SEC Filing Summary: Frequency Electronics Inc. (FEIM)
Business Context and Reporting Period
This Form 8-K Current Report, dated June 12, 2026, discloses a material definitive agreement entered into by Frequency Electronics, Inc. The company, incorporated in Delaware and trading on the NASDAQ Global Market, announced the establishment of a new senior, secured revolving credit facility.
Key Financial Metrics and Agreement Terms
- Facility Size: $10,000,000 revolving credit facility.
- Letters of Credit: Up to $5,000,000 available within the facility.
- Expansion Option: Company may increase the facility by up to an additional $10,000,000 subject to conditions.
- Maturity Date: June 12, 2029 (three-year term).
- Interest Rates:
- CBFR Borrowings: Greater of Prime Rate or 2.50%, plus 2.50% margin.
- SOFR Borrowings: Adjusted Term SOFR Rate plus 2.50% margin.
- Commitment Fee: 0.35% per annum on the undrawn portion.
- Collateral: Pledge of all or substantially all assets, including equity in domestic subsidiaries.
- Guarantor: FEI-Zyfer, Inc., a wholly-owned subsidiary.
Material Changes and Covenants
The filing represents a new source of liquidity and does not report historical revenue, profit, or cash flow figures. The agreement introduces specific financial covenants effective for the fiscal quarter ended July 31, 2026, and thereafter:
- Total Leverage Ratio: Must not exceed 2.25 to 1.00.
- Fixed Charge Coverage Ratio: Must not be less than 1.25 to 1.00.
The agreement includes customary negative covenants limiting mergers, additional indebtedness, liens, affiliate transactions, investments, dividends, and swap agreements.
Outlook, Risks, and Management Commentary
Management expects proceeds to be used for general corporate purposes and working capital. The filing notes that there can be no assurance that the option to increase the facility will be exercised or that additional funding will become available. Risks include events of default such as failure to pay principal or interest, covenant breaches, bankruptcy, or change of control, which could allow the lender to accelerate the debt.
Investor Verification Checklist
- Verify the company's current leverage and fixed charge coverage ratios to ensure compliance with the new covenants starting July 31, 2026.
- Review the full text of the Credit Agreement (Exhibit 10.1) and Security Agreement (Exhibit 10.2) for specific definitions of "Prime Rate" and "Adjusted Term SOFR Rate."
- Assess the impact of the 0.35% commitment fee on the cost of capital for undrawn funds.
- Confirm the extent of assets pledged under the Security Agreement and any restrictions on subsidiary operations.