the SEC filings.

    You didn't check any SEC filing weeks ago. They didn't exist. You know of lies and deceit after the fact.
    Go check the business update the CEO gave just SIX WEEKS BEFORE filing BANKRUPTCY.  Again you need to STFU because you are not an investors and never listened to the CEO's conference calls each quarter.

    You knew he was lying 6 weeks ago, did you? Aren't you the one that made an impetus investment in GTAT about that time? An investment were you calling all of us dumb fools for not jumping on board when you did?
    I'm sorry you don't have the business acumen to know when a CEO is a CROOK but I do.  Again let the professionals take care of this.  You need to just STFU and let the big boys discuss this.  You obviously know NOTHING about SEC reporting requirements.

    See post above.
    I said they were CROOKS weeks ago and each day its proving more and more true.

    Proof others are now supplying after investigating. Something you seem incapable of grasping.
    You are one those clowns who think Barry Bonds never took steroids or that Alex Rod never took steroids.  You just ignore all common sense.  Use your brain.  I don't need to wait 3 years for a court to find these GTAT frauds guilty. 

    This is animation of how your lack of consideration and impetuous comments come across.


    [VIDEO]
  • Reply 16 of 62
    analogjackanalogjack Posts: 1,071member
    Quote:

     Apple says it 'bent over backwards'


     

     GT says it bent over forwards. Apple duly obliged.

  • Reply 17 of 62
    But what they are doing is still not as bad as what Wall Street did during the housing bubble and government bailouts.  Those Wall Street FRAUDS make GT Advanced look like Saints.
     Lets get off of our high horse.  I hate GT Advanced just as much as the next guy but this is getting a little too personal IMO.
  • Reply 18 of 62
    Reading the full documents, GTAT alleges, to paraphrase, basically self-destructive and intentionally harmful business practices in their contract, doesn't make any sense why Apple would approach something this important and expensive in that manner. GTAT's version does not seem realistic.
  • Reply 19 of 62
    solipsismysolipsismy Posts: 5,099member
    sog35 wrote: »
    Are you really that DUMB?  GTAT files quarterly Financial Statements with the SEC each quarter.  Again just STFU and leave this discussion to people who know what they are talking about.

    Oh, now you've known they were lying with each quartet filing? When did you inform the SEC? When did you post that proof here? I certainly don't recall that when you started making your accusations.
    No.  I'm saying the CEO said in the business update that everything is going GREAT!  Then 6 weeks latter without ANY warning they are BANKRUPT.  That is NOT something that happens without FRAUD.  And I never called anyone a FOOL for not investing in GTAT, stop LYING.

    How much did you lose?
    Maybe you are a FRAUD too since you now are using an alternate account.

    Am I fraud impersonating another poster or am I using a new account? Can't be both.
    Again you just need to STFU because you are uninformed.  You did not read any of the SEC quarterly filings.  You did not listen to all the conference calls by the CEO or business updates.  Your source of information is this site. 

    I must have forgot because I do remember begging you for proof of your hysterics weeks ago. If you posted all the SEC of them lying I would have read it. Would you please supply a link to your original accusation that must include these SEc filings and your research to prove they've been lying every quarter? I'll wait.
  • Reply 20 of 62
    solipsismysolipsismy Posts: 5,099member
    sog35 wrote: »
    Heres my proof for the LAST TIME:

    On August 26th the CEO said in a business update:

    "Solid balance sheet with proven track record of productively deploying capital"

    "Newly expanded sapphire materials business with Apple is expected to add recurring revenue base to business"

     
    http://files.shareholder.com/downloads/AMDA-1AHIQM/3611462960x0x778573/57e6989c-b7d2-4041-b7bf-845d281975d7/GTAT_Corporate%20Overview_2014_August_final%20to%20post.pdf
     
    The August 26 presentation reiterated some financial data from the Q2 earnings report, such as its $333 million cash balance, and emphasizing GTAT's "strong balance sheet." However, the presentation (page 14) completely misstates GTAT's debt as of Q2. By the end of Q2 GTAT had already received the lion's share of Apple's prepayments, $543 million of the promised $578 million, and its total debt including the prepayment obligation had swollen to $644.8 million, not the $294 million shown in the presentation.
     
    Then 6 weeks later they go BANKRUPT without any warning to investors.
     
    if you don't think that is FRAUD than you are a simpleton clown.

    I don't want your proof after the fact. I want your proof of all this from weeks ago when you started going into hysterics. Just post that link to your AI post. I tried to check but I couldn't find anything from you but accusations with none of this proof you now say you posted last month.
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