Otter Tail obtains two-year $50 million term loan via JPMorgan

By Wendy Van Sickle

Columbus, Ohio, Feb. 9 – Otter Tail Corp. entered into a two-year $50 million unsecured term loan agreement on Feb. 5, according to an 8-K filed with the Securities and Exchange Commission.

J.P. Morgan Securities LLC acted as lead arranger and bookrunner and JPMorgan Chase Bank, NA as administrative agent.

Otter Tail may request up to two additional tranches of term loans in minimum increments of $10 million, so long as the total amount of outstanding term loans does not exceed $100 million.

Borrowings will bear interest at Libor plus 90 basis points.

Proceeds may be used for working capital, capital expenditures and other corporate purposes.

The agreement will terminate on Feb. 5, 2018.

Financial covenants include a maximum ratio of interest-bearing debt to total capitalization of 0.6 times on the last day of any fiscal quarter and a minimum interest and dividend coverage ratio of 1.5 times for any four consecutive fiscal quarters.

The agreement also contains affirmative covenants and events of default as well as restrictions on the company and its subsidiaries, including 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.

Otter Tail’s obligations under the loan agreement are guaranteed by each of its material subsidiaries.

The Fergus Falls, Minn.-based company operates in six segments: electric, plastics, manufacturing, health services, food ingredient processing and other business operations.

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