Optical Cable Corporation (NASDAQ:OCC), a manufacturer of a range of fiber optic and copper data communication cabling and connectivity solutions, has entered into an agreement with North Mill Capital LLC, extending its credit facility until July 24, 2027. This extension adds two years to the existing agreement, which was set to expire in 2025.
The modification, dated June 27, 2024, amends the Loan and Security Agreement originally executed on July 24, 2020, and subsequently modified on July 5, 2022. The agreement increases the Eligible Inventory maximum and modifies some other terms and conditions.
Under the new terms, the credit facility remains at Eighteen Million Dollars ($18,000,000) with the inclusion of an increased advance rate on eligible inventory to 35% up to a maximum of Seven Million Dollars ($7,000,000). Moreover, certain inventory previously classified as slow-moving will now be considered eligible, enhancing the borrowing base for the company.
The agreement stipulates a Facility Fee for the extended term, with a one percent fee of the benchmark advance amount plus any other advances. Furthermore, a Termination Fee is applicable if the agreement is terminated prior to the end of the newly defined term, with the fee percentage decreasing as the term progresses.
This strategic financial move by Optical Cable Corporation ensures continued access to capital through the extended term of the credit facility. As of July 2, 2024, the principal balance of the loan stands at approximately $7,837,102.
The detailed terms of the Modification Agreement are included as an exhibit to the company's SEC filing, which provides a comprehensive overview of the changes to the Loan Agreement.
Investors and stakeholders can review the full Modification Agreement as filed with the SEC for a complete understanding of the amendments to the credit facility. This information is based on a press release statement from Optical Cable Corporation.
InvestingPro Insights
As Optical Cable Corporation (NASDAQ:OCC) secures its financial flexibility with the extension of its credit facility, a glance at the company's metrics on InvestingPro provides a snapshot of its current standing.
With a market capitalization of $21.15 million, the company is trading at a low revenue valuation multiple, which could be appealing for value investors seeking entry points into the stock. The revenue for the last twelve months as of Q2 2024 stands at $65.24 million, although it has experienced a downturn in growth of -13.41% during the same period. This contraction in revenue growth is a critical factor to consider when assessing the company's future revenue streams and potential for rebound.
One of the InvestingPro Tips highlights that Optical Cable Corporation has liquid assets that exceed its short-term obligations, which is a positive sign of the company's ability to meet its immediate liabilities. Still, it is important to note that the company has not been profitable over the last twelve months, a trend that investors will be watching closely in the coming quarters. Moreover, OCC does not pay a dividend, which may influence the investment decisions of income-focused shareholders.
For readers looking to dive deeper into the financial health and future prospects of Optical Cable Corporation, there are additional InvestingPro Tips available. Readers can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription to access these valuable insights. With these resources, investors can make more informed decisions backed by real-time data and expert analysis.
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