FERGUS FALLS, Minn., Sept. 15, 2008 (GLOBE NEWSWIRE) -- Otter Tail Corporation (Nasdaq:OTTR) (the Company) announced today the commencement of a public offering of 5,000,000 shares of its common stock. The Company also expects to grant the underwriters of the offering an option to purchase up to an additional 750,000 shares to cover over-allotments.
The Company intends to use the net proceeds from the offering to finance the construction of the Ashtabula Wind Center in Barnes County, North Dakota; the expansion of wind tower manufacturing facilities in Tulsa, Oklahoma, and West Fargo, North Dakota; and to fund working capital needs of the Company's other businesses.
Merrill Lynch & Co. is acting as sole book-running manager. Robert W. Baird & Co. and J.P. Morgan are acting as joint lead managers. Banc of America Securities LLC, Wells Fargo Securities and KeyBanc Capital Markets are acting as co-managers.
The Company is also updating its 2008 earnings per share guidance. The Company expects its 2008 diluted earnings per share to be in the range of $1.25 to $1.50 compared with its previously announced earnings guidance of $1.40 to $1.65. The main factors contributing to the revision in earnings guidance are as follows:
* Cooler than normal weather in July and August which impacts the
electric segment's expected earnings.
* Reductions in raw potato supplies which are expected to lower
sales volumes for the rest of 2008 in the food ingredient
processing segment.
* A continuation of the general business conditions as discussed in
the August 4, 2008 second quarter earnings release. These
conditions include reduced demand for waterfront equipment and,
most importantly, increased costs related to the startup of new
facilities and integrating new customers at the Company's wind
tower manufacturing business as it prepares for anticipated
industry growth.
The Company believes it is well positioned for earnings growth in 2009 due to the significant investments it is making in its operating companies in 2008. Within the core electric business, continued growth is expected in 2009 given ongoing rate base investments and the anticipated effect of filing during the fourth quarter of 2008 for general rate increases in North Dakota and South Dakota. The Company also believes its nonelectric businesses have excellent growth prospects, particularly in the wind tower manufacturing business. Plant expansions in Oklahoma and North Dakota will increase production capabilities to serve the expected increase in demand for wind towers.
The offering is subject to market conditions and there can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering.
Otter Tail Corporation has filed a registration statement (including a prospectus) with the Securities and Exchange Commission (SEC) for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents Otter Tail Corporation has filed with the SEC for more complete information about Otter Tail Corporation and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, Otter Tail Corporation, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-664-1259.
About the Corporation
Otter Tail Corporation has interests in diversified operations that include an electric utility, manufacturing, health services, food ingredient processing and infrastructure businesses which include plastics, construction and transportation. Otter Tail Corporation stock trades on the Nasdaq Global Select Market under the symbol OTTR. The latest investor and corporate information is available at www.ottertail.com. Corporate offices are located in Fergus Falls, Minnesota, and Fargo, North Dakota.
The Otter Tail Corporation logo is available athttp://www.globenewswire.com/newsroom/prs/?pkgid=4958
Forward-Looking Statements
Except for historical information, all other information provided in this release consists of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those projected, anticipated, or implied. The following factors, among others, could cause actual results for Otter Tail Corporation to differ materially from those discussed in the forward-looking statements:
* The corporation is subject to federal and state legislation,
regulations and actions that may have a negative impact on
its business and results of operations.
* Actions by the regulators of the electric segment could
result in rate reductions, lower revenues and earnings or
delays in recovering capital expenditures.
* Any significant impairment of the corporation's goodwill
would cause a decrease in the corporation's assets and a
reduction in its net operating performance.
* The terms of some of the corporation's contracts could
expose the corporation to unforeseen costs and costs not
within the corporation's control, which may not be
recoverable and could adversely affect the corporation's
results of operations and financial condition.
* The corporation is subject to risks associated with energy
markets.
* Future operating results of the electric segment will be
impacted by the outcome of rate rider filings in Minnesota
for transmission investments.
* Certain costs currently included in the fuel clause
adjustment (FCA) in retail rates may be excluded from
recovery through the FCA but may be subject to recovery
through rates established in a general rate case.
* Weather conditions or changes in weather patterns can
adversely affect the corporation's operations and revenues.
