PROSPECTUS
OTTER TAIL POWER COMPANY
AUTOMATIC DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN
COMMON SHARES
($5 PAR VALUE)
The Automatic Dividend Reinvestment and Share Purchase Plan (the
"Plan") of Otter Tail Power Company (the "Company") provides the
Company's Common and Preferred Shareholders and customers with a
convenient method of purchasing the Company's Common Shares, $5 par
value ("Common Shares"), without payment of any brokerage commission
or service charge. Participants may purchase additional Common Shares
by reinvesting dividends and/or making cash payments.
Customers who are not shareholders of the Company may become holders
of record of the Company's Common Shares concurrently with enrollment
in the Plan by making a minimum initial investment of $100. Individuals
who are not shareholders or customers of the Company may
participate in the Plan only after becoming a shareholder of record
through the purchase of Common or Preferred Shares of the Company
through an independent broker.
The shares purchased under the Plan may be new issue Common Shares or
Common Shares purchased on the open market. New issue Common Shares
will be purchased from the Company at the current market price of
Common Shares as determined by the Company on the basis of the
average of the high and low sales prices of Common Shares on the
applicable investment date as reported by NASDAQ. The price of Common
Shares purchased on the open market will be the weighted average
price per share at which shares are actually purchased on the open
market for the relevant period.
This Prospectus relates to 1,000,000 new issue Common Shares
registered for sale under the Plan. A complete description of the
Plan begins on Page 3. Please read this Prospectus carefully before
investing and retain it for your future reference.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is October 31, 1999
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and in accordance therewith files reports, proxy statements and
other information with the Securities and Exchange Commission
("Commission"). Reports, proxy statements and other information filed
by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's regional offices at Seven World Trade Center, Suite
1300, New York, New York 10048, and Citicorp Center, Suite 1400,
500 West Madison Street, Chicago, Illinois 60601. Copies of such
materials can be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains
a web site (http://www.sec.gov) that contains reports, proxy statements
and other information regarding registrants such as the Company that
file electronically with the Commission.
The Company has filed with the Commission a registration statement
on Form S-3 with respect to the new Common Shares issuable under the
Plan (herein, together with all amendments and exhibits, referred to
as the "Registration Statement") under the Securities Act of 1933, as
amended. This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed with the Commission under the Exchange
Act (File No. 0-368) are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1998; and
2. The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31 and June 30, 1999.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of this offering shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof
from the respective dates of filing of such documents. Any statement
contained herein or in a document all or part of which is
incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained in this
Prospectus or in any document subsequently filed with the Commission
which also is or is deemed to be incorporated by reference in this
Prospectus modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each
person (including any beneficial owner) to whom this Prospectus has
been delivered, on the written or oral request of any such person, a
copy of any or all of the documents referred to above which have been
or may be incorporated in this Prospectus by reference, other than
certain exhibits to such documents. Requests for such copies should
be directed to the Corporate Secretary, Otter Tail Power Company,
215 South Cascade Street, P.O. Box 496, Fergus Falls, Minnesota
56538-0496, telephone number: (218) 739-8200.
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THE COMPANY
The Company is an operating public utility engaged in the production,
transmission, distribution and sale of electric energy in western
Minnesota, eastern North Dakota and northeastern South Dakota. The
Company, through its subsidiaries, is also engaged in other
businesses which are referred to as Manufacturing Operations, Health
Services Operations and Other Business Operations. Manufacturing
Operations includes businesses involved in the production of
agricultural equipment, plastic pipe, automobile and truck frame
straightening equipment and accessories, and fabricated metal parts.
Health Services Operations consists of businesses involved in the
sale, service, rental, refurbishing, and operation of medical imaging
equipment and the sale of related supplies and accessories to various
medical institutions. Other Business Operations consists of
businesses diversified in such areas as electrical and telephone
construction contracting, entertainment, energy services, natural gas
marketing, telecommunications, and trucking.
The Company was incorporated in 1907 under the laws of the State of
Minnesota. Its principal executive office is located at 215 South
Cascade Street, Box 496, Fergus Falls, Minnesota 56538-0496,
telephone number: (218) 739-8200.
