Otter Tail Ag Enterprises secures loan default forbearance

By Caroline Salls

Pittsburgh, March 26 - Otter Tail Ag Enterprises, LLC entered into a forbearance agreement with senior lender Agstar Financial Services, PCA in connection with the company's failure to make principal and interest payments due Feb. 1 and March 1 on its master loan agreement, according to an 8-K filed with the Securities and Exchange Commission.

The forbearance also covers Otter Tail's failure to maintain an adequate borrowing base to support advances under the terms of its revolving line of credit.

Under the agreement, Agstar has agreed not to act on the defaults through the earlier of occurrence of an event of default and April 30.

The lender has also agreed to increase the borrowing base on the line of credit to the lesser of $6 million or the sum of 100% of the company's eligible accounts receivable and 100% of its eligible inventory.

In addition, the passing of the maturity of the date of the line of credit without payment in full will not constitute an event of default under the forbearance agreement.

All unpaid principal and interest payments will be deferred to May 1, but the payments must be made in full by that date.

Otter Tail also must deliver a borrowing base certificate to the lender within 10 days of the end of each calendar month, deliver a balance sheet and plant production report within 20 days of the end of each calendar month and use its best efforts to complete its pending equity offering by May 31.

Also, the lender will retain an independent counsel at the company's expense to review Otter Tail's risk management, operations and financial systems procedures, with the consultant's report due by April 15.

Otter Tail is a Fergus Falls, Minn., ethanol company.

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