GTAT update: Company seeks to end sapphire manufacturing

Plans revealed in bankruptcy judge’s late Thursday order

GT Advanced Technologies wants to wind down its sapphire manufacturing operations – most likely the Arizona facility built to provide material for Apple’s mobile device screens – according to a court order partially denying the Merrimack-based company’s motion to keep such plans secret.

Most of the company’s 1,187 employees work at the Mesa, Ariz. facility.

The order, issued Thursday evening by Judge Henry Boroff, was in response to GTAT’s motion – described by the firm’s own attorneys as “bizarre” and “unprecedented” – to withhold from creditors and the public the reason behind its bankruptcy filing on Monday. The company cited a confidentiality agreement attached to the $500 million- plus deal with Apple, which specifies penalties of $50 million a day per violation.

Boroff said that some details in that agreement could remain sealed, but GTAT must file several wind-down motions that would be public, except “in the event any such information relates to the details of the debtor’s business relationship with Apple.”

Then GTAT must provide what it intended to disclose three days beforehand, at which time Apple can object to its disclosure.

A hearing on the motions is scheduled to be held Oct. 15 in Springfield, Mass., where Boroff usually presides. (Boroff took over the case after Bruce Harwood, the New Hampshire judge, recused himself for reasons that he did not disclose.)

GTAT signed the deal to supply Apple with sapphire last fall. In that deal, Apple said it would advance GTAT $578 million to build and equip the facility on land owned by Apple. But in September, the technology giant announced that it would not include sapphire in its new iPhone, only its Apple Watch, meaning that a lot less sapphire would be needed.

In addition, the Watch’s launch was delayed, possibly delaying a final prepayment of $139 million to GTAT.