Attached files
| file | filename |
|---|---|
| 8-K - Otter Tail Ag Enterprises, LLC | v175578_8k.htm |
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24096
– 170th Avenue
Fergus Falls, MN
56537
Phone: 218
998-4301
Fax: 218 998-4302
ahicks@otaellc.com
www.ottertailethanol.com
|
February
26, 2010
Dear
Member:
In an
effort to keep you informed of current developments in the Otter Tail Ag
Enterprises, LLC (OTAE or Company) bankruptcy situation, I would like to take a
few moments to explain the present status of the Company's bankruptcy
filing.
Disclosure
Statement
The
Company has a 120 day period from the date of its bankruptcy filing in which it
is permitted an exclusive right to present a reorganization plan to the
bankruptcy court. Since this exclusivity period expires at the end of
February 2010, it is OTAE's intention to file the Disclosure Statement (a
document containing information for the benefit of creditors seeking their
approval, but not confirmed by the bankruptcy court) together with the
reorganization plan by the required date of February 28, 2010. A
hearing date on the reorganization plan will be scheduled approximately four to
five weeks following the reorganization plan filing. At this initial hearing,
OTAE’s creditors will have an opportunity to discuss the content of the
reorganization plan and their proposed treatment within the plan. A second
hearing on confirmation of the reorganization plan will be scheduled four to
five weeks after this initial hearing. The Company believes the entire
confirmation process will take some 60 to 70 days, depending on
scheduling. The time frames discussed above may change depending on
the Court’s availability and the degree of any opposition the Company may
encounter in seeking approval of the Disclosure Statement or the Plan of
Reorganization.
The
current plan has support of certain OTAE creditors but not all, which means it
is likely to be “contested.” During this process, OTAE will have the
opportunity to continue negotiating with affected parties; however, in order for
the reorganization plan to be confirmed, it will likely need the support of any
significant dissenting creditors, or OTAE will be required to prove that the
plan’s treatment of those creditors is fair and equitable. An inability to
obtain the support of the majority of creditors could prevent confirmation of
the Company's plan. The Company has been engaged in a lengthy process
to achieve a fully pre-negotiated plan with all creditors, but has been unable
to reach a consensus. Thus, the reorganization plan will be worked
through the court process, which is unfortunately a time consuming and expensive
process.
Investors
In
connection with the filing of the bankruptcy plan, the Company has to raise
capital in the form of additional equity investment, and is presently targeting
$12,000,000 as its capital raising goal. Any qualified investor that
is a Minnesota resident will be able purchase units at the opening of the
offering. The offering materials will give further details on the
opportunity and how to invest, but members seeking an opportunity to re-invest
will have to make sure they act fast.
Investment
Prospectus
OTAE is
drafting an Investment Prospectus (Prospectus) for submission to the State of
Minnesota for approval to issue 24,000,000 units at a value of $0.50 divided
into two classes of membership interests, Class B units and Class C units. Once
the Company obtains effectiveness of the Prospectus, it will then be allowed to
solicit investments. It is anticipated that it will take approximately two to
three weeks to obtain effectiveness and be able to seek
investors. Upon approval of the Prospectus, the Company will be
holding meetings to present the Prospectus, go over highlights and answer
questions about the investment opportunity, units will be sold on a first come
first served basis to qualified Minnesota investors. OTAE will be
requesting a minimum of 10% subscription deposit, which will be deposited into a
separate escrow account with certain conditions limiting release. If the
Company's reorganization plan is not eventually approved in a form that is
substantially similar to the reorganization plan submitted in the Prospectus,
OTAE will need to seek approval of each investor to confirm their investment.
Should the Company fail in obtaining approval of its plan, a full refund of the
deposited amount will be returned to the subscriber. OTAE intends to distribute
the Prospectus at a number of to-be-scheduled informational
meetings. The Prospectus and its exhibits will be substantial
documents covering the reorganization plan as well as the risks associated with
the investment.
Conclusion
The
Company remains on track to meet timelines for documentation and filings. As a
word of caution, OTAE cannot guarantee that it will be successful in obtaining
the support of its reorganization plan from a sufficient number of creditors or
that the reorganization plan as filed will be confirmed either in entirety or in
an amended format. Rather, the Company remains at risk of not having a
reorganization plan approved, and not being able to move forward with its
restructuring. The Company remains optimistic, but wishes to be realistic as
well.
We look
forward to scheduling the investment informational meetings once we know that
the Prospectus is declared effective by the appropriate regulatory authorities
and available for circulation.
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 possible inability to obtain court approval for our
reorganization plan, our ability to emerge successfully from bankruptcy, 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, including the Company’s annual
report on Form 10-K for the fiscal year ended September 30, 2009. 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.
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