Issuer:
|
Otter Tail Corporation | |
Ticker / Exchange:
|
OTTR / Nasdaq Global Select Market | |
Title of Securities:
|
Common Shares, par value $5.00 per share, of the Issuer | |
Shares Offered and Sold:
|
4,500,000 (or 5,175,000 if the underwriters exercise their overallotment option in full) |
|
Public Offering Price:
|
$30.00 per share / $135,000,000 total | |
Underwriting Discounts
and Commissions:
|
$1.0875 per share / $4,893,750 total | |
Proceeds, Before
Expenses, to the Issuer:
|
$28.9125 per share / $130,106,250 total | |
Use of Proceeds:
|
We estimate that the net proceeds from the sale of the common shares, after deducting underwriting discounts and estimated offering expenses, will be approximately $129,706,250 (or approximately $149,222,188 if the underwriters overallotment option is exercised in full). | |
We intend to use the net proceeds from this offering to finance the construction of the Ashtabula Wind Center in Barnes County, North Dakota and the expansion of the wind tower manufacturing facilities of Varistars subsidiary DMI in Tulsa, Oklahoma, and West Fargo, North Dakota and, pending the full application for these purposes, the net proceeds from this offering will be used to fund working capital needs of our other businesses. | ||
We have used short-term borrowings to fund costs incurred to date on the Ashtabula Wind Center and expansion of the wind tower manufacturing facilities. Accordingly, we intend to use approximately $97.5 million of the net proceeds from this offering to pay down all of the approximately $82.5 million of |
short-term borrowings under the Otter Tail Power Company line of credit and a portion, approximately $15.0 million, of short-term borrowings under the Varistar line of credit. Approximately $67.0 million of the borrowings under the Otter Tail Power Company line of credit were used to partially finance Otter Tail Power Companys investments in wind energy projects, including approximately $43.0 million of the planned $121 million investment in the Ashtabula Wind Center, with the balance used for working capital for Otter Tail Power Company. Approximately $2.8 million of the borrowings under the Varistar line of credit were used to partially finance the $30 million expansion of the wind tower manufacturing facilities, with the balance used for working capital for various subsidiaries of Varistar. | ||
Pending the application of the net proceeds for these purposes, we expect to either pay down additional amounts outstanding of short-term borrowings under our existing lines of credit or invest in short-term, highly rated investment grade securities. To complete the Ashtabula Wind Center and the expansion of the wind tower manufacturing facilities, we will borrow funds from amounts available under our lines of credit at such time as required for completion of those projects. | ||
As of September 17, 2008, approximately $82.5 million was outstanding under the Otter Tail Power Company line of credit at an interest rate of approximately 3.0% and maturing on July 30, 2011, and approximately $158.0 million was outstanding under the Varistar line of credit at an interest rate of approximately 4.3% and maturing on October 2, 2010. | ||
Affiliates of Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., Banc of America Securities LLC and Wells Fargo Securities, LLC are lenders under the Otter Tail Power Company line of credit and affiliates of J.P. Morgan Securities Inc., Banc of America Securities LLC, Wells Fargo Securities, LLC and KeyBanc Capital Markets Inc. are lenders under the Varistar line of credit, and accordingly, will receive a portion of the proceeds from this offering pursuant to the repayment of borrowings under these facilities. Since more than 10% of the net proceeds from this offering will be paid to affiliates of each of J.P. Morgan Securities Inc., Banc of America Securities LLC and Wells Fargo Securities, LLC, which are underwriters of this offering as well as FINRA members, this offering will be conducted in accordance with NASD Conduct Rule 2710(h). | ||
Commissions and Discounts:
|
The underwriters have advised the Issuer that they propose to offer the Common Shares to the public at the public offering price, and to dealers at the price less a concession, not in excess of $.6525 per share. | |
Sole Book-Running Manager:
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Merrill Lynch, Pierce, Fenner & Smith Incorporated | |
Joint Lead Managers:
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Robert W. Baird & Co. Incorporated | |
J.P. Morgan Securities Inc. | ||
Co-Managers:
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Banc of America Securities LLC | |
Wells Fargo Securities, LLC | ||
KeyBanc Capital Markets Inc. |