Nortech Systems (NSYS) wins covenant waiver but faces higher borrowing costs

Rhea-AI Filing Summary

Nortech Systems Incorporated entered into a Waiver and Amendment No. 4 to its Credit Agreement with Bank of America on February 27, 2026. Bank of America waived financial covenant defaults tied to the company’s consolidated leverage ratio, fixed charge coverage ratio, and consolidated EBITDA for the quarter ended December 31, 2025.

The amendment revises key credit terms, including borrowing base mechanics, financial covenants with new EBITDA thresholds, revolving commitment levels, and an increase in the applicable borrowing rate. The company reports ongoing operating benefits from earlier restructuring and is negotiating a new asset-backed lending facility, which it expects to close in the near term.

Positive

• Waiver of covenant defaults: Bank of America waived financial covenant defaults on leverage, fixed charge coverage, and consolidated EBITDA for the quarter ended December 31, 2025, allowing Nortech Systems to avoid immediate default-related consequences under its existing credit agreement.
• Progress after restructuring: The company reports continued positive benefits to operating performance in Q4 2025 stemming from restructuring actions taken in Q4 2024 and Q1 2025, suggesting that prior cost and efficiency measures are having a favorable operational effect.

Negative

• Financial covenant defaults: Nortech Systems incurred financial covenant defaults related to its consolidated leverage ratio, fixed charge coverage ratio, and consolidated EBITDA for the quarter ended December 31, 2025, signaling recent pressure on its financial metrics under the credit agreement.
• Tighter and more expensive credit terms: The waiver and amendment introduce revised borrowing base mechanics, new EBITDA thresholds, adjusted revolving commitment levels, and an increased borrowing rate, indicating more restrictive access to credit and higher interest costs.
• Reliance on new financing: The company is actively negotiating a new asset-backed lending facility and expects to close a new facility in the near term, highlighting ongoing dependence on external financing arrangements.

Insights

Credit and capital structure analyst

Covenant defaults were waived, but at the cost of tighter, more expensive credit.

Nortech Systems obtained a waiver from Bank of America for financial covenant defaults on its consolidated leverage ratio, fixed charge coverage ratio, and consolidated EBITDA for the quarter ended December 31, 2025. In exchange, the lender implemented revised definitions, updated borrowing base mechanics, and new EBITDA thresholds, which typically make compliance more demanding.

The amendment also adjusts revolving commitment levels and increases the applicable borrowing rate, indicating the company’s credit risk is being priced higher. Management notes positive operating effects from prior restructuring and is negotiating a new asset-backed lending facility expected to close in the near term. Subsequent disclosures may clarify how the new facility replaces or complements the amended agreement.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 27, 2026

NORTECH SYSTEMS INCORPORATED

(Exact name of registrant as specified in charter)

Minnesota		0-13257		41-1681094
(State or other jurisdiction		(Commission		IRS Employer
of incorporation)		File Number)		Identification No.)

7550 Meridian Circle N. Ste 150, Maple Grove, MN 55369

(Address of principal executive offices)

(952) 345-2244

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed from last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:		Trading Symbol(s)		Name of each exchange on which registered:
Common Stock, par value $.01 per share		NSYS		NASDAQ Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

ITEM 1.01 Entry into a Material Definitive Agreement

On February 27, 2026, Nortech Systems Incorporated (the “Company”) entered into a Waiver and Amendment No. 4 to its Credit Agreement with Bank of America, N.A., dated February 27, 2026 (“Waiver and Amendment”). Under the Waiver and Amendment, Bank of America waived certain financial covenant defaults related to the Company’s Consolidated Leverage Ratio, Fixed Charge Coverage Ratio, and Consolidated EBITDA for the quarter ended December 31, 2025. The Waiver and Amendment also modifies multiple provisions of the Credit Agreement, including revised definitions, updated borrowing base mechanics, revised financial covenants (including new EBITDA thresholds), adjustments to the revolving commitment levels, an increase in applicable borrowing rate, and updates limitations on foreign subsidiary investments and transfers.

The full text of the Waiver is filed as Exhibit 10.1 to this Form 8-K and incorporated herein by reference.

In the fourth quarter of 2025, we continued to see positive benefits to our operating performance from our restructuring activities in the fourth quarter of 2024 and the first quarter of 2025. The Company is actively in negotiations to secure a new asset-backed lending facility. The Company expects to close a new facility in the near term.

ITEM 9.01 Financial Statements and Exhibits.

Exhibits.

Exhibit No.		Description
10.1		Waiver and Amendment No. 4 to Credit Agreement dated as of February 27, 2026, by and between Nortech Systems Incorporated and Bank of America, N.A.
104		Cover Page Interactive Data File (embedded within the Inline XBRLdocument).

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: March 5, 2026

Nortech Systems Incorporated

(Registrant)

/s/ Andrew D. C. LaFrence

Andrew D. C. LaFrence

Senior Vice President of Finance and

Chief Financial Officer

3

FAQ

What did Nortech Systems Incorporated (NSYS) disclose in its latest 8-K filing?

Nortech Systems disclosed a Waiver and Amendment No. 4 to its Credit Agreement with Bank of America. The bank waived certain financial covenant defaults and updated borrowing mechanics, covenants, commitment levels, and the borrowing rate, while the company works on securing a new asset-backed lending facility.

Which financial covenant defaults were waived for Nortech Systems (NSYS)?

Bank of America waived financial covenant defaults related to Nortech Systems’ Consolidated Leverage Ratio, Fixed Charge Coverage Ratio, and Consolidated EBITDA for the quarter ended December 31, 2025. This prevented immediate default consequences while imposing revised covenants and other updated credit terms going forward.

How does the amended credit agreement affect Nortech Systems’ borrowing costs?

The Waiver and Amendment increases the applicable borrowing rate under Nortech Systems’ credit agreement. Along with changes to the borrowing base and revolving commitment levels, this means the company’s existing debt becomes more expensive and potentially more restrictive compared with prior terms.

Is Nortech Systems (NSYS) planning new financing after the waiver and amendment?

Yes. Nortech Systems states it is actively negotiating a new asset-backed lending facility and expects to close a new facility in the near term. This indicates the company is working to reshape or replace its current financing arrangements following the covenant waiver and amendments.

What operational trends did Nortech Systems highlight alongside the credit amendment?

Nortech Systems reported continued positive benefits to operating performance in the fourth quarter of 2025. These improvements are attributed to restructuring activities undertaken in the fourth quarter of 2024 and the first quarter of 2025, suggesting prior cost and efficiency measures are helping current operations.

Who is Nortech Systems’ lender under the amended credit agreement?

The lender under the Waiver and Amendment No. 4 is Bank of America, N.A. The amendment covers revised definitions, updated borrowing base mechanics, new EBITDA thresholds, adjusted revolving commitment levels, and an increased borrowing rate for Nortech Systems’ existing credit arrangement.

Filing Exhibits & Attachments

4 documents

Agreements & Contracts

• EX-10.1 EX-10.1 83.4 KB

Other Documents

• EX-101 XBRL SCHEMA FILE 2.9 KB
• EX-101 XBRL LABEL FILE 33.4 KB
• EX-101 XBRL PRESENTATION FILE 21.8 KB