Otter Tail Ag Enterprises files plan, needs to raise $12 million

By Caroline Salls

Pittsburgh, Feb. 26 - Otter Tail Ag Enterprises, LLC filed its plan of reorganization and related disclosure statement Thursday with the U.S. Bankruptcy Court for the District of Minnesota.

According to the disclosure statement, the plan is designed to restructure the company's capital structure to improve cash flow and strengthen Otter Tail's balance sheet by reducing its overall debt.

Under the plan, Otter Tail's capital structure will be improved by a new equity drive seeking a $12 million investment. The company said this new capital is a condition to the plan taking effect and is a condition imposed by senior lenders for acceptance of the plan.

Otter Tail said it polled its existing members regarding their interest in reinvesting in the reorganized company and found there would not be enough interest to raise the $12 million, but the company said the equity opportunity is not exclusive to existing equity members.

Instead, the offering will be made to any Minnesota qualified investor, and any party can purchase new equity in the reorganized company, including existing creditors who are not equity members.

If it is not able to complete the restructuring proposed in the plan, the company said it will likely have to sell its assets through an auction process, which would result in fewer or no funds available to pay unsecured creditors.

Treatment of creditors will include:

• Holders of AgStar secured claims and NMF secured claims will be paid in full under modified credit agreement terms;

• Holders of U.S. Bank NA revenue bond indenture trustee claims will receive $2.5 million within 60 days of the plan effective date;

• Holders of Otter Tail County general obligation bond administrator claims will receive $751,250 within 60 days of the effective date;

• Holders of general unsecured claims and rejection claims will be paid at least 12.5% of their claims within 60 days of the effective date;

• Holders of unsecured convenience claims will be paid in full within 60 days of the effective date; and

• Equity interests will be cancelled.

Otter Tail, a Fergus Falls, Minn., ethanol company, filed for bankruptcy on Oct. 30. Its Chapter 11 case number is 09-61250.

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