Business Context and Reporting Period
Company: Optical Cable Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: October 15, 2018
Event: Entry into a Material Definitive Agreement (Fifth Loan Modification Agreement) with Pinnacle Bank.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, or operating margins. It focuses exclusively on debt structure and financial covenants.
- Revolving Credit Facility: $7,000,000
- Fixed Charge Coverage Ratio Covenant: Modified to not less than 1.25 to 1.00
- Debt to Worth Ratio Covenant: Modified to no greater than 0.95:1.00
- Current Ratio Covenant: Modified to not less than 3.00 to 1.00
Material Changes Versus Prior Period
The Company entered into a Fifth Loan Modification Agreement to amend its existing Credit Agreement dated April 26, 2016. Key changes include:
- Covenant Adjustments: Relaxation of financial covenants regarding fixed charge coverage, debt-to-worth, and current ratios.
- Term Extension: The expiration date of the Revolving Loan was extended to April 30, 2020.
- Extension Mechanism: The agreement allows for one-year extensions of the Revolving Loan expiration date upon written notice from the Lender.
Outlook, Risks, and Contingencies
Management Commentary: The primary purpose of the agreement was to provide flexibility in financial covenants and extend the availability of the revolving credit line. All other terms of the Loan remain unaltered.
Collateral: The Loan remains secured by land and buildings at the Company's headquarters in Roanoke, Virginia, and manufacturing/office facilities near Asheville, North Carolina, as well as personal property and assets.
Risks: The filing does not explicitly list new risks, though the modification of covenants implies the Company sought to ensure compliance with its debt obligations.
Investor Verification Checklist
- Verify the Company's current compliance with the new fixed charge coverage ratio (1.25:1.00) and debt-to-worth ratio (0.95:1.00).
- Confirm the status of the $7,000,000 revolving line of credit and any outstanding balances.
- Review the full text of the Fifth Loan Modification Agreement (Exhibit 4.1) for any undisclosed conditions or fees.
- Monitor future filings to confirm if the Lender exercises the option to extend the Revolving Loan beyond April 30, 2020.