GT seeks to close sapphire plant and sever ties with Apple

Let's go over the GT Advanced Technologies timeline. In late 2013, the company inked a deal with Apple to provide sapphire glass for iPhones and other gadgets—Apple would loan GT the money to build a sapphire manufacturing facility in Arizona, and in exchange, GT would sell that sapphire primarily to Apple. Rumor had it that the then-forthcoming iPhone 6 would use sapphire or sapphire-coated glass to protect their displays from scratches, and it sent GT's stock climbing. On September 9, Apple announced new iPhones with "ion-strengthened glass," not sapphire. This sent GT's stock sliding downward. On Monday, GT filed for Chapter 11 bankruptcy. And today, GT said in separate filings with the US Bankruptcy Court in New Hampshire that it wants to terminate its contract with Apple and close the Arizona facility.

The filing to end the contract with Apple (PDF) states that the terms of GT's contract with Apple are "oppressive and burdensome," and the separate filing requesting to shutter the sapphire plant claims that doing so is the only way to rescue GT's business. Closing the factory will cut 890 jobs (PDF). From the filing:

...the cash burn at GTAT's sapphire manufacturing operations for the benefit of Apple is not sustainable. Therefore, after a careful evaluation of all alternatives, and in consultation with its advisors, GTAT has determined that in order to preserve the value of its estates it must wind down its sapphire manufacturing operations in Mesa, Arizona, and Salem, Massachusetts, with reductions in associated supporting personnel at GTAT's Merrimack, New Hampshire, offices. Concurrently with the filing of this Motion, GTAT has also filed a separate motion seeking to
reject a series of Apple agreements related to these operations that will no longer be required.

GT may yet pursue additional legal action against Apple, as the company "believes that it has many claims against Apple arising out of its business relationship with Apple." More specific information about "further claims" was not disclosed.

Though confidentiality agreements apparently inhibit GT from disclosing exactly why its financial situation is so bad, current speculation says that the iPhone 6 situation is mostly to blame. The breakdown of the deal between Apple and GT has also raised other uncomfortable questions—GT CEO Thomas Gutierrez sold about $160,000 in GT stock the day before the iPhone announcement and has sold around $10 million in shares since February of 2014.