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OTTER TAIL CORPORATION

(OTTR)
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OTTER TAIL CORP : Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant (form 8-K)

12/01/2021 | 09:23am EST
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
As previously reported in a Form 8-K filed by Otter Tail Corporation on June 14,
2021 (the "June 8-K"), Otter Tail Power Company ("OTP"), a wholly owned
subsidiary of Otter Tail Corporation, entered into a Note Purchase Agreement
(the "Note Purchase Agreement") on June 10, 2021, with the purchasers named
therein (the "Purchasers"), pursuant to which OTP has agreed to issue to the
Purchasers, in a private placement transaction, $230 million aggregate principal
amount of the senior unsecured notes consisting of (a) $40 million in aggregate
principal amount of its 2.74% Series 2021A Senior Unsecured Notes due November
29, 2031 (the "Series 2021A Notes"), (b) $100 million in aggregate principal
amount of its 3.69% Series 2021B Senior Unsecured Notes due November 29, 2051
(the "Series 2021B Notes") and (c) $90 million in aggregate principal amount of
its 3.77% Series 2022A Senior Unsecured Notes due May 20, 2052 (the "Series
2022A Notes"; and together with the Series 2021A Notes and the Series 2021B
Notes, the "Notes").
On November 29, 2021, OTP issued the Series 2021A Notes and the Series 2021B
Notes pursuant to the Note Purchase Agreement for aggregate proceeds of $140
million. OTP will use the proceeds from the issuance to refinance existing
indebtedness. The remaining unissued notes of the Note Purchase Agreement, the
Series 2022A Notes, are expected to be issued in May 2022, subject to the
satisfaction of certain customary conditions to closing.
As reported in the June 8-K, the Note Purchase Agreement allows OTP to prepay
all or any part of the Notes (in an amount not less than 10% of the aggregate
principal amount of the Notes then outstanding in the case of a partial
prepayment) at 100% of the principal amount so prepaid, together with unpaid
accrued interest and a make-whole amount; provided that if no default or event
of default exists under the Note Purchase Agreement, any prepayment made by OTP
of all of the (a) Series 2021A Notes then outstanding on or after May 29, 2031,
(b) Series 2021B Notes then outstanding on or after May 29, 2051, or (c) Series
2022A Notes then outstanding on or after November 20, 2051 will be made without
any make-whole amount. The Note Purchase Agreement also requires OTP to offer to
prepay all outstanding Notes at 100% of the principal amount together with
unpaid accrued interest in the event of a Change of Control (as defined in the
Note Purchase Agreement).
As reported in the June 8-K, the Note Purchase Agreement contains a number of
restrictions on the business of OTP that were effective upon execution of the
Note Purchase Agreement. These include restrictions on OTP's abilities to merge,
sell substantially all assets, create or incur liens on assets, guarantee the
obligations of any other party, and engage in transactions with affiliates. The
Note Purchase Agreement also contains other negative covenants and events of
default, as well as certain financial covenants. Specifically, OTP may not
permit its Interest-bearing Debt (as defined in the Note Purchase Agreement) to
exceed 60% of Total Capitalization (as defined in the Note Purchase Agreement),
determined as of the end of each fiscal quarter. OTP is also restricted from
allowing its Priority Indebtedness (as defined in the Note Purchase Agreement)
to exceed 20% of Total Capitalization, determined as of the end of each fiscal
quarter.
The summary in this Item 2.03 of the material terms of the Note Purchase
Agreement is qualified in its entirety by reference to the full text of the Note
Purchase Agreement, a copy of which was filed as Exhibit 4.1 to the June 8-K and
is incorporated herein by reference.


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© Edgar Online, source Glimpses

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