Apple Inc. (NASDAQ:AAPL)’s supplier, who recently filed for bankruptcy, problems don’t seem to be ending. GT Advanced Technologies Inc (OTCMKTS:GTATQ) was seeking protection from bankruptcy, and as it is approaching bankruptcy an inquiry has been initiated by the U.S. Securities and Exchange Commission (SEC) on trading of shares by the company.
Another trouble for Apple supplier
Yesterday, a filing was made by SEC regarding the inquiry made by it against Apple’s supplier GT Advanced Technologies. The inquiry could help in knowing that what was going through the minds of the executives at GT Advanced while selling off their shares and why they could not fulfill the commitment they made to Apple regarding the delivery of scratch-resistant sapphire glass for the new iPhone models. The filing also informed that the company is cooperating with the authorities.
A data from Elink.com Inc indicates that shares worth more than $18 million were sold by the company insiders including the Chief Executive Officer Thomas Gutierrez and Chief Operating Officer Daniel Squiller during all those months.
Apple Inc. (NASDAQ:AAPL) introduced big screen iPhones in September, but they came without the sapphire glass, which was rumored since long. In October, a filing for Chapter 11 reorganization was made by the Apple supplier. GT Advanced is facing a major challenge in the form of the inquiry by SEC, and this serves as warning to those suppliers who depend largely on single, big customer.
Sapphire glass the reason for chaos
Sapphire Glass for the new iPhone 6 models was to be supplied by GT Advanced to Apple Inc. (NASDAQ:AAPL). The deal was finalized between the two, and as a part of which Apple was required to make an advance payment to GT Advanced in four installments. The last and final check was to be paid in April, which was not paid by Apple, as disclosed in court records GT Advanced.
Almost a year back the deal was signed between Apple Inc. and GT Advanced Technologies, and as per the terms the U.S firm was required to make a prepayment loan of $578 million to GT Advanced for investing in building the furnaces that would have been used for manufacturing of synthetic sapphire. GT Advanced was working on an Apple-owned factory located at Mesa, Arizona for the purpose of converting it into a sapphire producing unit. Significant costs were incurred by GT Advanced during the first half of the year as disclosed by the company in the quarterly earnings released by it in August, and this was an early sign of trouble brimming for GT Advanced.