USE OF PROCEEDS
Unless Common Shares are purchased directly from the Company, the
Company will receive no proceeds from the offering of Common Shares
through the Plan. To the extent shares are purchased from the
Company, the net proceeds from the sale of such shares will be added
to the general funds of the Company and used for general corporate
purposes, including payment of a portion of the cost of the Company's
continuing construction program. The Company has no basis for
estimating either the number of Common Shares that ultimately will be
sold pursuant to the Plan or the prices at which such shares will be
sold.
DESCRIPTION OF THE PLAN
The purpose of the Plan is to provide the Company's shareholders and
customers with a simple and convenient method of purchasing Common
Shares of the Company without payment of any brokerage commissions or
service charges. The terms and conditions of the Plan are set forth
below.
1. HOW TO ENROLL
Eligible persons may join the Plan at any time by completing the
appropriate authorization form and returning it to the Company. An
authorization form may be obtained by sending a written request to
Otter Tail Power Company, Shareholder Services Department, 215 South
Cascade Street, P.O. Box 496, Fergus Falls, Minnesota 56538-0496, or
by calling the Company at (800) 664-1259 or (218) 739-8479 (locally).
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2. PARTICIPATION
Any holder of the Company's Common or Preferred Shares or retail
utility customer of the Company is eligible to participate in the
Plan. If you are already a participant under the Plan, you are not
required to re-enroll.
If you are already a holder of record of Company shares, you must
complete the appropriate authorization form to become a participant
in the Plan. If you are a beneficial owner of Company shares held by
a broker or other custodial institution that has established
procedures which permit their customers to participate in the Plan,
please contact such broker or institution for the appropriate
authorization form.
Retail utility customers who are not already holders of Common or
Preferred Shares may join the Plan by completing the appropriate
authorization form and returning it to the Company's Shareholder
Services Department along with an initial cash payment of at least
$100 and up to a maximum of $5,000. Payments must be made by check or
money order (made payable in U.S. dollars drawn on a U.S. bank)
payable to "Otter Tail Power Company - D.R. Agent."
3. HOW THE PLAN WORKS
Participants can reinvest all dividends paid on full and fractional
Common and Preferred Shares to acquire additional Common Shares under
the Plan. Participants can elect to receive a cash dividend for
shares held in certificate form. All dividends earned on shares held
in book-entry form for a participant in the Plan must be reinvested.
Once enrolled in the Plan, participants may also make optional cash
payments of a minimum of $10 and a maximum of $5,000 per month to
purchase Common Shares.
Shares purchased with reinvested dividends and optional cash payments
are held by the Plan in book-entry form until the participant
requests issuance of a stock certificate. A participant may instruct
the Company to sell up to, but not more than, 25 Common Shares
credited to the participant's Plan account once during any calendar
month.
No brokerage fees, commissions or service charges will be paid by
participants in connection with the Plan. All administrative service
fees will be borne by the Company.
All dividends earned on shares held in the Plan in book-entry form
will be automatically reinvested. Participants can reinvest all or
none of the dividends earned on Common or Preferred Shares held in
certificate form. Fractions of shares, computed to four decimal
places, as well as full shares, are credited to participants'
accounts. Regular Statements of Account will provide simplified
record keeping.
Participants can deposit Common Share certificates for shares
acquired through the Plan or otherwise under the Share Deposit
feature of the Plan. (See Section 6 - Certificates for Shares.)
Please note that Preferred Shares are not eligible for this service.
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4. HOW INVESTMENTS ARE MADE
Shares for the Plan may come either from authorized but unissued
Common Shares ("new issue Common Shares") or from purchases of Common
Shares of the Company made on any securities exchange where the
shares are traded, in the over-the-counter market or in negotiated
transactions. The Company will decide when the Plan will purchase new
issue Common Shares or when Common Shares will be purchased on the
open market. For open market purchases, US Bank (the "Agent") will
act as purchasing agent. The Agent may purchase shares on such terms
as to price, delivery, and otherwise as the Agent may determine,
subject to any restrictions imposed by federal or state securities laws.