* Electric wholesale margins could be further reduced as the
Midwest Independent Transmission System Operator market
becomes more efficient.
* Electric wholesale trading margins could be reduced or
eliminated by losses due to trading activities.
* The corporation's electric generating facilities are subject
to operational risks that could result in unscheduled plant
outages, unanticipated operation and maintenance expenses
and increased power purchase costs.
* Wholesale sales of electricity from excess generation could
be affected by reductions in coal shipments to the Big Stone
and Hoot Lake plants due to supply constraints or rail
transportation problems beyond the corporation's control.
* The corporation's electric segment has capitalized $9.8
million in costs related to the planned construction of a
second electric generating unit at its Big Stone Plant site
as of June 30, 2008. Should approvals of permits not be
received on a timely basis, the project could be at risk. If
the project is abandoned for permitting or other reasons, a
portion of these capitalized costs and others incurred in
future periods may be subject to expense and may not be
recoverable.
* Federal and state environmental regulation could cause the
corporation to incur substantial capital expenditures and
increased operating costs.
* Existing or new laws or regulations addressing climate
change or reductions of greenhouse gas emissions by federal
or state authorities, such as mandated levels of renewable
generation or mandatory reductions in carbon dioxide (CO2)
emission levels or taxes on CO2 emissions, that result in
increases in electric service costs could negatively impact
the corporation's net income, financial position and
operating cash flows if such costs cannot be recovered
through rates granted by ratemaking authorities in the
states where the electric utility provides service or
through increased market prices for electricity.
* The corporation may not be able to respond effectively to
deregulation initiatives in the electric industry, which
could result in reduced revenues and earnings.
* The corporation's manufacturer of wind towers operates in a
market that has been influenced by the existence of a
Federal Production Tax Credit. This tax credit is scheduled
to expire on December 31, 2008. Should this tax credit not
be renewed, the revenues and earnings of this business, as
well as our electrical contracting business in our other
businesses segment, could be reduced.
* If the corporation is unable to achieve the organic growth
it expects, its financial performance may be adversely
affected.
* The corporation's plans to grow and diversify through
acquisitions and capital projects may not be successful and
could result in poor financial performance.
* The corporation's plans to acquire, grow and operate its
nonelectric businesses could be limited by state law.
* Competition is a factor in all of the corporation's
businesses.
* Economic uncertainty could have a negative impact on the
corporation's future revenues and earnings.
* Volatile financial markets and changes in the corporation's
debt rating could restrict the corporation's ability to
access capital and could increase borrowing costs and
pension plan expenses.
* The price and availability of raw materials could affect the
revenue and earnings of the corporation's manufacturing
segment.
* The corporation's food ingredient processing segment
operates in a highly competitive market and is dependent on
adequate sources of raw materials for processing. Should the
supply of these raw materials be affected by poor growing
conditions, this could negatively impact the results of
operations for this segment.
* The corporation's food ingredient processing and wind tower
manufacturing businesses could be adversely affected by
changes in foreign currency exchange rates.
* The corporation's plastics segment is highly dependent on a
limited number of vendors for polyvinyl chloride (PVC)
resin, many of which are located in the Gulf Coast regions,
and a limited supply of resin. The loss of a key vendor or
an interruption or delay in the supply of PVC resin could
result in reduced sales or increased costs for this
business. Reductions in PVC resin prices could negatively
impact PVC pipe prices, profit margins on PVC pipe sales and
the value of PVC pipe held in inventory.
* Changes in the rates or method of third-party reimbursements
for diagnostic imaging services could result in reduced
demand for those services or create downward pricing
pressure, which would decrease revenues and earnings for the
corporation's health services segment.
* The corporation's health services businesses may be unable
to renew and continue to maintain the dealership
arrangements with Philips Medical which are scheduled to
expire on December 31, 2008.
* Technological change in the diagnostic imaging industry
could reduce the demand for diagnostic imaging services and
require the corporation's health services operations to
incur significant costs to upgrade their equipment.
* Actions by regulators of the corporation's health services
operations could result in monetary penalties or
restrictions in the corporation's health services
operations.
* A significant failure or an inability to properly bid or
perform on projects by the corporation's construction
businesses could lead to adverse financial results.
For a further discussion of other risk factors and cautionary statements, refer to the prospectus for the offering to which this communication relates and other documents the corporation has filed with the SEC.