Apple and GT Advanced Technologies Contracts

Last week, GT Advanced Technologies Inc., a company formerly known as GT Solar International, Inc., filed for bankruptcy under Chapter 11 of the US bankruptcy code. The company is seeking a reorganization and will continue to operate their business.

On October 31, 2013, GTAT Corporation had entered into a prepayment agreement with Apple Inc. Under the agreement, Apple had agreed to make a prepayment of $578 million in advance for the purchase of sapphire goods under the Master Development and Supply Agreement and the Statement of Work. GTAT had already received three installments of $440 million so far.

Pursuant to paragraph 6 of the prepayment agreement, Apple may demand repayment of the entire prepayment balance if GTAT is subject to an insolvency proceeding. This will be stayed as a result of the bankruptcy filing.