Apple objects to GT Advanced financing plan after Mesa plant fire

Posted:
in General Discussion edited July 2015
Apple on Friday formally objected to a financing plan by its bankrupt former sapphire supplier, GT Advanced Technologies, on the basis of provisions tied to a May fire at its one-time plant in Mesa, Arizona.




GT said it needs to collect enough money from its insurance company to repair any damage done to the sapphire furnaces in Mesa -- the alternative being defaulting on a proposed $95 million loan agreement, according to court documents obtained by Re/code. Apple argued that GT has already indicated damage was small, and that the proposed terms would give lenders too much leverage to foreclose on the furnaces if an insurance payout is deemed too low to make repairs.

GT would face the choice of defaulting either on its loan or the settlement it reached with Apple in 2014, the latter party said. A collection of GT shareholders have also complained, asking why the firm needs to raise money nine months into bankruptcy protection.

The fire in question began on the roof of the Mesa building, but was extinguished in about 35 minutes. At the time it wasn't clear what damage had been caused beyond wrecking some of the plant's solar panels.

Apple and GT partnered on the facility in 2013 with the goal of mass-producing sapphire for devices such as iPhones. GT declared bankruptcy in October 2014 however, later saying that Apple had engaged in "bait-and-switch" tactics and made unreasonable demands. Apple responded by claiming it had "bent over backwards" to accommodate the supplier's setbacks.

Comments

  • Reply 1 of 16
    brakkenbrakken Posts: 687member
    Yet another poorly reported article with another negative spin on Apple on a website called 'ApplieInsider'. How about:

    Apple and GT partnered in 2013 but the deal fell through when GT CEO abruptly filed for banckruptcy after taking all of Apple's investment fundings. This Google-level betrayal was heightened further when same CEO then publicalky accused Apple of bullying, which was later proven incorrect. This latest attempt by the company and its holders shows more of the same.

    Maybe 'Administrator' is actually a wordbot.
  • Reply 2 of 16

    I lost $2k on GTAT. My own risk, a decent amount of money to me, etc.

    But screw GTAT and their executives that cashed out before filing. I hope the FEC sets them on fire.
  • Reply 3 of 16
    jkichlinejkichline Posts: 1,352member

    "I Believe that sometimes you gotta wreck the truck to get the insurance money to make the truck payment." – Larry the Cable Guy

  • Reply 4 of 16
    This fire was supposed to have damaged all the sapphire furnaces but the fire department put the fire out too quickly and messed up that plan so the damage was minimal. Now the GT Advanced Technologies CEO is trying to raise money using the fire as the basis... the guy is as crocked as a dog's hind leg...
  • Reply 5 of 16
    quinneyquinney Posts: 2,528member
    Have they sold [I]any[/I] of those furnaces in the many months since the agreement?
  • Reply 6 of 16
    stourquestourque Posts: 357member
    Unless they own the building they won't be getting any insurance money. That fire was on the roof and was put out in 30 minutes. There wouldn't have been any damage below, probably not even any smoke damage. I'm sure any equipment below is just fine.
  • Reply 7 of 16
    stourque wrote: »
    Unless they own the building they won't be getting any insurance money. That fire was on the roof and was put out in 30 minutes. There wouldn't have been any damage below, probably not even any smoke damage. I'm sure any equipment below is just fine.

    The furnaces mysteriously suffered fire damage that resembles multiple collisions with a forklift. All of them.
  • Reply 8 of 16
    tenlytenly Posts: 709member
    stourque wrote: »
    Unless they own the building they won't be getting any insurance money. That fire was on the roof and was put out in 30 minutes. There wouldn't have been any damage below, probably not even any smoke damage. I'm sure any equipment below is just fine.
    It's true that the first fire was put out quickly - but the majority of the damage to the equipment occurred during the second fire which occurred next month. /s
  • Reply 9 of 16
    MacProMacPro Posts: 19,404member
    rahhbriley wrote: »
    <rant>
    I lost $2k on GTAT. My own risk, a decent amount of money to me, etc.

    But screw GTAT and their executives that cashed out before filing. I hope the FEC sets them on fire.
    </rant>

    Well said. Similar experience here and the same reaction!
  • Reply 10 of 16
    MacProMacPro Posts: 19,404member
    brakken wrote: »
    Yet another poorly reported article with another negative spin on Apple on a website called 'ApplieInsider'. How about:

    Apple and GT partnered in 2013 but the deal fell through when GT CEO abruptly filed for banckruptcy after taking all of Apple's investment fundings. This Google-level betrayal was heightened further when same CEO then publicalky accused Apple of bullying, which was later proven incorrect. This latest attempt by the company and its holders shows more of the same.

    Maybe 'Administrator' is actually a wordbot.

    Not that I disagree with you comments about GTAT but I reread several times and don't see any spin in either direction here. What are you seeing I 'm not?
  • Reply 11 of 16
    bobroobobroo Posts: 91member
    Ahhhemm! The damage caused by the fire department to fight the fire (including water) is often worse than the fire itself in cases like this. Particularly if the remains are left to sit for a while.

    These consequences are absolutely part of the insurance claim.

    Unless, of course, arson is suspected then the insurance claim could be held up for years.
  • Reply 12 of 16
    joshajosha Posts: 901member
    Quote:

    Originally Posted by sog35 View Post

     

    I lost $5700 from GTAT stock.  Apple trusted them so I thought they were a decent company.

     

    The GTAT CEO can take a long walk on a short plank.




    They certainly sound like industrial con artists.

    Hopefully Apple has learned from this situation.

