NORTECH SYSTEMS INC 8-K

What Happened
Nortech Systems Inc. announced on March 20, 2026 that it entered into a Credit and Security Agreement with Associated Bank, National Association (the "Associated Facility"). The facility provides a revolving credit line of up to $15,000,000 (subject to a borrowing base tied to eligible accounts receivable, inventory and fixed assets) and a $2,200,000 term loan. The Associated Facility replaces Nortech’s prior credit facility (which was set to mature in August 2026) and both the revolving facility and the term loan mature in March 2029. The loans are secured by substantially all of the company’s U.S. assets.

Key Details

• Total capacity: up to $15,000,000 revolving credit (borrowing base) plus a $2,200,000 term loan.
• Letters of credit: $1,500,000 sublimit.
• Interest: at borrower’s option, a defined base rate or one‑month/three‑month Term Secured Overnight Financing Rate (SOFR) plus 2.00% for revolver borrowings and plus 2.25% for the term loan.
• Covenants and protections: customary affirmative and negative covenants restricting additional debt, liens, investments, asset sales and dividends; a required Fixed Charge Coverage Ratio of 1.10 to 1.00; broad events of default including change of control and destruction of collateral.

Why It Matters
This agreement extends Nortech’s borrowing runway (replacing a facility maturing August 2026 with debt that matures March 2029) and provides access to working capital tied to a borrowing base, which can support operations and liquidity. At the same time, the facility is secured by substantially all U.S. assets and includes financial covenants and broad default triggers; failure to meet those covenants (including the Fixed Charge Coverage Ratio) could restrict the company’s flexibility or lead to default. Investors should note both the increased near-term liquidity potential and the constraints imposed by the new lending terms.