Below are the various ways you can acquire shares:
Dividend Reinvestment
Dividends may be reinvested to purchase either new issue Common
Shares or Common Shares purchased on the open market, as determined
by the Company. Common and/or Preferred Share dividends used to
purchase new issue Common Shares will be invested on the dividend
payment date (which is typically the tenth or first day,
respectively, of each March, June, September and December) or, if
that date is not a trading day, the preceding trading day. Common
and/or Preferred Share dividends will normally be used by the Agent
to purchase Common Shares on the open market within 10 business days
of the dividend payment date, depending on market conditions.
Participants can authorize full reinvestment of dividends on all
shares. Participants can also authorize cash dividends to be paid on
all Common and/or Preferred Shares held in certificate form.
Dividends on shares held in the Plan in book-entry form will always
be automatically reinvested. To change participation to allow receipt
of dividends in cash for all shares or just shares held in
certificate form, the Company's Shareholder Services Department must
receive a written request for such change on or before the record
date established for the particular dividend. If the request is
received after the record date, the change will begin with the next
dividend.
Cash Investment Option-Optional Cash Payments for Participants
Enrolled in the Plan
Participants may, at any time, send checks or money orders only (made
payable in U.S. dollars drawn on a U.S. bank) to make cash
investments in the Plan. Checks and money orders must be made payable
to "Otter Tail Power Company - D.R. Agent" and sent with the
authorization form or the form provided as part of the Statements of
Account. Once enrolled in the Plan, participants may vary cash
investments from a minimum of $10 to a maximum of $5,000 per month.
The Company will process all payments on the date they are received.
Payments post-dated and received on or before that date will be
accepted as of such date. Cash payments are invested monthly on the
first day of each month or, if that date is not a trading day, the
next succeeding trading day. In order to be invested in a particular
month, cash payments must be received on or before the last business
day of the preceding month. No interest will be paid on funds being
held by the Company or the Agent.
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Cash payments will be used to purchase either new issue Common Shares
or Common Shares purchased on the open market, as determined by the
Company. Cash payments used to purchase new issue Common Shares will
be invested on the investment date each month. Cash payments used to
purchase Common Shares on the open market will normally be purchased
by the Agent on the investment date each month.
Participants can request a refund of the current month's cash payment
by sending a written request to the Company's Shareholder Services
Department. The request must be received at least two business days
prior to the investment date. Payments that are rejected by the
Company will be refunded to participants as promptly as practicable.
Price
The price per share of new issue Common Shares will be the current
market price of Common Shares as determined by the Company on the
basis of the average of the high and low sales prices of Common
Shares on the applicable investment date as reported by NASDAQ.
The price per share of shares purchased for the Plan on the open
market will be the weighted average price per share at which Common
Shares of the Company are actually purchased on the open market for
the relevant period by the Agent on behalf of all participants in the
Plan.
The Company has no basis for estimating either the number of shares
that will be purchased under the Plan or the prices at which shares
will be purchased. Participants should be aware that since investment
prices are determined as of specified dates, they may lose any
advantages otherwise available from being able to select the timing
of their investment. Neither the Company nor the Agent shall have any
responsibility for the value of the Common Shares acquired for
participants' accounts.
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5. STATEMENTS OF ACCOUNT
The Company will maintain an account for each Plan participant and
will send Statements of Account to each participant as soon as
practicable after each quarterly dividend reinvestment and each
monthly cash investment. The Statements include the participant's
current share balance and all year-to-date transactions in the
participant's account. Statements are a participant's continuing
record of the cost of the participant's purchases, and the statements
should be retained for tax purposes. Included as a part of the
Statements is a form for making optional cash payments, selling
shares, requesting certificates, depositing certificates, or
withdrawing from the Plan.
6. CERTIFICATES FOR SHARES
Normally, certificates for Plan shares are not issued to participants
unless requested. Instead, the shares are credited to Plan accounts
and are shown on the Statements of Account. This protects against
loss, theft or destruction of stock certificates, and reduces the
Company's administrative costs.
Participants can, however, request stock certificates for any number
of full shares credited to their Plan accounts. There is no charge
for this service. A written request must be made to the Company's
Shareholder Services Department by completing the form provided as
part of the Statements of Account or by submitting a written request.
