Apple Inc. (NASDAQ:AAPL) may bail out GT Advanced Technologies Inc (NASDAQ:GTAT)

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By Stefan Larson on October 7, 2014 Intl News

GT Advanced Technologies Inc (NASDAQ:GTAT) is a company that has innovative equipment that benefits companies that are specific to electronics as well as LED and solar based industries.GT Advanced Technologies Inc (NASDAQ:GTAT) has filed for bankruptcy in New Hampshire, their home state. This United States company signed a deal with Apple Inc. (NASDAQ:AAPL) just last year to exclusively supply the electronic giants with materials needed to create smart phones and other electronic gadgets. The courts are expected to allow this business to continue while reorganizational issues are in the process of being resolved.Tom Gutierrez, the CEO of GT Advanced Technologies Inc (NASDAQ:GTAT) has been quoted in saying that GT has a fundamentally strong and solid core business and that the bankruptcy filing does not means that business is failing. In fact, he said, it provides an opportunity to continue business as usual by improving the overall balance sheet and making a smooth path toward reorganization. The short term plan is to seek DIP (debtor in possession) financing as this type of financing was used in 2009 when General Motors and Chrysler where hit hard by global financial crisis. If this type of financial funding is acquired, it would mean that basis day to day operations would not be affected, such as paying employees in a timely manner.Apple Inc. (NASDAQ:AAPL) has stepped in and they would own the facility in Arizona where the sapphire is currently being made and GTAT would operate and own the furnaces that are required to produce the crystals. The loan is due to be paid off within 5 years, beginning January 2015. As stated by a GTAT representative, regardless of what quantities of the material will be purchased, the repayment obligation will begin as scheduled.

The repayment obligation can be adjusted if certain technical or financial metrics are not met. GTAT has recently said that they have expended a significant amount of capital to convert the Arizona location, which is over one million square feet, into a fabrication facility. In addition, the company has also stated that the resources used in the purchase and equipment installation and other operations costs will have a significant financial impact on the end results. Due to this expenditure, the cost of producing the sapphire at this new location is significantly above its planned target. This may explain why Apple Inc. (NASDAQ:AAPL) has not yet launched this high profile product in mass quantities.

Many consumers and investors expected the sapphire to appear on the newest models of iPhone by why Apple Inc. (NASDAQ:AAPL) and this change in design has prompted some analysis to wonder if this was due to production issues encountered by GT Advanced Technologies Inc (NASDAQ:GTAT).As of the opening bell, Apple Inc. (NASDAQ:AAPL) was 99.43 and at 11:40 EDT, it is holding at 99.30. The market cap is 595.97B and the 52 week range is 68.33 to 10.74.On the other hand, GT Advanced Technologies Inc (NASDAQ:GTAT) was.95 at the opening bell and at 11:40 EDT, it has risen to 1.29. The 52 week range is .75 to 20.54 and has a marketing cap of 173.30 M.