Otter Tail Corporation filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation, Financial Statements and Exhibits
$OTTR
Electric Utilities: Central
Utilities
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): December 11, 2024
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Item 1.01 Entry Into A Material Definitive Agreement
Otter Tail Corporation Amended and Restated Credit Agreement
On December 11, 2024, Otter Tail Corporation (the “Company”) entered into a Sixth 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 provides 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 December 11, 2029. 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 margin 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 Company and its “Material Subsidiaries” (as defined in the Otter Tail Credit Agreement and specifically excluding Otter Tail Power Company), including restrictions on the 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” (each as defined in the agreement) to be equal to or less than 0.65 to 1.00 as of the last day of each fiscal quarter. The agreement also contains certain affirmative covenants and defined events of default. The Company’s obligations under the agreement are guaranteed by each of its Material Subsidiaries.
The Otter Tail Credit Agreement amends and restates the Fifth Amended and Restated Credit Agreement, as amended (the “Prior Otter Tail Credit Agreement”), dated as of October 31, 2022, which was set to expire on October 29, 2027.
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 December 11, 2024, Otter Tail Power Company (“OTP”), a wholly owned subsidiary of the Company, entered into a Fifth 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 provides for an unsecured revolving credit facility with a $220 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 $300 million on the terms and subject to the conditions described in the agreement. The agreement expires on December 11, 2029. 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 margin 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, 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” (each as defined in the agreement) to be equal to or less than 0.65 to 1.00 as of the last day of each fiscal quarter. The agreement also contains certain affirmative covenants and defined events of default.
The OTP Credit Agreement amends and restates the Fourth Amended and Restated Credit Agreement, as amended (the “Prior OTP Credit Agreement”), dated as of October 31, 2022, which was set to expire on October 29, 2027.
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.
Item 2.03 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 December 11, 2024, no amounts were outstanding under the Otter Tail Credit Agreement, nor was there any amount outstanding under the Prior Otter Tail Credit Agreement immediately prior to the effectiveness of the Otter Tail Credit Agreement. As of December 11, 2024, $31.1 million was outstanding under the OTP Credit Agreement, plus $8.8 million of outstanding letters of credit, all of which was outstanding under the Prior OTP Credit Agreement immediately prior to the effectiveness of the OTP Credit Agreement.
Item 9.01 Financial Statements and Exhibits
(d) | Exhibits | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| OTTER TAIL CORPORATION | ||||||||
| Date: December 16, 2024 | By: | /s/ Todd R. Wahlund | ||||||
| Todd R. Wahlund | ||||||||
| Chief Financial Officer | ||||||||