GT Advanced Technologies said it reached an agreement with Apple under which GT Advanced would exit the production of sapphire materials.
The company will shut down its factories in Mesa, Arizona, and Salem, Massachusetts, the company said in a statement on Thursday.
Under the terms of the agreement, GT Advanced will be released from all exclusivity obligations with Apple and a mechanism will be provided for the iPhone maker to recover its $US439 million prepayment to GT Advanced, without interest.
In afternoon trade following the news, GT Advanced shares that were trading over the counter under the ticker ‘GTATQ’ were up more than 45% to about $US0.78.
The announcement from GT Advanced follows the company’s initial bankruptcy announcement on Oct. 6, which caught the market flat-footed and sent shares of the company tumbling by more than 90%. GT Advanced shares closed below $US1 on a Monday after closing near $US11 the previous Friday.
Following that announcement, many on Wall Street and in the industry were left scratching their heads, though at least one analyst Business Insider spoke to at the time surmised that something must have gone awry in the agreement between Apple and GT Advanced.
In November 2013, the two companies announced a $US578 million supply agreement in which GT Advanced would manufacture sapphire materials for Apple. And ahead of Apple’s iPhone 6 launch, many speculated that the new phone would feature a full sapphire display. Shares of GT Advanced took a huge hit after that failed to materialised.
In a statement on Thursday, GT Advanced CEO Tom Gutierrez said: “We realise that our filing for Chapter 11 protection has caused uncertainty and hardship for many of our important stakeholders. We have been working diligently to develop a restructuring plan that will allow us to emerge from Chapter 11 as quickly as possible and with the operating flexibility and resources to position GT for long-term success. This agreement with Apple is an important step in that direction as it will allow us to monetise our advanced sapphire growth and fabrication technologies in an unrestricted manner.”
As a result of GT’s decision to close its sapphire operations, it will lay off approximately 650 employees at its Mesa plant, which the company initially built to produce sapphire for Apple.
You can read the full statement from GT Advanced here.