For the three month period ended June 28, 2014, the Company recorded a loss from operations of $84,405 and a net loss of $86,381. For the six month period ended June 28, 2014, the Company incurred a loss from operations of $139,043, a net loss of $127,778, and used $102,380 in cash for operating activities.
Under its Prepayment Agreement with Apple ratably (on a quarterly basis) over a five year period beginning in January 2015, either as a credit against amounts due from Apple’s purchases of sapphire goods under the MDSA or as a direct cash payment.The Prepayment Amount is non-interest bearing. The Company’s obligation to repay the Prepayment Amount may be accelerated under certain circumstances, including if the Company does not meet certain operating metrics or financial covenants. See Note 3 for additional information on the Prepayment Agreement.
The Company is currently in compliance, and based on the Company’s operational plans and financial forecasts, the Company expects to maintain compliance with the operating metrics and financial covenants in the Prepayment Agreement and management believes that the Company will have sufficient cash resources to fund operations for at least the next twelve months.
Well, yes, covenant-lite deals FTW.
In fact, the only piece of information that provides some clarity on what happened leading to the stunning Chapter 11 filing out of the blue, is the following brief blurb in the first day motions:
EVENTS LEADING TO CHAPTER 11
GTAT is facing a severe liquidity crisis due to circumstances that will be more fully described at the hearing on the First Day Pleadings.
Why not explain now? Did “key customer” Apple have something to do with the gag order?
Because as anyone who lost 90% of their equity in seconds earlier today (after listening to others such as Cramer extoll the virtues of the next Bear Steanrs) found out, yes: the company does indeed have a severe liquidity crisis.
In any case, while there is not much there, the full declaration in support of first-day motions is presented below:
The complete GTAT Ex-Parte motion to preserve the company’s biggest remaining asset, its NOLs:
We’ll spare you the full list of creditors, all 459 pages of them. Suffice to say that Apple is among them.
This article is brought to you courtesy of Tyler Durden From Zero Hedge.