A separate request must be made for each certificate requested
specifying the number of full shares to be issued. Requests are
processed as soon as practicable after receipt. Generally, the
certificates are issued within five business days after the Company
receives the request. Any remaining full and fractional shares will
continue to be credited to participants' accounts. Certificates for
fractional shares will not be issued under any conditions.
The Company reserves the right to suspend its policy of issuing
certificates, other than upon termination or withdrawal from the
Plan, at any time.
Registration of Share Certificates
Certificates can be registered and issued in names other than
Participants' names subject to compliance with any applicable laws.
To do this participants must complete a stock power form and return
it to the Company's Shareholder Services Department. This form must
bear the signature of the registered holder(s) with the signature
guaranteed by an eligible financial institution which is a member of
a signature medallion program. Assignment forms can be obtained from
the Company's Shareholder Services Department.
If a participant wants shares issued or a transfer to be effective
for a particular dividend payment, the appropriate form must be
received at least five days before the record date established for
that dividend.
Shares credited to participants' accounts may not be pledged and may
not be assigned, except to another Plan account. To pledge or assign
shares participants must make a written request for certificates to
be issued.
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Deposit of Common Share Certificates into the Plan
Participants can deposit any certificates for Common Shares of the
Company into the Plan, whether such certificates were issued under
the Plan or otherwise, at no cost. To take advantage of this feature,
participants must send certificates for Common Shares to the
Company's Shareholder Services Department together with the
appropriate information on the form provided as part of the
Statements of Account or with a separate written request. Common
Shares represented by such certificates are credited to the
appropriate participant account under the Plan. If you are receiving
a cash dividend for shares held in certificate form, you must
continue to hold a certificate representing those shares. Once shares
are deposited into the Plan, dividends on such shares will be
automatically reinvested. Certificates for Preferred Shares of the
Company are not eligible for deposit.
Should participants choose to deposit certificates, the Company
recommends that registered or certified mail be used. The method used
to submit certificates to the Company is at the option and risk of
the participant. Participants should submit their certificates
without endorsement.
7. HOW TO TERMINATE PARTICIPATION
Participation in the Plan is voluntary, and a participant may
terminate participation at any time by submitting the appropriate
information on the form provided as part of the Statements of Account
or by submitting a separate written request to the Company's
Shareholder Services Department.
The request for termination will be processed as soon as practicable
after receipt. A stock certificate for full shares will normally be
mailed within five business days after receipt of the request, unless
the request is received between a dividend record date and a dividend
payment date. If the request is received during this period, a
certificate will generally not be sent out until the dividends paid
for the quarter have been credited to your account. The Agent will
sell all fractional shares normally on the first trading day of each
month. A check for the fractional share will be sent to you promptly.
For income tax purposes the amount of the fractional share check is
taxable and is reported accordingly. If the request to terminate has
been received at least two business days prior to the investment
date, any cash payments waiting for investment will be returned,
without interest, as soon as practicable. Any subsequent dividends,
if applicable, will be paid in cash.
Participants wishing to terminate with 25 or less shares credited
under the Plan may sell all but not less than all Plan shares through
the Company, without the issuance of a certificate and without
payment of a brokerage fee. (See Section 8 - Selling Plan Shares.)
After termination, previous participants can re-enroll in the Plan by
completing the appropriate authorization form. However, the Company
reserves the right to reject any enrollment forms from previous
participants on the grounds of excessive joining and termination.
Such reservation is intended to minimize unnecessary administrative
expense and to encourage use of the Plan as a long-term investment
service.
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8. SELLING PLAN SHARES
A participant may instruct the Company to sell up to, but not more
than, 25 Common Shares credited to the participant's Plan account by
completing the information on the form provided as part of the
Statements of Account or by submitting a separate written request to
the Company's Shareholder Services Department. A participant may
submit only one such request during a calendar month.
The Agent will sell the shares normally on the first trading day of
each month. If a request to sell all shares in the account is
received between the record date and payable date, the shares will
not be sold until the dividends paid for the quarter have been
credited to your account. In the event that shares being sold by
terminating participants are needed to meet Plan requirements, those
shares will be purchased by the Plan. In either case, the participant
will receive the proceeds of the sale, less any backup withholding
tax, within 10 days after the sale. The price of the Plan shares sold
on the open market will be the actual sale price of such shares. The
price of shares purchased by the Plan to meet Plan requirements will
be the average of the high and low sales prices of Common Shares on
the date of purchase as reported by NASDAQ.
