Note 8 - Subsequent Events

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE

8.

SUBSEQUENT EVENTS

Sale

and

Leaseback

Agreement

We have entered into sale and leaseback agreements with Essjay Investment Company, LLC (“Essjay”) relating to the Company's manufacturing facilities in Bemidji and Mankato, Minnesota. Nortech and Essjay are expected to close during the Company's fiscal

third

quarter, subject to final documentation and other customary closing conditions. 

The Company expects net proceeds from the sale, excluding expenses and expected taxes, of approximately

$5,000.

 The Company intends to use net proceeds to pay down debt, provide additional liquidity for initiatives and strengthen the Company's financial position. At closing, the Company will enter into a lease agreement for the Bemidji and Mankato, Minnesota facilities for an initial

15

-year term, with multiple renewal options.

Facility Consolidation

To further improve operational efficiencies and lower overhead costs, the Company approved on

August 7, 2020,

the closure of our Merrifield, Minnesota, production facility, shifting wire and cable assembly, system-level assembly and printed circuit board (PCB) manufacturing to Nortech's other Minnesota locations. The Merrifield production facility consolidation is expected to be complete on or before

December 31, 2020,

and will impact approximately

60

employees, who will be offered positions at other Nortech facilities in Minnesota.