The shock chapter 11 bankruptcy of major PV equipment provider, GT Advanced Technologies (GTAT) was said to be due to ‘severe liquidity issues', according to preliminary court papers.
In initial court papers, the only reference to GTAT’s chapter 11 filing that provides any insight into the reasoning behind move were as follows:
“GTAT is facing a severe liquidity crisis due to circumstances that will be more fully described at the hearing on the First Day Pleadings.”
The company had previously reported US$333 million in cash at the end of the second quarter of 2014, indicating it spent US$248 million in the third quarter as it primarily invested in its sapphire substrate manufacturing plant as part of its deal with Apple.
GTAT executives had noted in its second quarter earnings call in early August that it expected the third Apple prepayment of US$103 million during the third quarter, while operational targets would need to have been met for the fourth payment by Apple at the end of October totalling US$139 million.
GTAT said it had US$85 million in cash when announcing the bankruptcy.
It would seem that at least the fourth planned payment at the end of October was not received from Apple, forcing the company into bankruptcy on the back of an operating liquidity crisis.
It remains unclear whether GTAT failed to meet operational targets for Apple or whether other circumstances around the business relationship with Apple led to the bankruptcy proceedings.
No other financial issues, including convertible bonds not due until 2016 and 2017 would seem to explain GTAT’s sudden liquidity issues.