Business Context and Reporting Period
Company: Coffee Holding Co., Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: March 10, 2015
Event: Entry into Material Definitive Agreements regarding debt financing with Sterling National Bank.
Key Financial Metrics and Debt Structure
This filing details the restructuring of existing credit facilities and the establishment of a new facility. No revenue, profit, or cash flow data is provided in this specific report.
| Facility Type | Maximum Amount | Interest Rate | Term End Date | Collateral |
|---|---|---|---|---|
| Modified Loan Facility (Existing) | $9,000,000 (Increased from $7,000,000) | WSJ Prime Rate (3.25%) | February 28, 2017 | All tangible and intangible assets |
| New Loan Facility (Subsidiary) | $3,000,000 | WSJ Prime Rate (3.25%) | February 28, 2017 | All tangible and intangible assets |
Borrowing Base:
- Modified Facility: Up to 85% of eligible accounts receivable and 25% of eligible inventory (green coffee beans and finished coffee, capped at $1,000,000).
- New Facility: Up to 85% of eligible accounts receivable (capped at 25% of all accounts of the Borrower).
Material Changes Versus Prior Period
The filing outlines significant modifications to the financing agreement originally entered into on February 17, 2009:
- Term Extension: The maturity date was extended from March 31, 2015, to February 28, 2017.
- Capacity Increase: The revolving line of credit limit was increased by $2,000,000 (from $7,000,000 to $9,000,000).
- Interest Rate Reduction: The rate was lowered from a fixed 3.75% per annum to the variable Wall Street Journal Prime Rate (3.25% at the time of filing).
- New Prepayment Penalty: A prepayment premium of 0.50% of the maximum facility amount was introduced upon certain termination events.
- New Subsidiary Facility: A separate $3,000,000 facility was established for the subsidiary, Organic Products Trading Company LLC, guaranteed by the parent company.
Guidance, Risks, and Covenants
Covenants and Restrictions: Both facilities impose annual operational restrictions, including:
- Debt restrictions and leverage limits.
- Capital expenditure limits.
- Minimum deposit and working capital requirements.
- Minimum tangible net worth and net profit requirements.
- Restrictions on employee loans, intercompany transactions, and distributions (dividends/common/preferred stock).
Risks and Contingencies:
- Security Interest: Both facilities are secured by all tangible and intangible assets of the Company.
- Prepayment Penalty: Early termination under specific events triggers a 0.50% premium on the maximum facility amount.
Management Commentary: The filing does not contain forward-looking guidance or management commentary beyond the terms of the agreements.
Investor Verification Checklist
- Verify the current outstanding balance on both the Modified and New Loan Facilities to assess immediate liquidity needs.
- Confirm the Company's current compliance with the new minimum working capital and tangible net worth covenants.
- Review the specific definition of "eligible accounts receivable" and "eligible inventory" to understand the actual borrowing capacity versus the maximum limit.
- Monitor the Wall Street Journal Prime Rate, as interest expense will fluctuate with this variable rate.
- Check for any subsequent filings regarding the utilization of the new $3,000,000 subsidiary facility.