Legalectric

TODAY – CAN YOU BELIEVE IT!!!

While Otter Tail Power is at the PUC arguing for their Big Stone II,(or is it their life?), their messenger was really busy filing at the SEC. The Otter Tail Corporation Board of Directors has authorized reorganization. Is this all about debt/equity ratio? Does this keep some things out of consideration? What’s going on… this is a short short SEC document that says so much!

This is something that the Commission must address as it makes its decision about the Certificate of Need and Routing Permits for Big Stone II, so I whipped off a mncoalgasplant.com Motion:

mncoalgasplant.com Motion for Disclosure & Commission Notice; Exhibit A – Otter Tail Power 8k filing

Here it is verbatim, linked, of course:

Item 7.01 Regulation FD Disclosure

The Board of Directors of Otter Tail Corporation (the “Company”) has authorized the Company to proceed with a holding company reorganization under the provisions of Section 302A.626 of the Minnesota Business Corporation Act. Currently, the Company’s regulated electric utility business is operated under the name of Otter Tail Power Company as a division of the Company. Following the holding company reorganization, Otter Tail Power Company will be operated as a wholly-owned subsidiary of the new parent holding company to be named Otter Tail Corporation.

In connection with the reorganization, each outstanding share of Otter Tail Corporation common stock will be automatically converted into one share of the common stock of the new holding company, and each outstanding share of Otter Tail Corporation cumulative preferred stock will be automatically converted into one share of the cumulative preferred stock of the new holding company having the same terms. Shareholder approval is not required for the reorganization under the provisions of the Minnesota Business Corporation Act.

The holding company reorganization is subject to approval by Minnesota, North Dakota and South Dakota regulatory agencies and by the Federal Energy Regulatory Commission, consents from various third parties and certain other conditions. Subject to such conditions, the holding company reorganization is expected to become effective on January 1, 2009.

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, thereunto duly authorized.

OTTER TAIL CORPORATION

Date: June 3, 2008

By /s/ Kevin G. Moug
Kevin G. Moug
Chief Financial Officer and Treasurer

In case you’re wondering, Minn. Stat. 302A.626 is (click it to read) “Merger to affect a holding company reorganization.”

So who cares about reorganization? Apparently Bill Gates does, it’s mentioned in the Note Purchase Agreement from last year…

Note Purchase Agreement between Cascade and Otter Tail Power

Read carefully and you’ll see that reorganization is one of the reasons the obligations on Otter Tail Power wouldn’t be binding.

A couple of questions are apparent (and this is NOT my specialty by any means, it’s the myopic leading the blind here):

Is the reorganization a prelude to a spin-off divestiture?

Is the reorganization due to contractual debt ratio provisions?

Is the reorganization a prelude to bankruptcy?

Does the reorganization open the door to “carry-over credit or loss of merged subsidiary?”

Others? Any ideas? We’ll see…