NORTECH SYSTEMS INCORPORATED (NASDAQ:NSYS) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
On June15, 2017, Nortech Systems Incorporated (the Company)
entered into a Loan and Security Agreement with Bank of America,
N.A. (the Loan Agreement), which provides for senior secured
asset-based credit facilities of up to $21.0 million, including
up to $16.0 million of revolving loans and up to $5.0 million of
term loans. The Loan Agreement also includes an expansion feature
providing for up to an additional $20.0 million of revolving
credit, subject to certain conditions and further approvals. This
new credit facility replaces the Companys existing credit
agreement with Wells Fargo Bank, National Association (Wells
Fargo), which has been terminated.
Loans made under the Loan Agreement mature on June15, 2022. A
portion of the loan proceeds were allocated for payment of
amounts owed under the Companys existing credit facility with
Wells Fargo, and the balance will be used by the Company for
working capital and general corporate purposes. The Loan
Agreement allows the Company to borrow at interest rates equal to
Bank of Americas base rate or LIBOR plus an applicable margin
ranging from 1.00% to 2.25%. The Loan Agreement also permits the
issuance of letters of credit.
The Loan Agreement contains customary covenants, including
covenants relating to financial reporting and notification,
compliance with applicable laws, payment of taxes, and
maintenance of insurance. There is also a financial covenant that
requires the Company to maintain a Fixed Charge Coverage Ratio
for any period of four consecutive fiscal quarters of not less
than 1.0 to 1.0. The Fixed Charge Coverage Ratio is defined in
the Loan Agreement as the ratio of (a)EBITDA, minus (i)capital
expenditures, (ii)cash taxes paid and (iii)distributions made, to
(b)the sum of interest expense (other than payment-in-kind) and
scheduled principal payments made on borrowed money.
The Loan Agreement also imposes certain customary limitations and
requirements on the Company with respect to the incurrence of
indebtedness and liens, investments, mergers and dispositions of
assets. Amounts due under the Loan Agreement may be accelerated
upon an event of default, as described in the Loan Agreement,
such as breach of a representation, covenant or agreement of the
Company or the occurrence of bankruptcy, if not otherwise waived
or cured.
Advances under the Loan Agreement are secured by a lien on all
assets of the Company, including certain real estate.
The foregoing summary description of the terms and conditions of
the Loan Agreement does not purport to be complete and is
qualified in its entirety by reference to the Loan Agreement, a
copy of which is filed as Exhibit10.1 to this Current Report on
Form8-K and is incorporated herein by reference.
In addition, on June15, 2017, the Company issued a press release,
a copy of which is attached hereto as Exhibit99.1 and
incorporated herein by reference.
Item 1.02 Termination of a Material Definitive
Agreement.
On June15, 2017, the Company fully paid all of its obligations
and related fees then outstanding to Wells Fargo under the
Third Amended and Restated Credit Agreement with Wells Fargo
dated May27, 2010, as amended from time to time (the Wells
Fargo Credit Agreement). The aggregate amount of the payment
was approximately $11.6 million and was funded from a portion
of the proceeds of the Loan Agreement discussed immediately
above under Item 1.01. Upon receipt of this payoff, the Wells
Fargo Credit Agreement as well as Wells Fargos commitment to
extend further credit to the Company terminated, except with
respect to the continuation of certain accounts and a possible
letter of credit.
Item 2.03 Creation of a Direct Financial Obligation or
an Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The information with respect to the Loan Agreement in Item 1.01
of this Current Report on Form8-K is incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
|
ExhibitNo. |
|
Description |
|
10.1 |
Loan and Security Agreement dated as of June15, 2017, |
|
|
99.1 |
Press Release of Nortech Systems Incorporated dated |
NORTECH SYSTEMS INC ExhibitEX-10.1 2 a17-15497_1ex10d1.htm EX-10.1 Exhibit 10.1 LOAN AND SECURITY AGREEMENT Dated as of June 15,…To view the full exhibit click here About NORTECH SYSTEMS INCORPORATED (NASDAQ:NSYS)
Nortech Systems Incorporated is an electronic manufacturing services (EMS) company. The Company offers a range of value-added engineering, technical and manufacturing services and support, including project management, design, testing, prototyping, manufacturing, supply chain management and post-market services. The Company’s segment is Contract Manufacturing. The Company’s manufacturing and engineering services include medical devices, printed circuit board assemblies, wire and cable assemblies, and electromechanical assemblies. The Company’s manufacturing facilities are located at Bemidji, Blue Earth, Merrifield, Eden Prairie, Milaca and Mankato in Minnesota; Augusta in Wisconsin; Monterrey in Mexico, and Suzhou in China. The Company serves approximately three markets within the EMS industry, such as Aerospace and Defense, Medical/Life Sciences and the Industrial market, which includes industrial equipment, transportation, vision, agriculture, oil and gas.
