Optical Cable Corp.'s Bank May Gain Leverage After OCC Missed 2 Bank Covenants' Requirements

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About: Optical Cable Corporation (OCC)
by: GreatQuarter
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GreatQuarter
Long/short equity, special situations, value, bonds
Summary

OCC missed the previously contracted requirements of two bank covenants, one on April 30, 2019 (waived) and another on July 31, 2019 (suspended).

Barring a dramatic development, I expect OCC to violate two bank covenants on October 31, 2019 (expected to be waived and/or suspended in exchange for consideration).

I expect OCC's bank to encourage OCC to take bank-friendly actions.

I believe probability of a sale of OCC to an acquirer has increased.

OCC's Total Liabilities to Tangible Net Worth Bank Loan Covenant

On April 30, 2019 (FY2019 Q2-end), Optical Cable (NASDAQ:OCC) was "not in compliance" with the Total Liabilities to Tangible Net Worth