    Apple with an increasing pile of cash is such a target for financial games against them.  :mad:

  • Reply 13 of 16
    lightknightlightknight Posts: 2,312member
    Quote:
    Originally Posted by sog35 View Post

     

    I lost $5700 from GTAT stock.  Apple trusted them so I thought they were a decent company.

     

    The GTAT CEO can take a long walk on a short plank.




    That's not exactly "due diligence", if you invested that much money only on "so I thought". And if you did do your due diligence, and made a mistake... it's your own fault.

     

     

    Note: I'm not saying that the GTAT CEO is not a crook, I'm saying that the way you make it sound now is very slanted.

     

    Especially taking into account that you were pretty bullish on GTAT, unless I remember wrong? I however entirely agree with you that the GTAT CEO seems to have broken quite a few laws, misled and lied, inappropriately taken profits out of a situation where he should have informed shareholders, and justice should be served for that.

     

    Quote:
    Originally Posted by JoshA View Post

     



    They certainly sound like industrial con artists.

    Hopefully Apple has learned from this situation.

    Apple with an increasing pile of cash is such a target for financial games against them.  :mad:




    So is any big company. Apple seems to suffer from its unwillingness to compromise with political powers and make friends at the appropriate newspapers, though. <s> But then again, if you can't play the let-s-tank-the-stock-before-earnings-and-make-a-pile-of-$$$... how could you ever call the United States a liberal haven of capitalist freedom and a democracy? </s>

     

     

    Quote:
    Originally Posted by bobroo View Post



    Ahhhemm! The damage caused by the fire department to fight the fire (including water) is often worse than the fire itself in cases like this. Particularly if the remains are left to sit for a while.

    Entirely agreed, not to mention chemicals emitted from the fire, that may or may not have corrugated sensitive equipment, or even the possibility of having to recalibrate every imaginable sensor. On such a technically complex and precise subject as sapphire manufacture, a process so difficult to engineer that Apple had to delegate, and did not have any other viable option for, it would stand to reason that any kind of industrial incident could turn extremely costly to repair.

     

    Not that the fire doesn't happen at a very opportune moment.

  • Reply 14 of 16
    palominepalomine Posts: 362member
    I can see how people might have thought GTAT was a good investment, you'd think Apple's Due Diligence would be as good as it gets. What could you uncover personally that Apple didn't already know about? It sure looked like a winner, and a beginning of investments in the U.S. They have bent over backwards trying to do the right thing in all of this, I forget what the final plan for this location was, but Apple was trying to save the jobs.

    It's a pity that GTAT has lying scum for executives though. Kind of proves the point that American companies will screw you over any way they can find to get their own $$. God only knows how long it will take to sort out this mess. Proves you can take a 'contract' and use it in a manipulative way. I hope Apple is even more careful during M/As in the future. They surely learned from this even though they are very experienced.
  • Reply 15 of 16
    lightknightlightknight Posts: 2,312member
    Quote:
    Originally Posted by palomine View Post



    I can see how people might have thought GTAT was a good investment, you'd think Apple's Due Diligence would be as good as it gets. What could you uncover personally that Apple didn't already know about?

    Well, I expect that Apple can afford to take some financial risks that I or him can't, for one.

    Second, assuming that because Apple did the due diligence, there is no risk.... that's where we'd be lacking in ours.

     

    Example: maybe Apple decided that they need product X, and while there is a 60% chance that investing 5B in the only manufacturer of Product X means they lose 4B and recover 1B, such risk is acceptable because if Product X is delivered appropriately, then Apple will make 20B supplemental profit/annihilate their competition in the higher end (supposing they had competition in the first place, of course). In a company where management famously lies by the rule " Bet the company" (see Phil Schiller's declarations about the iPhone), this is actually not out of the realm of possibilities. However, if that sixty% chance happens, and I invested 5k instead of 5B, well, I don't have trillions to sponge that loss off.

     

     

    What I'm trying to say is: unless you're sitting at Apple's Board, there is/should be no way that you can conclude that since Apple did its due diligence on GTAT, it's safe to invest in it. If it was that easy, indeed, what would be the point of the stock market? Just put your money in any company that Apple invests in, trades with, etc... 

     

    Also, don't invest what you can't afford to lose. You're not "entitled" to the money you invest on the stock market. Once it's invested, it's written off. If you manage well and you're lucky, you'll make money, but there is absolutely no reason that you should feel safe with that money: it pays interest out and you can earn a premium on resale (if lucky/wise) because there is a risk.

     

    Even government bonds aren't 100% safe, so publicly traded companies?

     

    Quote:
    Originally Posted by palomine View Post





    It's a pity that GTAT has lying scum for executives though. Kind of proves the point that American companies will screw you over any way they can find to get their own $$.


     


    American companies and GTAT executives are two distinct styles of entities though. Your point is correct, companies will screw you any way they can, and not only American ones, but GTAT executives seem to be a special breed of 80's style managers...

     

     

     

    In any case: any investment where you stand to easily make a lot of money is extremely suspect. It's the Nigerian Prince of business... and GTAT shares a lot with this Prince. If it's easy and safe, lots of people are aware of it, and the stock becomes very expensive, which reduces the returns massively. If it's huge returns, then it's unsafe and people are cautious to get in. Investing in computer companies in the early 80s might have brought billions to those who put their money in Apple/MS, (ignoring those who sold their position when Apple went super-ill), but the people who chose DEC, ATARI, or Sierra (the last one being similar to GTAT in terms of unreliability of the executives... one of them being into a super-villain-prison) did not get so lucky, even though the investments looked safer than Apple/MS. Risk goes with big returns, safety goes with less returns.

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