otter tail corp issues $50 million in senior unsecured notes

Otter Tail Corporation (NASDAQ:OTTR), a utility company with a market capitalization of $3.2 billion, announced the issuance of $50 million in senior unsecured notes on Thursday, as disclosed in an SEC filing. According to InvestingPro data, the company maintains a healthy financial position with moderate debt levels and strong cash flows to cover interest payments. The issuance pertains to the Series 2025B Senior Unsecured Notes, which carry an interest rate of 5.98% and mature on June 5, 2055. This transaction is part of a previously reported Note Purchase Agreement dated March 27, 2025, under which Otter Tail Power Company, a wholly-owned subsidiary, agreed to issue $100 million in senior unsecured notes.

The proceeds from the issuance will be allocated toward capital expenditures, refinancing existing debt, and for general corporate purposes. The Note Purchase Agreement includes several covenants, such as restrictions on mergers, asset sales, and incurring liens, as well as financial covenants limiting interest-bearing debt to 65% of total capitalization and priority indebtedness to 20% of total capitalization. Currently, the company’s total debt to capital ratio stands at 25%, well within these covenant requirements.

The agreement also allows for prepayment of the notes under certain conditions. Otter Tail Corporation is incorporated in Minnesota and trades on the Nasdaq Stock Market under the symbol OTTR. Notably, the company has maintained dividend payments for 55 consecutive years, demonstrating strong financial stability. For deeper insights into Otter Tail’s financial health metrics and comprehensive analysis, including 12 additional ProTips, check out the detailed research report available on InvestingPro.

In other recent news, Otter Tail Corporation reported its Q1 2025 earnings, highlighting a mixed financial performance. The company achieved an earnings per share (EPS) of $1.62, exceeding the forecasted $1.54, but its revenue of $337.35 million fell short of the expected $349.7 million. Otter Tail Power Company, a subsidiary of Otter Tail Corporation, has filed for a 12.5% rate increase with the South Dakota Public Utilities Commission, citing rising operational costs and the need to maintain reliable service. If approved, this would result in a $5.7 million rise in rates. The company last underwent a rate review in South Dakota in 2018.

Additionally, Otter Tail Corporation maintains a strong liquidity position with over $600 million available, and its advanced metering and renewable projects are progressing as planned. The Plastics segment experienced a 13% increase in sales volumes despite a decline in PVC pipe pricing. Meanwhile, Otter Tail Power has made information available on its website regarding the potential impacts of the proposed rate increase on monthly bills. These developments are part of Otter Tail’s broader strategy to meet customer needs while adapting to market conditions and regulatory environments.

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