(Reuters) - Apple and GT Advanced Technologies Inc struck an agreement on Tuesday that will let GT begin the shutdown of key Arizona operations, and shed some more light on why the former stock market darling abruptly filed for bankruptcy this month.
A lawyer for GT, Apple’s erstwhile sapphire supplier, described the deal at a hearing in U.S. Bankruptcy Court in Springfield, Massachusetts, saying it would save the company money and allow it to be more open about its mysterious Chapter 11 filing on October 6.
Scant details have emerged since the filing, which wiped out most of GT’s market value and triggered speculation as to what may have soured its relationship with Apple.
It remains unclear how much information GT would get to reveal under Tuesday’s agreement, which was described verbally by GT’s lawyer but has not been fully outlined in court filings.
GT’s bankruptcy hearings have drawn the attention of industry experts seeking insight into how the world’s most valuable technology company runs its famously secretive production and supply chain that stretches from China to the United States. Apple is known for exacting standards and demands that often leave suppliers little room for profitability.
Key court filings revealing the reasons for GT’s bankruptcy - routine in most Chapter 11 cases - have been filed with the court in secret. GT Advanced had cited confidentiality requirements in its Apple contracts which, if violated, carry fines of $50 million.
On Tuesday, lawyers for both companies reached a deal that will let GT begin selling more than 2,000 furnaces installed at a plant in Mesa, Arizona, that Apple financed. The iPhone maker will get an undisclosed portion of any proceeds. Luc Despins, an attorney for GT, described the deal as an “amicable parting of the ways” between the companies, avoiding litigation.
In conjunction with the deal, GT would reveal more detail about what caused it to go bankrupt.
But parties who have demanded transparency - including the state of New Hampshire, where GT is based - voiced lingering skepticism during the hearing, saying it remains unclear how much information the public will get, or when.
GT hopes to file more detail on the settlement by Friday, Despins said. The deal is tentatively scheduled for a court approval hearing in November.
The original request to keep documents secret underscores the highly unusual nature of the case, starting with a bankruptcy filing that caught everyone from Wall Street to Apple itself off guard.
At the heart of GT’s abrupt bankruptcy filing was a deal struck with Apple in November 2013. GT Advanced was to have used the Arizona plant to make scratch-resistant sapphire exclusively for Apple. That sapphire was to have eventually found its way into future mobile devices, such as iPhones - where it’s already in use in their fingerprint sensors - or the upcoming Apple Watch.
But, sources and analysts say, GT Advanced was not hitting the required production targets as set out in its original agreement with Apple.
Reporting by Nick Brown in New York and Noel Randewich in San Francisco; Editing by Tom Brown, G Crosse and Jonathan Oatis