GTAT cuts workforce by another 40 percent
‘Part of the normal procedure’ of going through bankruptcy, company says
GT Advanced Technologies is reducing its workforce by 40 percent as part of a yet-to-be disclosed new business plan, its attorney, Luc Despins, revealed Thursday in bankruptcy court in Manchester.
“We don’t have three months,” he said. “This is happening in real time.”
But a spokesperson from the company later downplayed the move.
“It is part of the normal procedure of people going through reorganization, to come up with a new business plan to come out of bankruptcy,” GTAT spokesperson Jeff Nestel-Patt told NH Business Review.
The move is expected to save the company $20 million.
Nestel-Patt and Despins declined to say how many employees would be laid off nationally or at the company’s Merrimack headquarters, but Despins did say that GTAT would not be required to give workers 60 days’ notice, as required under state and federal WARN laws.
That would mean the total number of layoffs would be less than 100 full-time equivalents, which would mean that GTAT’s workforce has shrunk to less than 250 employees.
At the end of 2013, GTAT had 541 full-time equivalents, with 185 in New Hampshire, according to the company’s last annual filing with the U.S. Securities and Exchange Commission. In July, according to a bankruptcy trustee filing, there were 400 employees.
After this latest reduction, there will be fewer than 150 remaining.
On paper, GTAT has lost more than $370 million since it filed for bankruptcy last October but much of those losses are on paper.
Revelation of the reduction announcement came less than two weeks after Thomas Gutierrez, CEO since 2009, retired, replaced by David Keck
Gutierrez resigned without explanation, but statements made at the hearing indicate that it wasn’t at the best of terms.
Despins said that the change was favored by the creditors committee, and when discussing a motion about severance from lower-level executives in Hong Kong, he assured the court that the “CEO is not getting anything.”
Despins asked Judge Henry J. Boroff to close the courtroom to the press, presumably to disclose more details, but the judge declined, and that was all he said on the matter.
‘A seat at the table’
During the last two weeks, Keck has been busy re-evaluating the business “from the ground up” and has concluded that the company must revise its business plan, Despins said. Keck has met with the creditors and bondholders about the matter, Despins said.
But Keck did not meet with the Ad Hoc Committee of Equity Holders, which claims to represent the interests of those holding 137 million shares of outstanding stock, now being sold over the counter for less than a dime.
The group – claiming to consist of 17 shareholders with about 4 million shares – wants official recognition, which would mean that its attorneys would be paid out of the bankrupt estate.
“They want a seat at the table,” Despins said of the committee. “There is no table. We sold the table.”
Later, he added, “There is not a chance for recovery for the equity holder.”
Still, the equity committee’s attorney, Peter B. McGlynn argued that it had filed a valuation report indicating that the company was worth as much as $1 billion. Despins, however, said that report was done when the sapphire market was much stronger.
But Judge Boroff, who has ruled against four other motions to form an equity committee, seemed more willing to consider this one, saying it was argued in a more “cogent fashion.”
He said it was a “bit unfair” to criticize a report for not having up-to-date information, and then deny the group that information. He ordered that the equity committee would be “brought under the tent,” while he ordered the committee to come up an estimate of how much it would cost.
Boroff said he understood the company was losing money. “I get it, but that doesn’t tell me the company’s potential, only what it is doing now. It doesn’t mean it’s hopelessly insolvent. It just mean it’s losing money.”