Business Context and Reporting Period
Company: Optical Cable Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: March 31, 2006
Event: Entry into a Material Definitive Agreement (Amended and Restated Loan and Security Agreement) with Wachovia Bank, N.A.
Key Financial Metrics
The filing does not provide specific revenue, profit, cash flow, margin, or liquidity figures for the reporting period. The document focuses exclusively on the terms of a new credit facility.
- Credit Facility Limit: Up to $25 million.
- Collateral: All tangible and intangible assets of the Company.
- Interest Rate: Prime rate + 0.50% per annum (or LIBOR-based at the Company's option).
- Expiration Date: April 17, 2008.
Material Changes
The Company amended and restated its previous Loan and Security Agreement dated April 18, 2002. The new agreement maintains the $25 million maximum availability but updates the terms. Borrowing availability remains subject to coverage ratios and advance limits based on accounts receivable, inventory, and fixed assets.
Outlook, Management Commentary, and Risks
Refinancing Efforts: Management is actively discussing terms with the current lender and other financial institutions to replace the current facility with one deemed more favorable given the Company's financial strength.
Cancellation Terms: The Amended Loan Agreement is cancelable upon 60 days' advance notice without pre-termination penalties if a new agreement is reached.
Risks: Access to the full $25 million is contingent upon the Company's borrowing base calculations and adherence to coverage ratios.
Investor Verification Checklist
- Verify the Company's current borrowing base calculation to determine actual available liquidity versus the $25 million cap.
- Monitor the status of negotiations for a replacement credit facility to assess potential changes in interest rates or covenants.
- Review the full text of Exhibit 10.1 (Amended Loan and Security Agreement) for specific financial covenants and default provisions.
- Confirm the Company's compliance with the required coverage ratios to ensure continued access to funds.