SFE Posts $4.1-Million Loss After Heavy Stock Trading
After a week of heavy trading and a continuing decline in its stock price, SFE Technologies on Tuesday said it had a $4.1-million loss in the third fiscal quarter ended July 25, pushing it into technical default on some lending agreements.
Jerome J. Jahn, SFE’s vice president for finance, said he couldn’t account for the stock market activity. He said that the company’s results were widely anticipated and that the Rubendall family, which founded the San Fernando-based electronics concern in 1951 and which still owns about 25%, hasn’t been selling stock in recent weeks.
SFE stock closed Tuesday at $4 a share in over-the-counter trading, unchanged from Monday but down from $5.375 on Aug. 11 and $7.25 at the end of last year. More than 500,000 SFE shares, a volume equal to nearly 8% of its 6.3 million outstanding shares, have changed hands during the last six days of trading.
The company makes protective components used with semiconductors, and SFE has suffered over the last few quarters along with the rest of its industry. The company’s third-quarter loss came on sales of $10.5 million, down 19% from the same period last year, when it lost $1.8 million.
SFE said it will try to improve its financial condition by dropping unprofitable product lines, cutting inventory, finding a partner for its cash-intensive Polytronics unit, shedding some other units and otherwise continuing to cut costs. Jahn said SFE already has slashed worldwide employment to slightly more than 1,500 from 2,600 a year ago.
Because the third-quarter results lowered the company’s net worth to $32.6 million at the end of the third quarter from $36.6 million three months before, SFE fell into technical default on its industrial bond financing agreements in Arizona and North Carolina even though its payments are current.
The company also fell into default on its working capital lending agreement with City National Bank and said a line of credit with Bank of America expired. Jahn said the company is negotiating to renew its credit agreements.
