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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): May 22, 2009
OTTER TAIL CORPORATION
(Exact name of registrant as specified in its charter)
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Minnesota
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0-00368
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41-0462685 |
(State or other jurisdiction
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(Commission
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(I.R.S. Employer |
of incorporation)
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File Number)
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Identification No.) |
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215 South Cascade Street, P.O. Box 496, Fergus Falls, MN
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56538-0496 |
(Address of principal executive offices)
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(Zip Code) |
Registrants telephone number, including area code: (866) 410-8780
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 1.01 |
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Entry into a Material Definitive Agreement |
On May 22, 2009, Otter Tail Corporation, d/b/a Otter Tail Power Company (the Company) entered
into a Term Loan Agreement (the Loan Agreement) with JPMorgan Chase Bank, N.A., as administrative
agent, KeyBank National Association, as syndication agent, Union Bank, N.A., as documentation
agent, and the banks named therein. The Loan Agreement provides for a $75 million term loan to the
Company due May 20, 2011, which was fully drawn on May 22, 2009.
Borrowings under the Loan Agreement currently bear interest at a rate equal to the base rate in
effect from time to time. The base rate is a fluctuating rate per annum equal to (i) the highest
of (A) JPMorgan Chase Bank, N.A.s prime rate, (B) the Federal funds effective rate plus 0.5% per
annum, and (C) a daily LIBOR rate plus 1.0% per annum, plus (ii) a margin of 1.5% to
3.0% determined on the basis of the Companys senior unsecured credit ratings, as provided in the
Loan Agreement. At the Companys option, the interest rate on outstanding borrowings may be
converted to a LIBOR rate that would fluctuate based on the rate at which deposits of U.S. dollars
in the London interbank market are quoted, plus a margin of 2.5% to 4.0% determined on the basis of
the Companys senior unsecured credit ratings, as provided in the Loan Agreement. The Company will
use the proceeds borrowed under the Loan Agreement to support the working capital needs and other
capital requirements of the Companys electric operations, including construction of a wind farm
near Lake Ashtabula in North Dakota.
The Loan Agreement, which is filed as Exhibit 4.1 to this Form 8-K, contains a number of
restrictions on the businesses of the Company and its material subsidiaries, including restrictions
on their ability to merge, sell assets, make certain investments, create or incur liens on assets,
guarantee the obligations of any other party, and engage in transactions with related parties. The
Loan Agreement also contains certain financial covenants. Specifically, the Company must not permit
the ratio of its Interest-bearing Debt to Total Capitalization (each as defined in the Loan
Agreement) to be greater than 0.60 to 1.00, or permit its Interest and Dividend Coverage Ratio
(as defined in the Loan Agreement) for any period of four consecutive fiscal quarters to be less
than 1.50 to 1.00. The Loan Agreement also contains affirmative covenants and events of default.
The Loan Agreement does not include provisions for the termination of the agreement or the
acceleration of repayment of amounts outstanding due to changes in the Companys credit ratings.
The obligations of the Company under the Term Loan Agreement are unsecured. No subsidiary of the
Company is a party to or guarantor of the Loan Agreement.
The Loan Agreement provides that in the event the Company elects to form a holding company and,
following the holding company reorganization, the Companys regulated electric utility business is
operated as a wholly owned subsidiary (Otter Tail Power Company) of the new parent holding
company, the Loan Agreement will become an obligation of Otter Tail Power Company on the terms and
subject to the conditions specified in the Loan Agreement.
The description of the terms of the Loan Agreement in this Item 1.01 is qualified in its entirety
by reference to Exhibit 4.1 to this Form 8-K.
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JPMorgan Chase Bank, N.A. and Bank of America, N.A. are parties to the Loan Agreement and are also
parties to the Credit Agreement, dated as of July 30, 2008, among the Company, the Banks named
therein, Bank of America, N.A., as syndication agent, and U.S. Bank National Association, as agent
for the Banks, as amended (the OTPC Credit Agreement), which creates a separate unsecured
revolving credit facility that the Company can draw on to support its electric operations. JPMorgan
Chase Bank, N.A., Bank of America, N.A., KeyBank National Association, Union Bank, N.A. and Bank of
the West are parties to the Loan Agreement and are also parties to the Amended and Restated Credit
Agreement, dated as of December 23, 2008, among Varistar Corporation, a wholly owned subsidiary of
the Company, the Banks named therein, U.S. Bank National Association, as agent and as lead
arranger, and Bank of America, N.A., Keybank National Association, and Wells Fargo Bank, National
Association, as co-documentation agents, as amended (the Varistar Credit Agreement), which
creates an unsecured revolving credit facility that Varistar Corporation can draw on to support its
operations. In addition, certain of the banks party to the Varistar Credit Agreement and the OTPC
Credit Agreement and their affiliates have, from time to time, engaged and in the future may engage
in various financial advisory and investment banking transactions with, and provide services to,
the Company or its subsidiaries in the ordinary course of business for which they received or will
receive customary fees and expenses.
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Item 2.03 |
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant |
The information contained in Item 1.01 above is incorporated herein by reference. As of
May 22, 2009, $75 million was outstanding under the Loan Agreement.
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Item 9.01 |
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Financial Statement and Exhibits |
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4.1 |
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Term Loan Agreement, dated as of May 22, 2009, among Otter Tail
Corporation, d/b/a Otter Tail Power Company, JPMorgan Chase Bank, N.A., as
Administrative Agent, Keybank National Association, as Syndication Agent, Union Bank,
N.A., as Documentation Agent, and the Banks named therein. |
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Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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OTTER TAIL CORPORATION
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Date: May 29, 2009 |
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/s/ Kevin G. Moug
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Kevin G. Moug |
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Chief Financial Officer |
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EXHIBIT INDEX
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Exhibit |
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Description of Exhibit |
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4.1
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Term Loan Agreement, dated as of May 22, 2009, among Otter Tail
Corporation, d/b/a Otter Tail Power Company, JPMorgan Chase Bank,
N.A., as Administrative Agent, Keybank National Association, as
Syndication Agent, Union Bank, N.A., as Documentation Agent, and the
Banks named therein. |
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