Business Context and Reporting Period
Company: Optical Cable Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: July 25, 2011
Event: Entry into a Material Definitive Agreement regarding the renewal of a revolving credit facility.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, or operating margins. It focuses exclusively on debt facility terms.
- Facility Type: Revolving Credit Facility (Commercial Loan) with SunTrust Bank.
- Maximum Borrowing Limit: $6,000,000 (subject to borrowing base calculations).
- Borrowing Base Formula: Lesser of $6,000,000 or the sum of:
- 85% of certain receivables aged 90 days or less.
- 35% of the lesser of $1,000,000 or certain foreign receivables.
- 25% of certain raw materials inventory.
- Interest Rate: Greater of LIBOR plus 2% or 3.0%.
- Interest Payment Frequency: Monthly (first day of each month).
- Maturity Date: Extended to May 31, 2013.
Material Changes Versus Prior Period
The primary material change is the extension of the Commercial Loan maturity date.
- Previous Maturity: May 31, 2012.
- New Maturity: May 31, 2013.
- Documentation: Executed a Binding Letter of Renewal and a Fourth Loan Modification Agreement to amend the definition of "SunTrust Debt" to reflect the extension.
Guidance, Outlook, and Risks
The filing contains no forward-looking guidance, management commentary on future performance, or specific risk factors beyond the terms of the loan agreement. The agreement allows the company to borrow, repay, and reborrow funds until the new maturity date to meet working capital needs.
Important Facts for Investor Verification
- Verify the company's current utilization of the $6,000,000 credit line and whether the borrowing base (receivables and inventory) supports the outstanding balance.
- Confirm the current LIBOR rate to calculate the effective interest cost (LIBOR + 2% vs. 3.0% floor).
- Review the Fourth Loan Modification Agreement (Exhibit 99.2) for any covenants or conditions precedent that could restrict future borrowing.
- Monitor the company's ability to meet monthly interest payments and the full principal repayment due on May 31, 2013.