GT Advanced Bankruptcy Produces Clouds for Solar ETFs

Shares of GT Advanced Technologies (NasdaqGS: GTAT) lost nearly all of their value Monday, tumbling more than 90% and at one point trading as low as 75 cents after the producer of crystal growth equipment for the global consumer electronics, power electronics, solar and LED industries filed for Chapter 11 Bankruptcy protection in the U.S. Bankruptcy Court for the District of New Hampshire.

News of another solar sector bankruptcy is pressuring related exchange traded funds as the Guggenheim Solar ETF (NYSEArca: TAN), the largest of the two dedicated solar ETFs, is trading lower by 4.7% today on volume that is already 37% above the daily average. [Cyclical Trends With Solar ETFs]

TAN, which has $388.3 million in assets under management, featured a 3.23% weight to GT Advanced Technologies as of Oct. 3, according to Guggenheim data.

The ETF’s largest holdings include a 9.5% allocation to First Solar and a 9.2% weight SunEdison (NYSE: SUNE). The solar sector recovered from its 2012 downfall, with solar-module prices stabilizing. Now, annual growth capacity from 2012 to the end of this year is expected to rise only 10% while demand is projected to jump twice as fast. [Solar ETFs: Demand Outpacing Supply for First Time Since 2006]

However, solar sector ebullience (TAN was 2013’s top-performing non-leveraged energy ETF by a wide margin) has been put on the back burner today due to the GT Advanced news.

“GT indicated that as of September 29, 2014 it had approximately $85 million of cash. In addition, it is now seeking debtor-in-possession financing, which, once obtained, would provide the company with an immediate source of additional funds. These funding sources will enable GT to satisfy the customary obligations associated with the daily operation of its business, including the timely payment of employee wages and other obligations,” the company said in a statement released earlier Monday.