9. OTHER INFORMATION
Stock Dividends and Stock Splits
Should the Company declare a stock dividend or a stock split, the
number of additional shares participants receive will be based on the
number of shares in their Plan account as of the record date for such
stock dividend or stock split. Additional full and fractional shares
that result from a stock dividend or a stock split will be credited
to participants' Plan accounts. Stock dividend or stock split shares
issued with respect to certificated shares held by participants will
be mailed directly to the participants in the same manner as to
shareholders who are not participating in the Plan.
Rights to Purchase
In the event that the Company makes available to its shareholders
rights to purchase additional shares or other securities, the Agent
will sell such rights accruing to shares participating in the Plan
for the participant and will combine the funds from such sale with
the next regular dividend or optional cash investment for
reinvestment at that time. If a participant desires to exercise these
rights, the participant should request that certificates be issued
for full shares as provided herein.
Voting at the Annual Meeting of Shareholders
The Company will vote all shares held in the participant's Plan
account in the same way in which the participant votes Common Shares
standing in the participant's name by the regular proxy returned by
the participant to the Company. If the Company sends to participant a
separate proxy covering the shares credited to participant's Plan
account, then such shares will be voted as designated in such
separate proxy. In the event participant does not direct the voting
of the participant's shares by either such regular or separate proxy,
the shares credited to the participant's Plan account will not be
voted.
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Company Responsibility in Administering the Plan
The Company and the Agent will have no responsibility beyond the
exercise of ordinary care for any action taken or omitted pursuant to
the Plan nor will they have any duties, responsibilities or
liabilities except such as are expressly set forth herein. In
administering the Plan, neither the Company nor the Agent will be
liable for any act done in good faith or for any good faith omission
to act, including, without limitation, any claim of liability (a)
arising out of failure to terminate participants' accounts upon death
prior to receipt of notice in writing of such death; (b) with respect
to the prices at which the shares are purchased or sold, the time
such purchases or sales are made or any fluctuation in the market
value before or after purchases or sales of shares; or (c) as to the
value of the shares acquired for participants.
Participants should recognize that neither the Company nor the Agent
can assure them of a profit or protect them against a loss on shares
purchased or sold by them under the Plan. The Company believes that
its serving as administrator, rather than a registered broker-dealer
or a federally insured banking institution, poses no material risks
to participants.
The Company reserves the right to interpret and regulate the Plan as
may be necessary or desirable in connection with the operation of the
Plan. The terms and conditions of the Plan and any authorization
forms shall be governed by Minnesota law.
Company's Right to Amend or Terminate the Plan
While the Company expects to continue the Plan indefinitely, it
reserves the right to amend, modify, suspend or terminate the Plan or
participation therein, in whole or in part, at any time. Any such
amendment, modification, suspension or termination will be announced
to participants in advance.
FEDERAL INCOME TAX INFORMATION
The information set forth below is only a summary and does not claim
to be a complete description of all tax consequences of participation
in the Plan. The description may be affected by future legislation,
IRS rulings and regulations, or court decisions. Accordingly,
participants should consult with their own tax advisors with respect
to the federal, state, local and foreign tax consequences of
participation in the Plan.
What are the federal income tax consequences of participation in
the Plan?
For tax purposes, participants' reinvested dividends are treated in
the same manner they would have been treated had the participants
received them in cash on the applicable dividend payment date.
Participants will not realize any taxable income when stock
certificates for full shares are issued from Plan accounts. However,
participants will realize gain or loss when the shares are sold
either at their request through the Company or by them after
certificates have been issued. The amount of the gain or loss is the
difference between the amount the participant receives for the shares
and the cost basis of the shares. In addition, terminating
participants will realize gain or loss upon receipt of the check
covering the value of the fractional share.
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How will participants be notified of their taxable dividend income?
The Company will report the dividend income to participants and to
the IRS on Form 1099-Div. When shares are sold through the Company,
the Company will report the proceeds from the sale to participants
and to the IRS on Form 1099-B.
What is the federal tax basis of Plan shares?
