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Otter Tail Power repays debt with proceeds of $140 million note sale
By Lisa Kerner
Charlotte, N.C., Dec. 6 - Otter Tail Corp. subsidiary Otter Tail Power Co. (OTP) used the proceeds from the sale of its 10-year 4.63% senior notes to retire $90 million of its 6.63% senior notes due Dec. 1, 2011 and $10.4 million of its pollution control refunding revenue bonds due Dec. 1, 2012.
Remaining proceeds will be used to repay short-term debt and for other general corporate purposes, according to a form 8-K filed with the Securities and Exchange Commission.
As previously reported, OTP agreed to issue $140 million principal amount of 4.63% senior notes due Dec. 1, 2021 in a private placement under a July 29 note purchase agreement.
The notes settled on Dec. 1.
Purchasers included Northwestern Mutual Life Insurance Co., Sun Life Assurance Co., ING US Annuity Life Insurance Co., ReliaStar Life Insurance Co. and Travelers Casualty and Surety Co. of America.
The notes have a make-whole call at Treasuries plus 50 basis points. In the case of a partial prepayment, the company must redeem at least 10% of the total principal amount of the notes then outstanding.
OTP's ability to merge, sell assets, create or incur liens, guarantee obligations and engage in transactions with related parties is restricted under the agreement.
In addition, OTP may not permit its interest-bearing debt to exceed 60% of total capitalization or permit its interest and dividend coverage ratio to be less than 1.5 to 1.0, in each case determined as of the end of each fiscal quarter. OTP's priority debt, as defined in the agreement, cannot to exceed 20% of total capitalization, according to the filing.
Otter Tail is a Fergus Falls, Minn.-based diversified company with operations in electric utility, manufacturing, health services, food ingredient processing and infrastructure businesses, which include plastics, construction and transportation.
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