By Peg Brickley
GT Advanced Technologies Inc. is lining up $95 million worth of loans to rehabilitate a business left in disarray by a year-long effort to become a supplier to technology giant Apple Inc.
Judge Henry Boroff Wednesday cleared the company to pay a $2.85 million commitment fee to a group of existing bondholders, who are putting together a bankruptcy financing package. GT's bondholders outbid a specialty lending affiliate of TPG for the right to loan money to the New Hampshire manufacturer, which filed for bankruptcy protection last year after Apple spurned the sapphire screen material it had produced.
Recovery in bankruptcy means returning to its base as a manufacturer of equipment such as the furnaces that produce sapphire, an effort that GT feels will take about $100 million in new loans. The proposed bankruptcy financing still must be completed and approved by the court. It calls for GT to exit Chapter 11 protection early next year.
TPG was willing to finance GT's Chapter 11 revival, but GT's bondholders beat the terms offered by the outside lender and were chosen as turnaround lenders, company lawyer Luc Despins said at a hearing in the U.S. Bankruptcy Court in New Hampshire.
The financing arrangement drew fire from U.S. Trustee William Harrington, who protested a provision that would have called for GT to pay lawyers for the bondholder group offering the loan. The provision was dropped and other changes made to calm concerns voiced by the official committee of unsecured creditors and federal watchdogs.
Members of GT's lending group include Whitebox Advisors LLC, Aristeia Capital LLC, QPB Holdings Ltd., Wolverine Flagship Fund Trading Limited, Jefferies LLC, Pine River Capital Management LP, and AQR Funds.
Enticed by the chance to link up with the smartphone giant, the New Hampshire company spent heavily to transform itself from a manufacturer of industrial equipment to a manufacturer of sapphire screen material for Apple.
An effort to produce the scratch- and shatter-resistant material at a volume never before attempted failed to pan out, for reasons that were a matter of dispute between GT and Apple. They settled their differences early in the bankruptcy, under an arrangement that gives GT time to sell furnaces to pay off a debt to Apple.
The company's down to $67.5 million cash, and needs the new loans to get its manufacturing business back up and running, after the unfortunate interlude with Apple, according to court testimony.
Write to Peg Brickley at email@example.com
Access Investor Kit for Apple, Inc.
Access Investor Kit for GT Advanced Technologies, Inc.