Business Context and Reporting Period
Company: Optical Cable Corporation (OCC)
Filing Type: Form 8-K (Current Report)
Date of Report: April 15, 2020
Reporting Period: Event date April 15, 2020
The filing reports the entry into a material definitive agreement and the receipt of a new loan facility in response to the COVID-19 pandemic.
Key Financial Metrics
This filing does not contain revenue, profit, cash flow, margin, or liquidity metrics. It focuses exclusively on debt financing activities.
| Metric | Value |
|---|---|
| New Debt Principal (SBA PPP Loan) | $4,981,400.00 |
| Interest Rate | 1.0% per year (fixed) |
| Monthly Payment | $280,335.21 |
| Payment Start Date | Seven months from effective date |
| Maturity Date | Two years from effective date |
| Prepayment Penalty | None |
Material Changes
- Debt Facility Modification: Entered into a "Tenth Loan Modification Agreement" with Pinnacle Bank (successor to Bank of North Carolina) to amend the existing Credit Agreement dated April 26, 2016.
- Purpose of Modification: To permit the Company to incur indebtedness under the SBA Coronavirus PPP Loan or U.S. Department of Treasury loans under the CARES Act.
- Collateral: The Loan remains secured by land, buildings, and personal property at headquarters in Roanoke, VA, and facilities near Asheville, NC.
- Other Terms: All other terms of the existing Loan remain unaltered.
Guidance, Outlook, and Risks
Management Commentary: The filing indicates the Company is actively utilizing federal relief programs (CARES Act/SBA PPP) to manage liquidity during the pandemic.
Risks and Contingencies: The filing does not explicitly list new risks beyond the context of the pandemic necessitating the loan. The Company has assumed a new fixed obligation of approximately $5 million with a two-year maturity.
Unusual Items: The filing notes this is the tenth modification to the Credit Agreement since 2016, indicating a history of frequent restructuring of the credit facility.
Investor Verification Checklist
- Verify the total outstanding debt load of the Company post-transaction to assess leverage ratios.
- Confirm the Company's cash burn rate to ensure the $280,335 monthly payment (starting in 7 months) is sustainable.
- Review the full text of the Tenth Loan Modification Agreement (Exhibit 4.1) for any covenants or restrictions not summarized here.
- Check subsequent filings for updates on the utilization of the PPP loan forgiveness provisions.