(Reuters) - GT Advanced Technologies Inc altered its settlement with former partner Apple Inc to produce more near-term cash to support its emergence from bankruptcy, a lawyer for the sapphire maker told a court on Monday.
The new terms should be worth $50 million more than the original settlement, according to an attorney for GT noteholders, providing financing critical to return the business to its pre-Apple focus on selling sapphire furnaces.
The Merrimack, New Hampshire-based company abandoned the furnace business in 2013 when it agreed to begin supplying Apple with scratch-resistant sapphire material for iPhone screens. But Apple then turned to a different material for the screen of its iPhone 6 model.
GT Advanced, which invested heavily into increasing production of sapphire materials for Apple, blamed the supply agreement for forcing it into bankruptcy in October, a move that shocked investors and sent its stock plummeting more than 90 percent to under $1 before Nasdaq suspended the shares.
The stock, now traded over the counter, shot 48 percent higher on Monday to close at 40.8 cents per share after news of the new deal terms.
U.S. Bankruptcy Judge Henry Boroff in Springfield, Massachusetts indicated on Monday he would approve the settlement once the final wording was documented. The deal will allow GT Advanced to raise cash by initiating the sale of about 2,000 sapphire furnaces in Mesa, Arizona.
The furnaces were installed to make sapphire for Apple, which loaned GT $439 million for the project.
Despins told the court he anticipated each furnace would fetch at least $500,000. Apple would receive $169,000 for each of the first 500 furnaces under the modified agreement. Previously, the parties had agreed that Apple would get $200,000 from each of the first 500 furnaces sold.
The new settlement terms also allow GT to store its furnaces in Mesa rent-free for an additional three months, to the end of next year.
Michael Stamer, an Akin Gump Strauss Hauer Feld attorney who represents investors who hold $230 million of GT notes, said the new terms improved the original settlement by at least $50 million, prompting his group to withdraw its objection.
Neil Augustine, a Rothschild Inc financial expert who advised GT’s board, testified that the case against Apple offered the potential for a big win, but it might cost $15 million to bring. The company only has $6 million in cash.
“If we lost, it would be game over for the company,” Augustine said. “We concluded we should do the settlement.”
The case is In re: GT Advanced Technologies Inc., U.S. Bankruptcy Court, District of New Hampshire, No. 14-11916.