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Otter Tail Corporation (NASDAQ:OTTR), a utility company with a market capitalization of $3.37 billion and strong financial health according to InvestingPro analysis, has entered into a significant financial agreement through its wholly owned subsidiary, Otter Tail Power Company, securing $100 million through the issuance of senior unsecured notes to named purchasers. This transaction, detailed in a recent 8-K SEC filing, took place on Sunday, March 27, 2025, and involves two series of notes: the 5.49% Series 2025A Senior Unsecured Notes due March 27, 2035, and the 5.98% Series 2025B Senior Unsecured Notes due June 5, 2055.
The Series 2025A Notes, totaling $50 million, were issued immediately upon entering the agreement, while the Series 2025B Notes, also amounting to $50 million, are scheduled for issuance on June 5, 2025, contingent on customary closing conditions. The Note Purchase Agreement imposes several business restrictions on Otter Tail Power Company, including limitations on mergers, asset sales, lien incurrences, third-party obligation guarantees, and affiliate transactions. The company’s strong liquidity position, with a current ratio of 2.03 and moderate debt levels, positions it well for this additional financing.
Additionally, the agreement sets forth financial covenants, such as a ceiling on Interest-bearing Debt at 65% of Total (EPA:TTEF) Capitalization and a limit on Priority Indebtedness to 20% of Total Capitalization, both assessed quarterly. The company is permitted to prepay the notes, in whole or in part, under certain conditions and may be required to offer prepayment at face value plus unpaid interest in case of a Change of Control. InvestingPro data shows the company maintains healthy cash flows to cover interest payments, with a debt-to-equity ratio of 0.62, well within industry norms.
Otter Tail Power Company plans to allocate the proceeds from the notes toward capital expenditures, refinancing existing debt, and other general corporate purposes. This strategic financial move is designed to strengthen the company’s financial position and support its ongoing operations.
This news is based on information contained in a recent SEC filing by Otter Tail Corporation.
In other recent news, Otter Tail Corporation reported a substantial earnings beat for the fourth quarter of 2024, with earnings per share (EPS) reaching $7.17, significantly higher than the forecasted $1.28. This impressive performance was accompanied by revenue of $1.33 billion, surpassing the expected $314.75 million. The company also announced a 12% increase in its dividend, now set at $2.10 per share. Otter Tail’s electric segment experienced nearly 8% earnings growth, while the plastics segment saw a 27% rise in sales volumes, despite a 15% decline in the manufacturing segment’s sales volumes. Looking ahead, Otter Tail Corporation provided 2025 EPS guidance ranging from $5.68 to $6.08, with plans to invest $1.4 billion in capital spending over the next five years. The company is focusing on long-term EPS growth of 6% to 8%. Additionally, Otter Tail’s CEO, Chuck MacFarlane, highlighted strategic investments in renewable energy and manufacturing expansions.
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