GT Advanced Technologies Inc., which once had a deal to supply
smartphone screen material to Apple Inc., secured approval to
borrow $95 million after butting heads with its bankruptcy judge
over the loan's terms.
After his proposed revisions to the loan drew the ire of GT
Advanced and the bondholder group providing the loan, court papers
show U.S. Bankruptcy Judge Henry J. Boroff on Friday authorized GT
Advanced to take out the loan on the terms that the borrower and
its lenders had negotiated.
GT Advanced presented the loan, from a bondholder group led by
Cantor Fitzgerald Securities as agent, for the court's approval at
a hearing last week. After the hearing, Judge Boroff filed papers
indicating the loan terms he was willing to approve.
The company and its lenders, however, cried foul, with the
lenders saying the court's changes to the loan they negotiated
would "fundamentally change" the loan terms and would leave them
"no longer willing" to provide the funding.
GT Advanced urged Judge Boroff to reconsider, citing its
"critical" need for the debtor-in-possession, or DIP, financing to
support its reorganization and its lack of any other financing
proposals.
"It bears repeating that there is no alternative DIP financing
available in the event the DIP lenders decline to proceed," the
company said in court papers. "And the failure to obtain DIP
financing at this stage (particularly given the publicity that
GTAT's efforts to obtain financing have received to date) would
send an incredibly negative signal to GTAT's suppliers, customers,
and employees and could precipitate a very negative turn of events
for GTAT."
Among one of the changes the judge had sought was to give
himself the right to authorize, over the lenders' objections, the
sale of any GT Advanced assets securing the lenders' claims.
"Suffice it to say that GTAT appreciates the court's position
that it does not want its powers to be eroded by a DIP credit
agreement. However, every DIP financing, by its nature, necessarily
involves some form of limitation on the court's powers in certain
circumstances," GT Advanced said in court papers.
GT Advanced plans to use the financing to fund a restructuring
in which it will return to its roots of making industrial and solar
equipment.
The company filed for chapter 11 protection last October in the
midst of a messy breakup with Apple, for whom GT Advanced was to
produce sapphire, a scratch- and shatter-resistant material, for
Apple's iPhone screens. But the partnership didn't work out,
prompting GT Advanced's bankruptcy filing and a courtroom battle
that preceded the companies' eventual settlement.
Write to Jacqueline Palank at jacqueline.palank@wsj.com
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