Former Apple Supplier GT Advanced to Cut 40% of Workforce
August 31 2015 - 2:30PM
Dow Jones News
By Patrick Fitzgerald
GT Advanced Technologies Inc., which is trying to emerge from
bankruptcy after losing its deal to supply scratch-resistant
smartphone screens to Apple Inc., said Monday it was reducing its
workforce by 40% in a bid to cut costs.
The company, which had already laid off some 700 workers at a
former Arizona sapphire-manufacturing facility, said the further
cuts will save it $20 million a year and help it "right size" its
costs after exiting chapter 11, according to papers filed in U.S.
Bankruptcy Court in Manchester, N.H.
The number of workers getting pink slips is unclear. A company
spokesman couldn't be reached for comment. GT Advanced had about
1,000 employees when it filed for bankruptcy in October.
A group of GT Advanced bondholders put up $95 million to fund
the company's bankruptcy restructuring. The company is using the
cash to fund a revised plan that calls for the ex-Apple supplier to
return to its roots of making industrial and solar equipment.
To that end, GT Advanced said it recently shared a preliminary
plan term sheet with its key creditors. Among the outstanding
issues facing the estate is whether intercompany loan obligations
can be characterized as equity contributions instead of true debt
obligations.
Also up for discussion, according to court papers, is the
ownership of more than $30 million in tax refunds plus valuable net
operating losses. Federal tax law allows companies to use net
operating losses from one year to write down earnings from another
year for tax purposes.
GT Advanced's lawyers say the company needs a 45-day extension
of its exclusive control of its case to negotiate the terms of a
chapter 11 plan with creditors. So-called exclusive periods protect
a firm restructuring under chapter 11 from outsiders who might look
to interfere with the reorganization process for their own
benefit.
The company seeks to extend the deadline to file a chapter 11
plan to Oct. 15. Without an extension, creditors and other parties
could file competing plans, which at a minimum would complicate the
confirmation of the Houston-based oil company's own plan. A hearing
on the request is slated for Sept. 17.
A downsized GT Advanced still hopes to exit chapter 11 early
next year. The New Hampshire-based company spent heavily to
transform itself from a manufacturer of industrial equipment to a
maker of sapphire screen material for Apple. However, the project
struggled to produce a consistent level of sapphire at the quality
demanded by Apple.
In the end, Apple didn't use sapphire from the Arizona facility,
which Apple owned and GT Advanced operated. Shortly after its
bankruptcy filing, GT Advanced said it planned to lay off more than
700 employees.
The two sides settled their differences early in the bankruptcy
under an arrangement giving GT Advanced time to sell furnaces to
pay a debt to Apple. Apple, meanwhile, is converting the Arizona
facility to a data center.
Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com
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(END) Dow Jones Newswires
August 31, 2015 14:15 ET (18:15 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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