Ottertail Ag Enterprises addresses financial difficulties

By Erin Voegele | August 10, 2009
Report posted Aug. 27, 2009, at 3:35 p.m. CST

Ottertail Ag Enterprises LLC's board of governors recently appointed Gary Thompson as chairman of its Fergus Falls, Minn.-based ethanol plant. The board also approved the formation of a new credit committee that will work with the facility's lending institutions to find a suitable path forward. The credit committee, which consists of the company's management, board and members, includes Thompson, Anthony Hicks, Warrenn Anderson, Daryl Gillund and Jamie Dosdall.

"The objective of this committee is to bring a group of very experienced business management together with production and banking/finance in one group to fully assess the needs of OTAE and the best for its members," said Ottertail Ag Enterprises CEO and Chief Financial Officer Anthony Hicks.

On Aug. 4, EPM reported that AgStar Financial Services' lending group was expected to make an announcement within a week regarding the fate of the facility. At that time Ottertail Ag Enterprises owed AgStar's lending group approximately $61.5 million. Repayment on the debt was due by Aug. 7. However, as of Aug. 27 AgStar public & media relations officer Heather Leiferman confirmed that no such announcement has yet been made.

In a report filed with the U.S. Securities and Exchange Commission on Aug.19, Ottertail Ag Enterprises announced that four members of its board of governors had resigned as of Aug. 11, including then Chairman Jerry Larson, Ed Mehl, Mark Ellison and Greg Smith.

The company also filed its quarterly report for the quarter ended June 30, which stated Ottertail Ag Enterprises had a net operating loss of $22 million for the first three quarters of the fiscal year.

According to the quarterly report, Ottertail Ag Enterprises' plan to address the expected shortfall of working capital is to generate additional funds through a combination of raising equity by having a planned voluntary capital campaign and renegotiating and restructuring the company's debt. In the long term, the company plans to evaluate improved technologies to either earn additional revenue or reduce operating costs. In addition, the report states that if the company is unable to obtain additional funding in the short-term, the company may be forced to restructure or significantly curtail its operations, file for bankruptcy or cease operations.