GTAT inks $100 million financing deal
Company seeks bankruptcy court approval for loan
GT Advanced Technologies has signed a deal for $100 million in financing, pending the bankruptcy court’s approval, as the Merrimack-based firm continues to lose millions of dollars every month.
A revised filing emerged on Thursday seeks permission to pay the lenders – TPG Specialty Lending and TAO Finance 2 LLC – a $2 million “work fee” to obtain the financing, plus up to $600,000 in expenses and 4 percent of the loan if GTAT should change its mind and go with someone else.
The court will hear the motions on March 18 in Boston.
The debtor-in-possession financing, if approved, couldn’t come at a better time for GTAT, which filed for Chapter 11 on Oct. 6 after a deal went sour to provide Apple Inc. with sapphire to make screens for its mobile devices, leaving a couple of thousand furnaces idle on Apple property in Mesa, Ariz.
GTAT hopes to sell the furnaces for about $500,000 each, but has to give a certain amount to Apple to pay it back the $439 million it advanced GTAT for the project.
The company’s latest operating report shows that GTAT lost another $10.7 million in January, on top of a $300 million loss in the October filing.
At the end of January, GTAT was down to $76.6 million in cash, compared to $87.7 million at the beginning of the month. Stockholders have a negative equity (they owe more than they own) of over $250 million.
In addition, the company has accounts receivable of $5.4 million, but $3.2 million of that is considered uncollectable. And projections for bondholders show that the company will continue to lose money, according to the SEC filing.
Between March 12 and May 8, the company says it expects to lose $38.6 million, leaving it with just under $40 million in cash. It will have a negative monthly cash flow for the rest of the year, except in December, when it expects to gain $33 million. Even with that turnaround, the company still projects that it will lose $52.5 million for the year.
But the company is maintaining that it will turn around, primarily because of some new technologies.
One, dubbed Merlin, would enable GTAT customers to produce materials to make cheaper and more efficient solar cells. According to the SEC filing, GTAT thinks that Merlin will account for more than a third of its future revenue.
Meanwhile, the company is appealing the bankruptcy court’s rejection of $3.7 million in incentive bonuses for its executives.
The court was “substituting its own judgment for the business judgment” of GTAT, according to the company’s view of the issues at stake on appeal. GTAT said it needs the incentive payments to retain the executives during the bankruptcy process.