SFE Technologies Falls Into Default on Loans

SFE Technologies, a San Fernando electronics company that has been rocked the past four years by an industry slump, said it has fallen into technical default on about $16 million in loans because its net worth dropped below the levels its loan agreements require it to maintain.

Jerome J. Jahn, SFE executive vice president, said the company is negotiating with its three banks--City National in Beverly Hills, Valley National in Phoenix and Hibernia in New Orleans--to try to resolve the problem. SFE’s net worth fell to $20.1 million on July 31, Jahn said, about $700,000 short of the $20.8 million it is required to maintain.

Two years ago, SFE fell into technical default on its loans. The company later restructured by selling off a large part of its manufacturing operations.

The disclosure came as SFE Technologies announced it loss widened in the third quarter ended July 30 to $1.2 million from $387,000 in the year-earlier period.

SFE, which makes components called capacitors that regulate electrical impulses in telecommunications and defense equipment, blamed the latest loss on lower sales at two of its subsidiaries. Overall, SFE’s quarterly sales fell to $9.2 million, down 15% from a year earlier.

For the nine months, the company lost $1.2 million, which included a $683,000 credit stemming from the purchase of a note by the company at a discount. In the year-earlier period, SFE lost $3.4 million. Sales in the nine months fell 8% from a year earlier to $27.4 million.