Business Context and Reporting Period
Company: Optical Cable Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: December 21, 2016
Event: Entry into a Material Definitive Agreement (Loan Modification) with Bank of North Carolina.
Key Financial Metrics and Debt Structure
This filing details a modification to existing debt instruments rather than reporting operational financial results (revenue, profit, or cash flow). The filing text does not provide a clear value for current revenue, profit, or liquidity positions.
| Debt Instrument | Principal Amount | Previous Rate | New Rate |
|---|---|---|---|
| Revolving Credit Note | $7,000,000 | Margin: 3.65% | Margin: 2.50% (Floor: 2.50%) |
| Term Loan A | $1,816,609 | Fixed: 4.25% | Fixed: 3.75% |
| Term Loan B | $5,271,411 | Fixed: 4.25% | Fixed: 3.75% |
Collateral: The loans are secured by land, buildings, and assets at the Company's headquarters in Roanoke, Virginia, and facilities near Asheville, North Carolina.
Material Changes Versus Prior Period
- Interest Rate Reduction: The modification lowered the interest margin on the Revolving Credit Note from 3.65% to 2.50% and the fixed rate on Term Loans A and B from 4.25% to 3.75%.
- Payment Impact: The rate reductions resulted in lower monthly installment payments for all three debt instruments.
- Rate Floor: A new floor was established for the Revolving Credit Note, ensuring the LIBOR Adjusted rate will not fall below 2.5% per annum.
Outlook, Risks, and Management Commentary
Management Commentary: The primary purpose of the agreement was to reduce borrowing costs and monthly cash outflows. No other substantive changes were made to the original Loan Documents dated April 26, 2016, and the remaining terms remain in full force.
Risks and Contingencies: The filing does not disclose new risks or contingencies. The debt remains secured by the Company's primary real estate and personal property assets.
Investor Verification Checklist
- Verify the total outstanding principal balance on the Revolving Credit Note, Term Loan A, and Term Loan B as of the filing date.
- Confirm the current LIBOR rate to calculate the actual effective interest rate on the Revolving Credit Note against the new 2.50% floor.
- Review the original Credit Agreement (April 26, 2016) to understand covenants that remain unchanged.
- Assess the impact of the reduced monthly payments on the Company's projected cash flow for the upcoming fiscal year.