The tax basis of participants' Plan shares acquired is equal to their
purchase price as indicated on the participants' Statements of
Account. Please be sure to retain your December Statements, which
summarize the entire year's activity for tax purposes.
How does the Company invest and report dividends subject to federal
backup withholding or foreign tax withholding?
The Company will invest an amount equal to the dividends less the
amount of tax withheld. The net dividend will purchase shares. The
Statements of Account and the Form 1099-Div sent to participants
subject to tax withholding will indicate the amount of tax withheld
and will show the net dividend reinvested by the Company. For IRS
reporting purposes, the amount of the dividend withheld will be
included in the dividend income of participants subject to backup
withholding or foreign participants subject to foreign withholding.
DESCRIPTION OF COMMON SHARES
At October 31, 1999 there were outstanding 11,925,272 Common Shares
(50,000,000 shares authorized) and 335,000 Cumulative Preferred
Shares (1,500,000 shares authorized). There are also authorized
1,000,000 Cumulative Preference Shares, none of which are
outstanding. The Board of Directors of the Company is authorized
under its Restated Articles of Incorporation to provide for the issue
of future series of Cumulative Preferred Shares and Cumulative
Preference Shares and, as to each series, to fix the designation,
dividend rate, redemption price or prices, voluntary and involuntary
liquidation prices, conversion rights and sinking and purchase fund
rights. Cumulative dividends and redemption and conversion provisions
could have an adverse effect on the availability of earnings for
distribution to the holders of Common Shares.
The following statements with respect to the Company's Restated
Articles of Incorporation, as amended (the "Articles") are brief
summaries of certain provisions of the Articles, do not purport to be
complete and are subject to the detailed provisions of the Articles,
a copy of which is filed with the Commission as an exhibit to the
Registration Statement and is incorporated in this section by
reference. Terms in italics are defined in the Articles and are used
herein as so defined.
Dividend Rights
Subject to the prior dividend rights of the holders of the Cumulative
Preferred Shares and the Cumulative Preference Shares and the
limitations set forth in the following two paragraphs, dividends may
be declared by the Board of Directors and paid from time to time upon
the outstanding Common Shares from any funds legally available
therefor.
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The Company's Indenture of Mortgage securing its First Mortgage Bonds
contains restrictions on the payment of dividends and other
distributions with respect to the Company's Common Shares, the most
restrictive of which provides that the Company may not declare or pay
dividends on its Common Shares (other than dividends payable in
Common Shares) or make any other distribution in respect of its
Common Shares, unless, after giving effect thereto, the sum of all
such dividends and distributions subsequent to December 31, 1976 will
not exceed $8,000,000 plus the Company's net income available for
Common Shares accrued after that date. Such Indenture provides that
in computing such net income there shall be deducted, as an
additional depreciation charge, for each year after 1976, the amount,
if any, by which the Indenture depreciation requirement exceeds the
depreciation charges against such net income actually made by the
Company on account of its depreciable fundable property. Under these
restrictions, $10,008,000 of retained earnings of the Company at
December 31, 1998 were not available for dividends or other
distributions on the Common Shares.
So long as any Cumulative Preferred Shares remain outstanding, the
Company shall not, without the consent of the holders of a majority
of the voting power of the Cumulative Preferred Shares of all series
then outstanding (two-thirds if more than one-fourth vote
negatively), declare or pay any dividend on or purchase, redeem or
otherwise acquire any Common Shares of the Company unless, after
giving effect thereto (a) Common Share Equity shall equal at least
25% of Total Capitalization and (b) the earned surplus of the Company
shall not be less than $831,398. Such provisions are less restrictive
than the restrictions on the payment of dividends and other
distributions with respect to the Common Shares contained in the
Company's Indenture of Mortgage. Moreover, no dividend shall be
declared or paid on the Common Shares at any time while there is a
default or deficiency with respect to a sinking or purchase fund
established for the benefit of any series of the Cumulative Preferred
Shares or the Cumulative Preference Shares. Certain series of the
Company's Cumulative Preferred Shares have sinking funds.
Voting Rights
Subject to the rights of the holders of the Cumulative Preferred
Shares and the Cumulative Preference Shares described below, only the
holders of Common Shares have voting rights and are entitled to one
vote for each share held.
