Attached files
| file | filename |
|---|---|
| EX-99.1 - Otter Tail Ag Enterprises, LLC | v168066_ex99-1.htm |
| 8-K - Otter Tail Ag Enterprises, LLC | v168066_8k.htm |
EXHIBIT
99.2
 |
24096
– 170th
Avenue
Fergus
Falls, MN 56537
Phone: 218
998-4301
Fax: 218
998-4302
ahicks@otaellc.com
www.ottertailethanol.com
|
December
3, 2009
Dear
Member
Otter
Tail Ag wishes to bring you up to date on what has taken place since the Company
filed for the negotiated Chapter 11 bankruptcy protection on October 11,
2009.
You no
doubt saw news articles in the Fergus Falls Daily Journal, including an
editorial they wrote. Their stories were generally accurate and well balanced
and were picked up by other newspapers and professional ethanol industry
journals around the country. It appears that the media and the public in general
has a much better understanding of the role that Chapter 11 bankruptcy can play
in helping businesses restructure in today’s difficult economy. General Motors
is one example we have all become familiar with.
While
Otter Tail Ag is no General Motors, the goal is the same: restructure,
reorganize, and emerge successfully. Filing for Chapter 11 bankruptcy protection
will allow Otter Tail Ag the opportunity to restructure our indebtedness and
negotiate contracts to reflect present day market values.
Here’s
what has taken place during the past several weeks and what management currently
sees as a timeline, though the timeline is very fluid.
Bankruptcy
Hearing
The
Company had its first hearing in Federal Bankruptcy Court in St. Paul before
Judge O’Brien on November 4. Because the bankruptcy filing was
pre-negotiated with Otter Tail Ag's senior lenders, AgStar Financial Services,
PCA and MMCDC New Markets Fund II, LLC, there were few objections to the first
motions filed, which included objections from one of the subordinate lenders. As
a result of the hearing and subsequent negotiations to an agreed upon order for
cash collateral, Otter Tail Ag remains in possession of its operating assets
during this bankruptcy period, allowing the Otter Tail Ag to continue its
business operations. The Court approved an interim cash collateral agreement
that allows Otter Tail Ag to utilize the cash that was in its bank accounts
along with present check stock. Additional Court orders permit the Company to
continue the employment terms for its employees, including pay and
benefits.
Management
is generally pleased with the initial hearing and preliminary orders. The
current circumstances allow Otter Tail Ag to keep operating while working toward
its restructuring plan. It is imperative that Otter Tail Ag keeps producing
ethanol at or near name plate capacity. The Company is still in the business of
buying corn, producing ethanol and selling distillers grain.
The next
scheduled hearing in Bankruptcy Court was scheduled to take place December 3.
Instead various issues with the senior lenders and subordinate lenders were
worked out in order to avoid the hearing. It is in everyone’s interest to
achieve agreement on key points in the bankruptcy process. Otter Tail Ag now has
in place a cash collateral order. This order will set the stage for Otter Tail
Ag to continue operation while management and the Company’s board of governors
develop a restructuring plan.
Restructuring
Plan
The
Company now has the opportunity to work with its lenders to formulate a
restructuring plan. The plans for restructure are starting to develop
although it is still too early to speak about specific issues. Otter Tail Ag has
until the end of February to file a plan but the goal is to have the plan
completed before Christmas. It is important that a reorganization plan be put in
place so the Company can move forward to raise the necessary
capital.
Based on
current projections, it appears that Otter Tail Ag will need to raise at least a
minimum of $10 million in new capital. Management and the board believe that a
good portion of the required capital will come from current members, and other
sources remain to be evaluated.
The
present goal is to raise the required capital before March 1, 2010. The board
and management of Otter Tail Ag remains committed to keeping the plant locally
owned, for the benefit of its membership and the local community and economic
base.
In order
to permit emergence from bankruptcy, Otter Tail Ag will be offering the
opportunity to invest in the restructured company.
The
current goal is to have investor meetings around the Fergus Falls area beginning
in early January. We will be setting those meeting dates and letting you know as
soon as possible.
Conclusion
Right now
the Company is moving forward step by step. Otter Tail Ag is generally feeling
positive about where things are now and where the company is headed. Although
the economic times and industry changes have and will continue to present the
company with challenges, Otter Tail Ag is fortunate that it was able to work out
an agreement with its senior lenders to make it possible to have an opportunity
to develop a plan for a viable company and live to fight another
day.
Management
and the board still believe in the future of ethanol and the renewable energy
industry.
Our best
wishes for a wonderful holiday season.
I
remain
Yours
Faithfully
Anthony J
Hicks
Chief
Executive Officer
Except
for historical information contained herein, the statements in this information
release are forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
involve known and unknown risks and uncertainties which may cause the Company's
actual results in future periods to differ materially from forecasted results.
Those risks include our expectations regarding future costs and revenues and
consumer demand for ethanol. These and other risks are more fully described in
the Company's filings with the Securities and Exchange Commission. The
information contained in this release is accurate only as of the date issued.
Investors should not assume that the statements made in these documents remain
operative at a later time. Otter Tail Ag Enterprises, LLC undertakes no
obligation to update any information contained in this release.