8-K

 
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549


                                   FORM 8-K

                                CURRENT REPORT

    Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


     Date of report (Date of earliest event reported):   January 27, 1997.



                           OTTER TAIL POWER COMPANY
            (Exact name of registrant as specified in its charter)


           Minnesota                      0-00368              41-0462685
(State or other jurisdiction of         (Commission         (I.R.S. Employer
incorporation or organization)          File Number        Identification No.)


215  South Cascade Street, P.O. Box 496, Fergus Falls, MN         56538-0496
        (Address of principal executive offices)                  (Zip Code)

 

Registrant's telephone number, including area code:  (218) 739-8200


                                Not Applicable
        (Former name or former address, if changed since last report.)

 
Item 5.  Other Events

          On January 27, 1997, the Board of Directors of Otter Tail Power
Company (the "Company"), declared a dividend of one preferred share purchase
right (a "Right") per share for each outstanding share of Common Stock, par
value $5.00 (the "Common Shares"), of the Company.  The dividend is payable on
February 7, 1997 (the "Record Date") to shareholders of record on that date.

          Each Right entitles the registered holder to purchase from the Company
one one-hundredth of a share of Series A Junior Participating Preferred Stock,
without par value (the "Preferred Shares"), of the Company at a price of $70.00
per one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment.  The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement"), dated as of January 27, 1997, between the
Company and Norwest Bank Minnesota, National Association, as Rights Agent (the
"Rights Agent").

          Initially, the Rights will be evidenced by the certificates
representing Common Shares then outstanding and no separate Right Certificates
will be distributed.  The Rights will separate from the Common Shares, and a
Distribution Date for the Rights will occur upon the earlier of:  (i) the first
date of public announcement that a Person or group of affiliated or associated
Persons has become an "Acquiring Person" (i.e., has become, subject to certain
exceptions, the beneficial owner of 15% or more of the outstanding Common
Shares) (except pursuant to a Permitted Offer, as hereinafter defined) and (ii)
the 10th day following the commencement or public announcement of a tender offer
or exchange offer, the consummation of which would result in a Person or group
of affiliated or associated Persons becoming, subject to certain exceptions, the
beneficial owner of 15% or more of the outstanding Common Shares (or such later
date as may be determined by the Board of Directors of the Company prior to a
Person or group of affiliated or associated Persons becoming an Acquiring
Person) (the earlier of such dates being called the "Distribution Date").

          Until the Distribution Date, (i) the Rights will be evidenced by the
Common Share certificates and will be transferred with and only with the Common
Shares, (ii) new Common Share certificates issued after the Record Date upon
transfer or new issuance of the Common Shares will contain a notation
incorporating the Rights Agreement by reference, and (iii) the surrender for
transfer of any Common Share certificate, even without such notation or a copy
of the Summary of Rights attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate.

          As promptly as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date, and such separate Right Certificates alone will evidence the
Rights.

          The Rights are not exercisable until the Distribution Date.  The
Rights will expire on January 27, 2007, unless extended or earlier redeemed or
exchanged by the Company as described below.

          The Purchase Price payable and the number of Preferred Shares or other
securities or property issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution: (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain
rights, options or warrants to subscribe for or purchase Preferred Shares or
convertible securities at less than the then current market price of the
Preferred Shares, or (iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness or assets (excluding regular periodic cash
dividends or dividends payable in Preferred Shares) or of subscription rights or
warrants (other than those described in clause (ii) of this paragraph).   With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1% in the Purchase
Price.

                                       2

 
          No fraction of a Preferred Share (other than fractions in integral
multiples of one one-hundredth of a share) will be issued and, in lieu thereof,
an adjustment in cash will be made based on the closing price on the last
trading date prior to the date of exercise.

          The number of outstanding Rights and the number of one one-hundredths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.

          Preferred Shares purchasable upon exercise of the Rights will not be
redeemable.  Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $.01 per share but will be entitled to an
aggregate dividend of 100 times the dividend declared per Common Share.  In the
event of liquidation, the holders of the Preferred Shares will be entitled to a
minimum preferential liquidation payment of $.01 per share but will be entitled
to an aggregate payment of 100 times the payment made per Common Share.
Finally, in the event of any merger, consolidation or other transaction in which
Common Shares are exchanged, each Preferred Share will be entitled to receive
100 times the amount received per Common Share.  These rights are subject to
adjustment in the event of a stock dividend on the Common Shares or a
subdivision, combination or consolidation of the Common Shares.

          In the event that a person or group becomes an Acquiring Person
(except pursuant to a Permitted Offer (as defined below)), each holder of a
Right, other than the Acquiring Person or the affiliates, associates or
transferees thereof (whose Rights will thereafter be void), will thereafter have
the right to receive upon exercise thereof at the then current exercise price of
the Right that number of Common Shares having a market value of two times the
exercise price of the Right, subject to certain possible adjustments.

