Shares in GT Advanced Technologies plunged 90 percent after the firm filed for bankruptcy.
GT Advanced Technologies Inc., (Nasdaq:GTAT), announced that it had, together with certain of its direct and indirect subsidiaries (collectively, GT), commenced voluntary cases under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of New Hampshire. GT expects the court will authorize the company to continue to conduct business as usual while it devotes renewed efforts to resolve its current issues and develops a reorganization plan.
The US company, which makes sapphire crystal glass, is now worth just 175 million USD, down from 1.5 billion USD on Friday.
GT, which makes sapphire crystal glass, indicated that as of September 29, 2014 it had approximately 85 million USD 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.
As a result of the filing, and as is customary with public companies, NASDAQ may temporarily halt trading in the company’s stock pending the receipt of additional information on the company’s financial condition. The company is cooperating with NASDAQ and will be providing any requested information as promptly as possible.
“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.
“We are convinced that the rehabilitative process of chapter 11 is the best way to reorganize, protect our company and provide a path to our future success. We remain committed to our roots in innovation and our diversification strategy. We plan to continue to operate as a technology leader across our core set of businesses.”
The company indicated that it expects to provide additional details with respect to the chapter 11 filing as soon as they are available.
Last November, GT announced it had signed a deal with Apple to manufacture sapphire materials. That led to speculation that the technology giant would be using GT’s glass in its new iPhone models. However, in August, GT announced that an Arizona factory it was building with Apple would not be up-and-running until next year – too late to be producing glass for Apple’s phones.
Its sapphire crystal glass is still expected to be used in two models of Apple’s new Watch wearable device.
After the announcement of the new phone, investors were stunned that GT’s material was noticeably left out. Shares of GT Advanced lost more than a third of their value since Apple decided to use hardened glass from GT Advanced rival Corning instead. As a result of the bankruptcy filing, GT shares dropped 10.13 USD, or 92 percent, to 92 cents USD per share.