On May 6, 2011 Otter Tail Corporation completed the sale of Idaho Pacific Holding to affiliates of Novacap Industries III, L.P., for approximately $87.0 million in cash.
The sale of IPH allows the Otter Tail Corporation to refine its portfolio to focus on a mix of businesses that will reduce its risk profile. The proceeds from the sale of IPH will be used to pay down short-term borrowings on the corporation's credit facility for its nonelectric businesses.
John Erickson, president and chief executive officer of Otter Tail Corporation on the sale of Idaho Pacific Holding: "We are pleased to have completed the sale of Idaho Pacific Holdings and expect to recognize a significant gain on the transaction. This sale provides us the opportunity to use the proceeds to further improve our financial position, as well as refine our portfolio of businesses in a fashion that reduces our risk profile and best supports our long-term diversification strategy."
The financial results for Q1 2011 of Otter Tail Corporation's Food Ingredient Processing segment (Idaho Pacific Holding) were as follows:
Food ingredient processing net income was $1.8 million compared with $1.4 million for the first quarter of 2010. The $0.4 million increase in net income was driven by a $1.7 million increase in revenue resulting from a 7.5% increase in pounds of product sold. Cost of goods sold increased $1.1 million due to the increase in sales volume while the cost per pound of product sold only increased 0.3%.