          In the event that the Company is acquired in certain mergers or other
business combination transactions or 50% or more of the assets or earning power
of the Company and its subsidiaries (taken as a whole) are sold after a person
or group becomes an Acquiring Person (except pursuant to a Permitted Offer (as
defined below)), holders of the Rights will thereafter have the Right to
receive, upon exercise thereof at the then current exercise price of the Right,
that number of Common Shares of the acquiring company (or, in certain cases, one
of its Affiliates) having a market value of two times the exercise price of the
Right.

          A "Permitted Offer" is a tender offer or an exchange offer for all
outstanding Common Shares of the Company at a price and on terms determined by a
majority of the Board of Directors of the Company who are not officers of the
Company and who are not Acquiring Persons or affiliates or associates of an
Acquiring Person and after receiving advice from one or more investment banking
firms, to be (a) fair to shareholders (taking into account all factors which the
Board of Directors deems relevant) and (b) otherwise in the best interests of
the Company and its shareholders, employees, customers, suppliers and creditors
and the communities in which the Company does business, and which the Board of
Directors determines to recommend to the shareholders of the Company.

          At any time after a Person becomes an Acquiring Person (subject to
certain exceptions), and prior to the acquisition by a Person of 50% or more of
the outstanding Common Shares, the Continuing Directors may exchange all or part
of the Rights for Common Shares at an exchange ratio of one Common Share per
Right, subject to adjustment.

          At any time before a Person has become an Acquiring Person, the
Continuing Directors may redeem the Rights in whole, but not in part, at a price
of $.01 per Right (the "Redemption Price"), subject to adjustment.  The
redemption of the Rights may be made effective at such time, on such basis and
with such conditions as such Continuing Directors may, in their sole discretion,
establish.

                                       3

 
          A "Continuing Director" is a member of the Board of Directors who was
a member of the Board on January 26, 1997, or who subsequently became or becomes
a member of the Board of Directors with the recommendation or approval of a
majority of the Continuing Directors.  Continuing Directors do not include any
Acquiring Person or affiliate or associate of an Acquiring Person.

          Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including without limitation, the right
to vote or to receive dividends.

          This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.


Item 7. Financial Statements and Exhibits

        (c)  Exhibits

             4.  Rights Agreement dated as of January 27, 1997, between the
                 Company and Norwest Bank Minnesota, National Association, which
                 includes as Exhibit B thereto the form of Right Certificate.

             99. Excerpt from the news release, dated January 27, 1997,
                 announcing the adoption of the Shareholder Rights Plan.

                                       4

 
Signature

          Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                OTTER TAIL POWER COMPANY
Date:  January 27, 1997

                                By    /s/  A.E. Anderson
                                    ---------------------------------------
                                    A.E. Anderson
                                    Vice President, Finance and
                                      Treasurer

                                       5

 
                                 EXHIBIT INDEX
                                 -------------

 
Exhibit   Description of Exhibit                          Page Number
- -------   ----------------------                          -----------

  4       Rights Agreement, dated as of January 27, 1997,
          between Otter Tail Power Company and Norwest
          Bank Minnesota, National Association, as Rights
          Agent (incorporated by reference to Exhibit 1 
          to the Company's Registration Statement on Form 
          8-A, dated January 28, 1997, File No. 000-00368).

  99      Excerpt from the news release, dated January 27, 
          1997, announcing the adoption of the Shareholder 
          Rights Plan

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EX-99

 
                                                                      Exhibit 99
                                                                      ----------

                           Excerpt From News Release
                           -------------------------

For further information call:
Corporate Communications Department 218-739-8253
MN:  800-492-4944 SD & ND: 800-346-4920           For release: January 27, 1997 
After hours:  Tom Hintgen 218-736-3863            Financial media
Lee Krogh 218-736-7601


                 Otter Tail Power Company increases dividend,
            announces 1996 results, adopts shareholder rights plan


                                      ###

     At the same meeting Otter Tail's directors adopted a shareholder rights
plan that provides protection against hostile takeovers and market activities
that could result in a sale of the company.

     Under the plan the company has declared a dividend of one right for each
common share outstanding on February 7, 1997.   Each right will entitle a
shareholder to buy 1/100 of a share of the company's newly created Series A
Junior Participating Preferred Stock at an exercise price of $70.   The rights
will become exercisable in the event that a person or group acquires, or makes a
tender offer for, 15 percent or more of the company's common shares, subject to
certain exceptions.  Otter Tail's board of directors retains the right to
approve a sale of the company or to redeem the rights under certain
circumstances.



                                      ###

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