Apple Surprised by GT's Bankruptcy Filing, Considering Next Steps

bbeagle said:

Apple loaned GT $441 million so far. GT is mismanaged and planned to not pay Apple back, which is why they filed bankruptcy.

Apple would be out another $139 million if they gave GT the remainder of the loan. GT would have just declared bankruptcy in January when the first payment came due.

It would be ridiculous for Apple to not pay $139 million to secure their $441 million investment, so Apple must have seen things going wrong at GT.

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Is that really possible? If so, then this is a prime example of how screwed up the U.S. is. Everyone (me included) complains about how Apple is doing all the manufacturing overseas. They bring some of it back home and boom, immediately get screwed. I guess that's the price of doing business in Amerika these days. We create these policies, tax incentives and laws that practically force businesses to have to go overseas, and then complain when they do. Then when a company tries to come back, the greedy b*stards over here suck them dry. I wonder what was preventing Apple from just buying this company?

Breaking Good said:

I can't help but wonder what Wendell Weeks, CEO of Corning Glass Company (maker of Gorilla Glass), has to say about this. He said Sapphire was a poor choice for a display screen and everyone accused him of sour grapes.

Corning Glass needs to do some type of "I told you so" ad campaign.

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Irrelevant. It's the company that's going bankrupt, not the technology. It doesn't mean Corning is better.


Anyway, if Apple wasnt under any obligation to buy from them, couldn't they find other contracts? It sounds like somebody was really lazy and falsely assumed Apple would "some time soon" start ordering from them, instead of doing what any company should be doing: getting clients.

i think this is what Apple saw: a company that is basically becoming a money drain; they assumed they'd never see those $400m, so they decided to keep the last $140m.

i mean, c'mone. it's like getting a government student-loan. do you automatically assume you'd get a government job after graduating, and become homeless on purpose if you don't?

gavroche said:

Now, granted, I know that you are going to tell me the Wall Street Journal is also an untrustworthy organization. So clearly they are wrong too. So here is a filing with the SEC, where they refer several times to the loan:

http://www.sec.gov/Archives/edgar/data/1394954/000110465913082405/a13-19507_1ex10d4.htm

But hey... next you will tell me that filings with the Securities and Exchange Commission are wrong too. Because... i mean... you couldn't possibly be wrong. Never.

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Don't pay for the WSJ, can't read it. I will say, I doubt media members qualify as expert accountants or lawyers. Also, they write to a pretty low common denominator, no doubt using vernacular to accommodate non-experts.

The SEC filing is redacted, but enough is shown to see that this is a prepayment for goods. The "goods" are a factory, in which either GTAT or Apple may "own" the creation of sapphire (the limited info given means I can't quite be specific). Most of the references to "loan" are between GTAT and the "SPE", which is a subsidiary company they set up to manage the factory that houses the furnaces. GTAT loaned the money to the SPE.

Now, all that said, this is still an amount of money that GTAT owes to Apple, after a fashion. They are supposed to pay it back (I think, too much is redacted or in other documents we haven't seen) by letting Apple make sapphire screens(?) in the factory (or possibly making it for Apple), which will make Apple money, which value will "forgive" the debt. However, if there are any defaults, called "Trigger Event", Apple has the right to demand back 100% of whatever outstanding money GTAT owes them, as a cash payment. That option exists, and is now presumably being used because of the bankruptcy, but is not the intended payback format as outlined in the agreement.

As I said somewhere above, "loan" is probably adequate terminology for laymen to try to understand. But laymen ranting on and on about how wrong the expert people are, makes us respond with corrections to your rants.

JAT said:

As I said somewhere above, "loan" is probably adequate terminology for laymen to try to understand. But laymen ranting on and on about how wrong the expert people are, makes us respond with corrections to your rants.

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I sorry that you feel i was ranting. That entire debate (debacle) was because one person got so bent out of shape because i referred to it as a loan. And yes, calling it a "loan" is a simplified, but effective, way of referring to it. Hence the reason that all the publications have referred to it as such. Hence the SEC filings refer to it as such. Hence Apple referring to it as such.
After being told how stupid i was for calling it a loan, all i tried to point out is that under GAAP, if you make a prepayment of any expense, it is reported and accounted for exactly the same as a loan. It's a pretty straight forward concept. What anyone wants to "call" it or "refer" to it as does not matter. Still goes in the exact same place on the balance sheet.