Otter Tail CorpOTTR
Otter Tail Corp Debt Disclosure
Short-Term and Long-Term Borrowings
The following is a summary of our outstanding short- and long-term borrowings by borrower, OTC or OTP, as of December 31, 2025 and 2024:
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| (in thousands) | OTC | OTP | Total | OTC | OTP | Total | |||||||||||||||||||||||||||||
| Short-Term Debt | $ | — | $ | 60,242 | $ | 60,242 | $ | — | $ | 69,615 | $ | 69,615 | |||||||||||||||||||||||
| Current Maturities of Long-Term Debt | 79,951 | — | 79,951 | — | — | — | |||||||||||||||||||||||||||||
| Long-Term Debt | — | 963,566 | 963,566 | 79,900 | 863,834 | 943,734 | |||||||||||||||||||||||||||||
| Total Debt | $ | 79,951 | $ | 1,023,808 | $ | 1,103,759 | $ | 79,900 | $ | 933,449 | $ | 1,013,349 | |||||||||||||||||||||||
Short-Term Debt
The following is a summary of our lines of credit as of December 31, 2025 and 2024:
| 2025 | 2024 | ||||||||||||||||||||||||||||
| (in thousands) | Line Limit | Amount Outstanding | Letters of Credit | Amount Available | Amount Available | ||||||||||||||||||||||||
| OTC Credit Agreement | $ | 170,000 | $ | — | $ | — | $ | 170,000 | $ | 170,000 | |||||||||||||||||||
| OTP Credit Agreement | 220,000 | 60,242 | 10,461 | 149,297 | 141,613 | ||||||||||||||||||||||||
| Total | $ | 390,000 | $ | 60,242 | $ | 10,461 | $ | 319,297 | $ | 311,613 | |||||||||||||||||||
OTC and OTP are each party to separate credit agreements (the OTC Credit Agreement and OTP Credit Agreement, respectively). The OTC Credit Agreement provides for a $170.0 million unsecured revolving line of credit, and the OTP Credit Agreement provides for a $220.0 million unsecured revolving line of credit. Both credit facilities are to support operations, fund capital expenditures, refinance certain indebtedness and provide for the issuance of letters of credit in an aggregate amount not to exceed $40.0 million under the OTC Credit Agreement and $50.0 million under the OTP Credit Agreement. Each credit facility includes an accordion provision allowing the borrower to increase the borrowing capacity under the facility, subject to certain conditions, up to $290.0 million and $300.0 million under the OTC Credit Agreement and OTP Credit Agreement, respectively.
Borrowings under each credit facility are subject to a variable rate of interest on outstanding balances and a commitment fee is charged based on the average unused amount available to be drawn under the respective facility. The variable rate of interest to be charged is based on a benchmark interest rate, either SOFR or a Base Rate, as defined in the credit agreements, selected by the borrower at the time of an advance, subject to the conditions of each agreement, plus an applicable credit spread. The credit spread ranges from zero to 2.00%, depending on the benchmark interest rate selected, and is subject to adjustment based on the credit
ratings of the relevant borrower. The weighted-average interest rate on all outstanding borrowings as of December 31, 2025 and 2024 was 5.08% and 5.61%.
Each credit facility contains a number of restrictions on the borrower, including restrictions on the ability to merge, sell assets, make investments, create or incur liens on assets, guarantee the obligations of any other party and engage in transactions with related parties. The agreements also require the borrower to maintain various financial covenants, as further described below. Each credit facility includes a cross-default provision whereby an event of default of other outstanding indebtedness will trigger an event of default under the agreement.
The terms of each credit facility include a provision for the borrower to request, and the lenders to grant an extension of the maturity date of the facility by one year, subject to certain terms and conditions. In 2025, a one-year extension was granted, and the current maturity date of each facility is December 11, 2030.
