GT Advanced Technologies Inc (OTCMKTS:GTATQ) continues to move lower in recent days; the stock is all but forgotten by Investors at this point.
Earlier this month the Company said the third extension of the solicitation period in connection with its previously announced proposed debtor-in-possession term loan facility (the “DIP Loan Facility”). Following the extension, the solicitation period will expire at 5:00 p.m., New York City time, on June 3, 2015.
The solicitation process is being conducted in connection with a commitment letter (the “Commitment Letter”), dated March 17, 2015 between the Company and certain holders of the Convertible Notes (the “Backstop Lenders”). The Company was authorized to undertake the solicitation process pursuant to an order of the Bankruptcy Court entered on April 2, 2015. On April 29, 2015, the Company and the Backstop Lenders entered into a second amendment to the Commitment Letter by which, among other things, the Backstop Lenders agreed to an extension of their commitment to provide the DIP Loan Facility to an outside date of June 15, 2015, subject to certain terms and conditions as described more fully in the Form 8-K filed by the Company on April 30, 2015.
GTATQ jumped after they won bankruptcy court approval of a settlement with Apple Inc. that wards off the threat of litigation over a failed effort to produce large quantities of scratch- and shatter-resistant smartphone screen materials.
”Approval from Judge Henry Boroff came after GT Advanced and Apple came to terms with leading creditors who had threatened to derail the pact and transform GT Advanced’s bid for an operational turnaround into a litigation-driven bankruptcy aimed at Apple.”
This represents a massive win for shareholders and puts a lid on litigation that could erupt from the corporate breakup that shocked investors unaware that the business relationship was on the rocks.
GT Advanced Technologies is a leading diversified technology company producing advanced materials and innovative crystal growth equipment for the global electronics, solar and LED industries. Their technical innovations accelerate the use of advanced materials, enabling a new generation of products across this diversified set of global markets. Their technologies help our customers lower the cost of manufacturing providing a high return on investment.
GTATQ has been focused on manufacturing smartphone screen material, a venture financed by Apple with $439 million worth of loans for the past year. GT Advanced also spent $900 million to pursue the transformative supply connection to Apple which left the Companies finances in tatters. GTATQ filed for Chapter 11 bankruptcy protection soon after.
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In the bankruptcy release GTAT indicated that as of September 29, 2014 it had approximately $85 million of cash. In addition, it is now seeking debtor-in-possession financing, which, once obtained, would provide the company with an immediate source of additional funds. These funding sources will enable GT to satisfy the customary obligations associated with the daily operation of its business, including the timely payment of employee wages and other obligations.
“GT has a strong and fundamentally sound underlying business,” said Tom Gutierrez, president and chief executive officer of GT. “Today’s filing does not mean we are going out of business; rather, it provides us with the opportunity to continue to execute our business plan on a stronger footing, maintain operations of our diversified business, and improve our balance sheet.
According to court papers GTATQ accused Apple of keeping it a “captive” supplier, subject to shifting specifications as well as being a victim of Apple’s interference in the manufacturing process. Apple on the other hand said that they were the losing party, left without sapphire screen material, vilified as a corporate bully and owing hundreds of millions.
The settlement approval is a huge win for GTATQ shareholders and gives the Company 4 years to sell off the equipment from the abandoned sapphire manufacturing venture and to pay Apples debt. The Company plans to keep above water by selling the equipment and says they plan on getting back to its roots as a manufacturer.
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Currently trading at a $35 million market valuation GTATQ did make a big move as after they won bankruptcy court approval with the Apple settlement. Since then GTATQ has been steadily drifting lower on little interest from Investors. We will be updating on GTATQ on a daily basis so make sure you are subscribed to microcapdaily.com so you know what is going on with GTATQ.
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Disclosure: we hold no position in GTATQ either long or short and we have not been compensated for this article.