Judge Restores GT Advanced Loan Terms, Approves Borrowing
GT Advanced secures approval to borrow $95 million
By Jacqueline Palank
The Wall Street Journal
Updated July 27, 2015 12:56 p.m. ET
GT Advanced Technologies Inc., GTATQ -1.52 % 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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