Long-Term Debt
The following is a summary of outstanding long-term debt by borrower as of December 31, 2025 and 2024:
| (in thousands) | ||||||||||||||||||||||||||||||||
| Entity | Debt Instrument | Rate | Maturity | 2025 | 2024 | |||||||||||||||||||||||||||
| OTC | Guaranteed Senior Notes | 3.55% | 12/15/26 | $ | 80,000 | $ | 80,000 | |||||||||||||||||||||||||
| OTP | Series 2007C Senior Unsecured Notes | 6.37% | 08/02/27 | 42,000 | 42,000 | |||||||||||||||||||||||||||
| OTP | Series 2013A Senior Unsecured Notes | 4.68% | 02/27/29 | 60,000 | 60,000 | |||||||||||||||||||||||||||
| OTP | Series 2019A Senior Unsecured Notes | 3.07% | 10/10/29 | 10,000 | 10,000 | |||||||||||||||||||||||||||
| OTP | Series 2020A Senior Unsecured Notes | 3.22% | 02/25/30 | 10,000 | 10,000 | |||||||||||||||||||||||||||
| OTP | Series 2020B Senior Unsecured Notes | 3.22% | 08/20/30 | 40,000 | 40,000 | |||||||||||||||||||||||||||
| OTP | Series 2021A Senior Unsecured Notes | 2.74% | 11/29/31 | 40,000 | 40,000 | |||||||||||||||||||||||||||
| OTP | Series 2024A Senior Unsecured Notes | 5.48% | 04/01/34 | 60,000 | 60,000 | |||||||||||||||||||||||||||
| OTP | Series 2025A Senior Unsecured Notes | 5.49% | 03/27/35 | 50,000 | — | |||||||||||||||||||||||||||
| OTP | Series 2007D Senior Unsecured Notes | 6.47% | 08/20/37 | 50,000 | 50,000 | |||||||||||||||||||||||||||
| OTP | Series 2019B Senior Unsecured Notes | 3.52% | 10/10/39 | 26,000 | 26,000 | |||||||||||||||||||||||||||
| OTP | Series 2020C Senior Unsecured Notes | 3.62% | 02/25/40 | 10,000 | 10,000 | |||||||||||||||||||||||||||
| OTP | Series 2013B Senior Unsecured Notes | 5.47% | 02/27/44 | 90,000 | 90,000 | |||||||||||||||||||||||||||
| OTP | Series 2018A Senior Unsecured Notes | 4.07% | 02/07/48 | 100,000 | 100,000 | |||||||||||||||||||||||||||
| OTP | Series 2019C Senior Unsecured Notes | 3.82% | 10/10/49 | 64,000 | 64,000 | |||||||||||||||||||||||||||
| OTP | Series 2020D Senior Unsecured Notes | 3.92% | 02/25/50 | 15,000 | 15,000 | |||||||||||||||||||||||||||
| OTP | Series 2021B Senior Unsecured Notes | 3.69% | 11/29/51 | 100,000 | 100,000 | |||||||||||||||||||||||||||
| OTP | Series 2022A Senior Unsecured Notes | 3.77% | 05/20/52 | 90,000 | 90,000 | |||||||||||||||||||||||||||
| OTP | Series 2024B Senior Unsecured Notes | 5.77% | 04/01/54 | 60,000 | 60,000 | |||||||||||||||||||||||||||
| OTP | Series 2025B Senior Unsecured Notes | 5.98% | 06/05/55 | 50,000 | — | |||||||||||||||||||||||||||
| Total Long-Term Debt | 1,047,000 | 947,000 | ||||||||||||||||||||||||||||||
| Less: | Current Maturities Net of Unamortized Debt Issuance Costs | 79,951 | — | |||||||||||||||||||||||||||||
| Less: | Unamortized Long-Term Debt Issuance Costs | 3,483 | 3,266 | |||||||||||||||||||||||||||||
| Total Long-Term Debt Net of Unamortized Debt Issuance Costs | $ | 963,566 | $ | 943,734 | ||||||||||||||||||||||||||||
On March 27, 2025, OTP entered into a Note Purchase Agreement pursuant to which OTP issued, in a private placement transaction, $100.0 million of senior unsecured notes consisting of (a) $50.0 million of 5.49% Series 2025A Senior Unsecured Notes due March 27, 2035, and (b) $50.0 million of 5.98% Series 2025B Senior Unsecured Notes due June 5, 2055. The Series 2025A Notes were issued on March 27, 2025, upon entering into the agreement. The Series 2025B Notes were issued on June 5, 2025.
Per the terms of the agreement, OTP may prepay all or any part of the notes (in an amount not less than 10% of the aggregate principal amount of the notes then outstanding in the case of a partial prepayment) at 100% of the principal amount so prepaid, together with unpaid accrued interest and a make-whole amount, as defined in the agreement; provided that no default or event of default exists under the agreement. Any prepayment of the Series 2025A Notes then outstanding on or after December 27, 2034, or the Series 2025B Notes then outstanding on or after December 5, 2054, will be made without any make-whole amount. Consistent with other of our borrowings, the agreement contains a number of restrictions on the business of OTP, including restrictions on OTP’s ability to merge, sell substantially all assets, create or incur liens on assets, guarantee the obligations of any other party, and engage in certain transactions with affiliates.
Our guaranteed and unsecured notes require the borrower to maintain various financial covenants, as further described below. These notes provide for prepayment options allowing for a full or partial prepayment at 100% of the principal amount so prepaid, together with unpaid accrued interest and a make-whole amount, as defined. These notes also include restrictions on the borrower, including its ability to merge, sell assets, create or incur liens on assets, guarantee the obligations of any other party and engage in transactions with related parties. The notes include a cross-default provision whereby an event of default of other outstanding indebtedness will trigger an event of default under the note.
Aggregate maturities of long-term debt obligations on December 31, 2025 for each of the next five years are as follows:
| (in thousands) | 2026 | 2027 | 2028 | 2029 | 2030 | ||||||||||||||||||||||||
| Debt Maturities | $ | 80,000 | $ | 42,000 | $ | — | $ | 70,000 | $ | 50,000 | |||||||||||||||||||
Financial Covenants
Certain of OTC's and OTP's short-term and long-term debt agreements require the borrower, whether OTC or OTP, to maintain certain financial covenants, including a maximum debt to total capitalization of either 0.60 to 1.00 or 0.65 to 1.00, depending on the debt agreement, a minimum interest and dividend coverage ratio of 1.50 to 1.00, and a maximum level of priority indebtedness. As of December 31, 2025, OTC and OTP were in compliance with these financial covenants.
Guaranties
OTC's obligations under the terms of its Guaranteed Senior Notes are unconditionally and irrevocably guaranteed by its subsidiaries, Varistar Corporation, BTD Manufacturing, Inc., Northern Pipe Products, Inc. and Vinyltech Corporation.
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.