In the event that four full quarterly dividend payments on the
Cumulative Preferred Shares of any series shall be in default, the
holders of the Cumulative Preferred Shares of all series, voting as a
class, shall thereafter elect three members of an eleven member Board
of Directors; and, if such default shall increase to twelve full
quarterly dividend payments, such holders shall thereafter elect six
members of an eleven member Board of Directors. In the event that
four full quarterly dividend payments on the Cumulative Preference
Shares of any series shall be in default, the holders of the
Cumulative Preference Shares of all series, voting as a class, shall
thereafter elect two members of an eleven member Board of Directors.
Holders of Cumulative Preferred Shares and Cumulative Preference
Shares shall be entitled to cumulative voting in the election of
Directors. After any such default shall have been cured, the
Cumulative Preferred Shares and/or the Cumulative Preference Shares,
as the case may be, shall be divested of such voting rights, subject
to being revested in the event of subsequent defaults.
The consent of the holders of at least two-thirds of the voting power
of the Cumulative Preferred Shares is required to (a) authorize or
issue any shares ranking prior to the Cumulative Preferred Shares as
to dividends or assets or (b) amend the Articles so as to affect
adversely any of the preferences or other rights of the holders of
the Cumulative Preferred Shares, provided that if less than all
series of Cumulative Preferred Shares are so affected, only the
consent of the holders of at least two-thirds of the voting power of
the affected series shall be required.
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A majority (two-thirds if more than one-fourth vote negatively) of
the voting power of the Cumulative Preferred Shares is required to
authorize certain other corporate acts, including (a) an increase in
the number of authorized Cumulative Preferred Shares or the
authorization of shares on a parity therewith, (b) the issue of
additional Cumulative Preferred Shares unless specified financial
tests are satisfied and (c) the participation by the Company in any
merger or consolidation or the sale of all or substantially all of
its assets unless specified conditions are met.
The consent of the holders of at least two-thirds of the voting power
of the Cumulative Preference Shares is required to (a) authorize any
shares of any class (other than the Cumulative Preferred Shares,
whether now or hereafter authorized) ranking prior to the Cumulative
Preference Shares as to dividends or assets or (b) amend the Articles
so as to affect adversely any of the preferences or other rights of
the holders of the Cumulative Preference Shares, provided that if
less than all series of Cumulative Preference Shares are so affected,
only the consent of the holders of at least two-thirds of the voting
power of the affected series shall be required.
A majority (two-thirds if more than one-fourth vote negatively) of
the voting power of the Cumulative Preference Shares is required to
authorize (a) an increase in the number of authorized Cumulative
Preference Shares or the authorization of shares on a parity
therewith or (b) the participation by the Company in any merger or
consolidation or the sale of all or substantially all of its assets
unless specified conditions are met.
Liquidation Rights
Upon any liquidation, dissolution or winding up of the Company, the
holders of Common Shares shall be entitled to receive pro rata all
assets of the Company distributable to shareholders after the payment
of the respective liquidation preferences to the holders of the
Cumulative Preferred Shares and the Cumulative Preference Shares.
Shareholder Rights Plan
On January 27, 1997, the Company's Board of Directors declared a
dividend of one Preferred Share Purchase Right ("Right") for each
outstanding Common Share held of record as of February 7, 1997.
One Right was also issued with respect to each Common Share issued
after February 7, 1997. Each Right entitles the holder to purchase
from the Company one one-hundredth of a share of newly created
Series A Junior Participating Preferred Stock at a price of $70,
subject to certain adjustments. The Rights are exercisable when,
and are not transferable apart from the Company's Common Shares
until, a person or group has acquired 15 percent or more, or
commenced a tender or exchange offer for 15 percent or more, of
the Company's Common Shares. If the specified percentage of the
Company's Common Shares is acquired, each Right will entitle the
holder (other than the acquiring person or group) to receive, upon
exercise, Common Shares of either the Company or the acquiring
company having value equal to two times the exercise price of the
Right. The Rights are redeemable by the Company's Board of Directors
in certain circumstances and expire on January 27, 2007.
