GT Advanced Technologies (old symbol: GTAT, new symbol: GTATQ) issued a press release that states it has reached an agreement with Apple that both parties have agreed to waive the condition that GT's October 8th declaration be kept under seal and expunged. This is a small positive in that it appears that GTAT did not have to give up anything additional for Apple to waive the request that certain information remain sealed (which it does seem like it was going to lose anyway) and the agreement to repay the $439 million GTAT owes Apple can move forward once approved by the bankruptcy judge (see below). (Note that I own Apple shares).
What this means is that the filing where GTAT submitted ‘the unusual (and perhaps unprecedented) nature of the request made in this Motion’ was to ‘avoid the risk of liquidated damages claims in the amount of $50 million per violation under certain confidentiality agreements involving a third party, which agreements themselves are required to be kept confidential’ can be unsealed without GTAT incurring upwards to $1 billion in damages to Apple.
Furnaces have projected value of $200,000 to $290,000 per unit
In an 8-K filing on November 4 it outlines how much Apple is to be repaid for each furnace that GTAT sells. The first 500 furnaces are projected at $200,000 each, the next 500 are $250,000 each and then each one is $290,000 until the $439 million load is paid off.
When you run the numbers if GTAT can receive this amount for each furnace it will need to sell 1,738 of the 2,036 furnaces to repay the loan. Maybe these used furnaces are worth this much (I hope so) and they can be sold over a four year period but since buyers knows there are 1,738 if not 2,036 furnaces to be sold they can drive a hard bargain.
In the agreement it says ‘if the purchase price is less than the Apple Repayment Amount, GTAT Corp. or SPE shall, or GTAT Corp. shall cause an affiliate (other than GT HK) to, pay to Apple the amount of the shortfall not later than three (3) business days following the earlier of receipt of the final payment from the purchaser or the date such final payment was due to be paid by the purchaser.’
It also says ‘If the market price of furnaces that are similar to the ASF Furnaces drops below the Apple Repayment Amount set forth in Exhibit B hereto, Apple and GTAT Corp. shall re-negotiate in good faith the amount of the Apple Repayment Amount for the quantity of ASF Furnaces that remains unsold at such time.’
Overall view that the shares will go to $0.00 doesn’t change
Overall the unsealing of additional information does not do much to impact my thought that the shares are more likely to go to $0.00 vs. recover. This is a link to a note which outlines financial information on the company which leads me to this conclusion. This is a link to another note that provides a great amount of historical information leading up to the bankruptcy. I still believe that GTAT owes too much and its other businesses aren’t large enough to offset the sapphire glass ‘bet the company’ move it took.
