SFE Technologies Closes, Lays Off 360 : San Fernando: Creditors of the 40-year-old maker of electronic components stand to lose about $20 million, its acting president says.

SFE Technologies, plagued by years of losses and recent product-testing violations, has shut down nearly all of its operation and plans to liquidate.

The San Fernando-based company, which celebrated its 40th anniversary this year, made ceramic capacitors and other electronic components that were mostly sold to the Pentagon. Its closure resulted in the layoff of 360 workers, and its creditors stand to lose about $20 million, said Emmett H. Bradley, SFE’s acting president.

SFE now has listed debts of $22.7 million and assets of $16.3 million, but estimates that the liquidation value of those assets is a mere $2.7 million, Bradley said. Such listed assets as the company’s inventory and receivables--money that was expected to be paid to the company over the next year--are mostly worthless, he said.

One small SFE division with 15 workers is still operating and is expected to be sold, Bradley said. The division makes electronic “filters” that prevent noise in communications lines.

SFE, whose capacitors were used to control the flow of electricity into semiconductor chips, suffered losses totaling more than $40 million from 1985 through 1990. (SFE’s fiscal year ends in October.) The losses continued in fiscal 1991. In the nine months that ended July 27, SFE lost an additional $2.1 million on sales of $15.4 million.

The company prospered in the early 1980s, and employed 1,950 people by 1985. But that same year, its problems began mounting following the 1984 breakup of American Telephone & Telegraph Co. AT&T; had been SFE’s biggest customer, but the seven “Baby Bell” regional systems formed by its breakup began buying their capacitors from SFE’s rivals. And as the decade progressed, that competition--especially from the Japanese--stiffened.

SFE’s setbacks grew in 1990. One of the company’s subsidiaries, West-Cap Arizona Inc., pleaded guilty to Justice Department allegations that it falsified test data for certain components.

The Defense Department’s Defense Logistics Agency then began efforts to bar SFE from receiving defense-related contracts, which accounted for most of its business. SFE avoided that disaster by selling West-Cap’s assets and by negotiating an agreement with the Pentagon.

Meantime, executive changes abounded at SFE. Between 1989 and 1991, SFE went through three chief executives, followed by the appointment of Bradley--a management consultant--as acting president last June.

Two months after his arrival, SFE itself uncovered more testing problems. “Several former and current employees admitted they had indeed been involved in falsification of test data unrelated to West-Cap” in 1988, Bradley said. SFE told the Pentagon, which suspended SFE’s military shipments Sept. 3 pending further tests of SFE’s products.

The suspension dragged on through October, and without shipments, SFE’s customers began canceling orders in droves. Bradley contends that part of the delay was the fault of the Pentagon’s Defense Electronics Supply Center, which he contends gave conflicting information to SFE regarding criteria the company was to use for its new tests.

Bradley said that although SFE’s past management gets most of the blame for the company’s collapse, the DESC’s actions “did delay the overall process, so that finally the company could go no further.”

Officials for the DESC, which is based in Dayton, Ohio, could not be reached for comment Monday because of the Veterans Day holiday.

According to SFE’s latest quarterly statement with the Securities and Exchange Commission, filed Sept. 10, the company already had been way behind in making payments to its banks.

In April, Valley National Bank of Arizona, a unit of Valley National Corp., sued the company, demanding payment of $4.5 million. And in September, City National Bank in Beverly Hills demanded full payment of the $10.5 million that it had loaned to SFE. Bradley said City National later withdrew its demand because of SFE’s precarious position. But SFE’s decision to liquidate will now hand the banks significant losses in any case.