13
Certain Provisions of Articles and Bylaws
Except at such times when holders of Cumulative Preferred Shares
and/or Cumulative Preference Shares have special voting rights for
the election of Directors as described above, the Company's Directors
are elected for three-year, staggered terms by the holders of the
Common Shares. Cumulative voting of the Common Shares in the election
of Directors is prohibited. In addition, the Company's Bylaws provide
that a vote of 75% of the Common Shares is required to remove
Directors who have been elected by the holders of Common Shares. The
affirmative vote of 75% of the Common Shares is required to amend
provisions of the Articles and Bylaws relating to the staggered terms
and the removal of Directors, unless approved by all of the
Continuing Directors as specified therein.
The Articles contain "fair price" provisions which require the
affirmative vote of 75% of the voting power of the Common Shares to
approve Business Combinations, including mergers, consolidations and
sales of a Substantial Part of the Company's assets, with an
Interested Shareholder or its Affiliates or Associates, unless
specified price criteria and procedural requirements are met or
unless the transaction is approved by the majority of the Continuing
Directors. The Articles also contain "anti-greenmail" provisions
which preclude the Company from making certain purchases of Common
Shares at a price per share in excess of the Fair Market Price from a
Substantial Shareholder unless approved by the affirmative vote of
66 2/3% of the voting power of the Common Shares held by the
Disinterested Shareholders. The "fair price" and "anti-greenmail"
provisions of the Articles may not be amended without the affirmative
vote of the holders of at least 75% of the voting power of the Common
Shares, unless approved by all of the Continuing Directors as
specified therein.
The overall effect of the foregoing provisions of the Company's
Articles and Bylaws, together with the Rights and the ability of the
Board of Directors to issue additional Common Shares, Cumulative
Preferred Shares and Cumulative Preference Shares, may be to delay or
prevent attempts by other persons or entities to acquire control of
the Company without negotiations with the Company's Board of
Directors.
Miscellaneous
The Common Shares are not redeemable. The Common Shares are not
entitled to any conversion or preemptive rights. The outstanding
Common Shares of the Company are, and the new issue Common Shares
when issued will be, fully paid and non-assessable. The Transfer
Agents and Registrars for the Common Shares are Norwest Bank
Minnesota, N.A. and the Company.
14
EXPERTS
The consolidated financial statements incorporated in this Prospectus
by reference from the Company's Annual Report on Form 10-K have been
audited by Deloitte & Touche LLP, independent auditors, as stated in
their report which is incorporated herein by reference, and have been
so incorporated in reliance upon such report given upon their
authority as experts in accounting and auditing.
VALIDITY OF COMMON SHARES
The validity of the issuance of the new issue Common Shares has been
passed upon for the Company by Dorsey & Whitney LLP, Minneapolis,
Minnesota.
ADDITIONAL INFORMATION
For further information and assistance, please write or call at:
Otter Tail Power Company
Shareholder Services Department
215 South Cascade Street
Box 496
Fergus Falls, Minnesota 56538-0496
Telephone:
(218) 739-8479 (locally)
(800) 664-1259 (toll free)
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TABLE OF CONTENTS
Page
----
Available Information 2
Information Incorporated by Reference 2
The Company 3
Use of Proceeds 3
Description of the Plan 3
How to Enroll 3
Participation 4
How the Plan Works 4
How Investments are Made 5
Statements of Account 7
Certificates for Shares 7
How to Terminate Participation 8
Selling Plan Shares 9
Other Information 9
Federal Income Tax Information 10
Description of Common Shares 11
Experts 15
Validity of Common Shares 15
Additional Information 15
-----------------------------
Neither the delivery of this Prospectus nor any sales hereunder shall
under any circumstances create any implication that there has been no
change in the affairs of the Company since the date hereof. No
dealer, broker, salesman or any other person has been authorized to
give any information or to make any representations, other than those
contained in this Prospectus, in connection with the offering contained
in this Prospectus, and information or representations not herein
contained, if given or made, must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an
offering in any state in which such offering may not lawfully be made.
-------------------
PROSPECTUS
-------------------
(LOGO - OTTER TAIL POWER COMPANY)
OTTER TAIL
POWER COMPANY
AUTOMATIC DIVIDEND REINVESTMENT
AND SHARE PURCHASE PLAN
16
