OPTICAL CABLE CORPOCC
OPTICAL CABLE CORP Debt Disclosure
| ( 7 ) | Long-term Debt and Note Payable to Bank |
The Company has credit facilities consisting of a real estate term loan, as amended and restated (the “Virginia Real Estate Loan”), a supplemental real estate term loan, as amended and restated (the “North Carolina Real Estate Loan”) and a Revolving Credit Note (“Revolver”).
Both the Virginia Real Estate Loan and the North Carolina Real Estate Loan are with Pinnacle Bank (“Pinnacle”), have a fixed interest rate of
3.95%
and are secured by a first
priority lien on all of the Company’s personal property and assets, all money, goods, machinery, equipment, fixtures, inventory, accounts, chattel paper, letter of credit rights, deposit accounts, commercial tort claims, documents, instruments, investment property and general intangibles now owned or hereafter acquired by the Company and wherever located, as well as a first
lien deed of trust on the Company’s real property.Long-term debt as of
October 31, 2018
and 2017
consists of the following:| October 31, | ||||||||
| 2018 | 2017 | |||||||
| Virginia Real Estate Loan ($6.5 million original principal) payable in monthly installments of $31,812, including interest (at 3.95%), with final payment of $3,644,211 due May 1, 2024 | $ | 4,774,252 | $ | 4,960,738 | ||||
| North Carolina Real Estate Loan ($2.24 million original principal) payable in monthly installments of $10,963, including interest (at 3.95%), with final payment of $1,255,850 due May 1, 2024 | 1,645,332 | 1,709,595 | ||||||
| Total long-term debt | 6,419,584 | 6,670,333 | ||||||
| Less current installments | 260,954 | 250,726 | ||||||
| Long-term debt, excluding current installments | $ | 6,158,630 | $ | 6,419,607 | ||||
The Revolver with Pinnacle provides the Company with a
$7.0
million revolving line of credit (“Revolving Loan”) for the working capital needs of the Company. Under the Revolver, Pinnacle provides the Company with one
or more revolving loans in a collective maximum principal amount of $7.0
million. The Company may
borrow, repay, and reborrow at any time or from time to time while the Revolving Loan is in effect.The applicable margin in the Revolving Credit Note has a floor on the interest rate for the Revolving Credit Note such that the rate will never be less than
2.50%
per annum. The Revolving Loan accrues interest at LIBOR plus 2.50%
(resulting in a 4.74%
rate at October 31, 2018).
The Revolving Loan is payable in monthly payments of interest only with principal and any outstanding interest due and payable at maturity.On
April 10, 2018,
the Company entered into a Fourth Loan Modification Agreement with Pinnacle to modify the Credit Agreement dated April 26, 2016
entered into between the Company and Pinnacle and the term loans dated April 26, 2016.
The Fourth Loan Modification Agreement extended the maturity date of the Revolving Loan to September 30, 2019
and modified two
financial covenants for the Company.Also on
April 10, 2018,
the Company entered into a Special Project Loan Agreement and Special Project Revolver with Pinnacle which provided the Company with a $6.0
million revolving line of credit (the “Special Project Revolving Loan”) for the working capital needs related to the fulfillment and processing of certain orders. Under the Special Project Revolver, Pinnacle provided the Company with one
or more revolving loans in a collective maximum principal amount of $6.0
million. The Company could borrow, repay, and reborrow at any time or from time to time while the Special Project Revolving Loan was in effect.The Special Project Revolving Loan accrued interest at LIBOR plus
4.0%.
The Special Project Revolving Loan was payable in monthly payments of interest only with principal and any outstanding interest due and payable at maturity. The Special Project Revolving Loan matured on October 1, 2018,
according to the terms of the agreement.The Company’s outstanding balance on the Special Project Revolving Loan never exceeded
$2.8
million during its term, and the final payment on the revolver was made in July 2018
prior to its maturity on October 1, 2018.
On
October 15, 2018,
the Company entered into a Fifth Loan Modification Agreement with Pinnacle to modify the Credit Agreement dated April 26, 2016
entered into between the Company and Pinnacle and the term loans dated April 26, 2016.
The Fifth Loan Modification Agreement extends the maturity date of the Revolving Loan to April 30, 2020
and modifies three
financial covenants for the Company. All other terms of the Revolving Loan remain unaltered and in effect.The Revolving Loan continues to be secured by a perfected
first
lien security interest on all assets, including but not
limited to, accounts, as-extracted collateral, chattel paper, commodity accounts, commodity contracts, deposit accounts, documents, equipment, fixtures, furniture, general intangibles, goods, instruments, inventory, investment property, letter of credit rights, payment intangibles, promissory notes, software and general tangible and intangible assets owned now or later acquired. The Revolving Loan is also cross-collateralized with the Company’s real property.As of
October 31, 2018,
the Company had $3.0
million of outstanding borrowings on its Revolving Loan and $4.0
million in available credit. As of October 31, 2017
the Company had $5.7
million of outstanding borrowings on its Revolving Loan and $1.3
million in available credit.The aggregate maturities of long-term debt for each of the
five
years subsequent to October 31, 2018
are: $260,954
in fiscal year 2019,
$3,270,918
in fiscal year 2020,
$282,651
in fiscal year 2021,
$294,181
in fiscal year 2022
and $306,180
in fiscal year 2023.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2018 | Dec 19, 2018 | Showing above |
| 2017 | Dec 20, 2017 | |
| 2016 | Dec 20, 2016 | |
| 2015 | Jan 28, 2016 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.