Thursday, April 2, 2009
RF Monolithics In Non-Compliance On Credit Line
Dallas-based RF Monolithics, a provider of wireless semiconductors and other products, is reporting this morning that the firm is "not in compliance" with covenants in the firm's senior secured credit facility. According to RFM, the firm did not achieve certain standards for net income and debt service. The firm said it is working with its banker to try to bring the firm back into compliance. According to RF Monolithics, because of the issue, the bank has the option to terminate its committment to make advances to the company, force the firm to pay the balance, or take possession of or liquidate its collateral in the firm; the violation also triggers interest penalties. Failure to meet the covenants in financing terms often result in banks forcing a company into bankruptcy. In this case, RFM said that the bank has so far "chosen not to exercise its rights" under its agreements.