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Frequency Electronics to divest subsidiary, consolidate marketing

The Uniondale offices of Frequency Electronics Inc.

The Uniondale offices of Frequency Electronics Inc. Credit: Howard Schnapp

Frequency Electronics Inc., a Uniondale maker of timing and synchronization devices for satellites, missiles, unmanned aerial vehicles and communication networks, plans to divest its Belgium subsidiary, the company announced Tuesday.

Gillam-FEI, the company’s 43-year-old wholly owned subsidiary in Lieges, Belgium, makes test equipment and products for wire-line network infrastructure.

In a news release Tuesday, Frequency Electronics said that when it releases a government filing for the year ended April 30, it will list Gillam-FEI as “held for sale/discontinued operations.” The company said it expects to file its quarterly results before the end of July and “record required book adjustments” related to the Gillam-FEI action.

The company also said it is consolidating overlapping marketing operations by two other subsidiaries, FEI-Elcom, based in Rockleigh, New Jersey, and FEI-Zyfer, based in Garden Grove, California. Both subsidiaries sell to the U.S. Defense Department and foreign governments.

It was unclear how many jobs would be affected by the moves. In its last annual report, the company said it had about 430 employees.

Frequency Electronics shares Wednesday closed down 4 percent to $8.55 on the Nasdaq Stock Market. The company’s shares have fallen 24 percent over the last 12 months.

A call to Frequency Electronics’ chairman of the board, Joel Girsky, was not returned.

In the news release, Girsky said the company had endured a “recent long downturn in satellite business,” but faced opportunities in secure communications and command and control systems, which have become “urgent” priorities of the Departments of Defense and Homeland Security.

“Satellite payloads, both additional and necessary replacements, after the current industrywide trough, will incorporate new technology in which we already have a head start,” he said.

In September, Frequency Electronics reached an agreement to end a proxy challenge by expanding its board of directors and appointing two new board members backed by Privet Fund Management, an Atlanta hedge fund. Frequency had charged that Privet was trying to seize control of the company.

In the quarter ended Jan. 31, Gillam-FEI posted revenue of $1.4 billion, down from $1.6 billion in the prior year’s quarter.

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