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OTTER TAIL CORPORATION

(OTTR)
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Otter Tail : Amended and Restated Credit Agreement (Form 8-K)

10/04/2021 | 03:29pm EST
Otter Tail Corporation Amended and Restated Credit Agreement
On September 30, 2021, Otter Tail Corporation (the "Company") entered into a Fourth Amended and Restated Credit Agreement (the "Otter Tail Credit Agreement") with certain banks as named therein, and led by U.S. Bank National Association ("U.S. Bank"), as administrative agent. The agreement continues to provide for an unsecured revolving credit facility with a $170 million line of credit the Company can draw on to refinance certain indebtedness, fund capital expenditures and support the operations of the Company and its subsidiaries, including letters of credit in an aggregate amount not to exceed $40 million outstanding at any time. The line of credit may be increased to $290 million on the terms and subject to the conditions described in the agreement. The agreement expires on September 30, 2026. The terms of the credit facility dictate a variable rate of interest to be charged on outstanding balances and impose a commitment fee based on the average unused amount available to be drawn under the facility. The variable rate of interest to be charged is based on a benchmark interest rate as selected by the borrower at the time of an advance, plus an applicable credit spread as defined in the agreement, which varies depending on the benchmark interest rate selected, and is subject to adjustment based on the credit ratings of the borrower.
The Otter Tail Credit Agreement, which is filed as Exhibit 10.1 to this Form 8-K, contains a number of restrictions on the businesses of the Company and its "Material Subsidiaries" (as defined in the Otter Tail Credit Agreement and specifically excluding Otter Tail Power Company), including restrictions on their ability to merge, sell assets, make investments, create or incur liens on assets, guarantee the obligations of any other party and engage in transactions with related parties. The agreement includes a financial covenant which requires the ratio of the Company's "Interest-bearing Debt" to "Total Capitalization" to be equal to or less than 0.60 to 1.00 as of the last day of each fiscal quarter. The agreement also contains certain affirmative covenants and defined events of default, and includes a provision for the replacement of the LIBOR benchmark rate in the event that LIBOR is no longer available. The Company's obligations under the agreement are guaranteed by each of its Material Subsidiaries. The Otter Tail Credit Agreement amends and restates the Third Amended and Restated Credit Agreement, as amended (the "Prior Otter Tail Credit Agreement"), dated as of October 29, 2012, which was set to expire on October 29, 2024, and the description of the terms of the Otter Tail Credit Agreement in this Item 1.01 is qualified in its entirety by reference to the full text of the Otter Tail Credit Agreement, which is filed as Exhibit 10.1 to this Form 8-K and incorporated by reference.
Otter Tail Power Company Amended and Restated Credit Agreement
On September 30, 2021, Otter Tail Power Company ("OTP"), a wholly owned subsidiary of the Company, entered into a Third Amended and Restated Credit Agreement (the "OTP Credit Agreement") with a group of banks as named therein, and led by U.S. Bank, as administrative agent. The agreement continues to provide for an unsecured revolving credit facility with a $170 million line of credit OTP can draw on to refinance certain indebtedness, fund capital expenditures, and support their operations, including letters of credit in an aggregate amount not to exceed $50 million outstanding at any time. The line of credit may be increased to $250 million on the terms and subject to the conditions described in the agreement. The agreement expires on September 30, 2026. The terms of the credit facility dictate a variable rate of interest to be charged on outstanding balances, and impose a commitment fee based on the average unused amount available to be drawn under the facility. The variable rate of interest to be charged is based on a benchmark interest rate as selected by the borrower at the time of an advance, plus an applicable credit spread as defined in the agreement, which varies depending on the benchmark interest rate selected and is subject to adjustment based on the credit ratings of the borrower.
The OTP Credit Agreement, which is filed as Exhibit 10.2 to this Form 8-K, contains a number of restrictions on OTP, among other covenants, including restrictions on its ability to merge, sell assets, make investments, create or incur liens on assets, guarantee the obligations of any other party and engage in transactions with related parties. The agreement includes a financial covenant which requires the ratio of OTP's "Interest-bearing Debt" to "Total Capitalization" to be equal to or less than 0.60 to 1.00 as of the last day of each fiscal quarter. The agreement also contains certain affirmative covenants and defined events of default, and includes a provision for the replacement of the LIBOR benchmark rate in the event that LIBOR is no longer available. The OTP Credit Agreement amends and restates the Second Amended and Restated Credit Agreement, as amended (the "Prior OTP Credit Agreement"), dated as of October 29, 2012, which was set to expire on October 29, 2024, and the description of the terms of the OTP Credit Agreement in this Item 1.01 is qualified in its entirety by reference to the full text of the OTP Credit Agreement, which is filed as Exhibit 10.2 to this Form 8-K and incorporated herein by reference.
All capitalized terms in this Item 1.01 have the meanings assigned to them in the respective credit agreements.
Certain Relationships
Certain of the banks party to one or both of the Otter Tail Credit Agreement and the OTP Credit Agreement, or their respective affiliates, are also a party to currently outstanding long term debt agreements of OTP, for which such banks or their respective affiliates may receive interest or fees in accordance with the terms of such instruments.
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 September 30, 2021, $36.6 million was outstanding under the Otter Tail Credit Agreement, which was also outstanding under the Prior Otter Tail Credit Agreement immediately prior to the effectiveness of the Otter Tail Credit Agreement. As of September 30, 2021, $61.2 million was outstanding under the OTP Credit Agreement, in addition to $13.2 million of outstanding letters of credit, all of which were outstanding under the Prior OTP Credit Agreement immediately prior to the effectiveness of the OTP Credit Agreement.


Financial Statements and Exhibits


Disclaimer

Otter Tail Corporation published this content on 04 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 October 2021 19:27:34 UTC.


© Publicnow 2021
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Sales 2021 1 171 M - -
Net income 2021 166 M - -
Net Debt 2021 628 M - -
P/E ratio 2021 16,7x
Yield 2021 2,34%
Capitalization 2 764 M 2 764 M -
EV / Sales 2021 2,90x
EV / Sales 2022 2,98x
Nbr of Employees 2 074
Free-Float 98,1%
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Number of Analysts 4
Last Close Price 66,54 $
Average target price 68,33 $
Spread / Average Target 2,70%
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Charles S. MacFarlane President, Chief Executive Officer & Director
Kevin G. Moug Chief Financial Officer & Senior Vice President
Nathan Ivey Partain Chairman
Karen M. Bohn Independent Director
James B. Stake Independent Director
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