Company

Black Hills Corporation, a South Dakota corporation

Company Stock Ticker

New York Stock Exchange “BKH”

Pricing Date

November 17, 2015

Trade Date

November 18, 2015

Closing Price of the Common Stock on November 17, 2015

$40.25 per share

Settlement Date

November 23, 2015

Registration Format

SEC Registered

Title of Securities

Common stock, par value $1.00 per share, of the Company (the “Common Stock”)

Number of Shares of Common Stock Offered

5,500,000 (or 6,325,000 if the underwriters of the Common Stock Offering exercise their option to purchase up to 825,000 additional shares of Common Stock in full)

Common Stock Public Offering Price

$40.25 per share of Common Stock
$221,375,000 in aggregate (or $254,581,250 if the underwriters of the Common Stock Offering exercise their option to purchase up to 825,000 additional shares of Common Stock in full)

Underwriting Discounts and Commissions

$1.40875 per share of Common Stock
$7,748,125 in aggregate (or $8,910,343.75 if the underwriters of the Common Stock Offering exercise their option to purchase up to 825,000 additional shares of Common Stock in full)

The underwriters of the Common Stock Offering propose to offer the shares of Common Stock to dealers at the Common Stock Public Offering Price less a concession not in excess of $0.84525 per share of Common Stock.

Estimated Net Proceeds to the Company from the Common Stock Offering

The Company estimates that it will receive net proceeds of approximately $212.4 million from the sale of Common Stock in the Common Stock Offering after deducting the Underwriting Discounts and Commissions and estimated offering expenses. The Company estimates that it will receive net proceeds of approximately $244.5 million if the underwriters of the Common Stock Offering exercise their option to purchase additional shares of Common Stock in full.

Joint Bookrunning Managers

Credit Suisse Securities (USA) LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
RBC Capital Markets, LLC
Wells Fargo Securities, LLC

Senior Co-Manager

BMO Capital Markets Corp.

Co-Managers

J.P. Morgan Securities LLC
Morgan Stanley & Co. LLC
Scotia Capital (USA) Inc.
Mitsubishi UFJ Securities (USA), Inc.

CUSIP for the Common Stock

092113109

ISIN for the Common Stock

US0921131092

Stabilization Transactions

Prior to purchasing the shares of Common Stock being offered pursuant to the Common Stock Preliminary Prospectus Supplement, on November 17, 2015, one of the underwriters purchased, on behalf of the syndicate, 47,450 shares of Common Stock at an average price of $40.2346 per share in stabilizing transactions.

Title of Securities

Equity Units that will each have a stated amount of $50.00 and will initially be in the form of a Corporate Unit consisting of a purchase contract issued by the Company and, initially, a 1/20, or 5%, undivided beneficial ownership interest in $1,000 principal amount of 2015 Series A 3.50% Remarketable

Junior Subordinated Notes due 2028 to be issued by the Company (each being referred to as an “RSN”)

Number of Equity Units Offered

5,200,000 (or 5,980,000 if the underwriters of the Equity Units Offering exercise their option to purchase up to 780,000 additional Corporate Units in full)

Aggregate Offering Amount

$260,000,000 (or $299,000,000 if the underwriters of the Equity Units Offering exercise their option to purchase up to 780,000 additional Corporate Units in full)

Stated Amount per Equity Unit

$50.00

Corporate Unit Public Offering Price

$50.00 per Corporate Unit
$260,000,000 in aggregate (or $299,000,000 if the underwriters of the Equity Units Offering exercise their option to purchase up to 780,000 additional Corporate Units in full)

Underwriting Discounts and Commissions

$1.50 per Corporate Unit
$7,800,000 in aggregate (or $8,970,000 if the underwriters of the Equity Units Offering exercise their option to purchase up to 780,000 additional Corporate Units in full)

The underwriters of the Equity Units Offering propose to offer the Corporate Units to dealers at the Corporate Unit Public Offering Price less a concession not in excess of $0.90 per Corporate Unit.

Estimated Net Proceeds to the Company from the Equity Units Offering

The Company estimates that it will receive net proceeds of approximately $250.5 million from the sale of Corporate Units in the Equity Units Offering after deducting the Underwriting Discounts and Commissions and estimated offering expenses. The Company estimates that it will receive net proceeds of approximately $288.3 million if the underwriters of the Equity Units Offering exercise their option to purchase additional Corporate Units in full.

Interest Rate on the RSNs

3.50% per year subject to the Company’s right to defer interest payments, as described in the Equity Units Preliminary Prospectus Supplement and subject to modification in connection with a successful remarketing

Interest Payment Dates

Prior to a successful remarketing, February 1, May 1, August 1 and November 1 of each year, commencing on February 1, 2016

Deferred Interest on the RSNs

Deferred interest on the RSNs will bear interest at the interest rate applicable to the RSNs, compounded on each Interest Payment Date to, but excluding, the Interest Payment Date on which such deferred interest is paid

Contract Adjustment Payment Rate

4.25% per year or $2.125 per year on the Stated Amount per Equity Unit subject to the Company’s right to defer contract adjustment payments, as described in the Equity Units Preliminary Prospectus Supplement

Contract Adjustment Payment Dates

February 1, May 1, August 1 and November 1 of each year,

commencing on February 1, 2016

Deferred Contract Adjustment Payments

Deferred contract adjustment payments will accrue additional contract adjustment payments at the rate equal to 7.75% per annum, compounded on each Contract Adjustment Payment Date to, but excluding, the Contract Adjustment Payment Date on which such deferred contract adjustment payments are paid

Total Distribution Rate on the Corporate Units

7.75% per annum

Reference Price

$40.25 (subject to adjustment, as described in the Equity Units Preliminary Prospectus Supplement)

Threshold Appreciation Price

$47.2938 (subject to adjustment, as described in the Equity Units Preliminary Prospectus Supplement), which represents appreciation of approximately 17.5% over the Reference Price

Minimum Settlement Rate

1.0572 shares of Common Stock (subject to adjustment, as described in the Equity Units Preliminary Prospectus Supplement), which is approximately equal to the $50.00 Stated Amount per Equity Unit, divided by the Threshold Appreciation Price

Maximum Settlement Rate

1.2422 shares of Common Stock (subject to adjustment, as described in the Equity Units Preliminary Prospectus Supplement), which is approximately equal to the $50.00 Stated Amount per Equity Unit, divided by the Reference Price

Purchase Contract Settlement Date

November 1, 2018 (or if such day is not a business day, the following business day)

RSN Maturity Date

November 1, 2028

Joint Bookrunning Managers

Credit Suisse Securities (USA) LLC
Wells Fargo Securities, LLC
RBC Capital Markets, LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated

Co-Managers

J.P. Morgan Securities LLC
Morgan Stanley & Co. LLC
U.S. Bancorp Investments, Inc.

Listing

The Company intends to apply to list the Corporate Units on the New York Stock Exchange and expects trading to commence within 30 days of the date of initial issuance of the Corporate Units under the symbol “BKHU”.

CUSIP for the Corporate Units

092113 125

ISIN for the Corporate Units

US0921131258

CUSIP for the Treasury Units

092113 133

ISIN for the Treasury Units

US0921131332

CUSIP for the RSNs

092113 AJ8

ISIN for the RSNs

US092113AJ83

Allocation of the Purchase Price

At the time of issuance, the fair market value of the applicable ownership interest in the RSNs will be $50 (or 100% of the issue price of a Corporate Unit) and the fair market value of each purchase contract will be $0 (or 0% of the issue price of a Corporate Unit).

Early Settlement

Subject to certain conditions described under “Description of the Purchase Contracts—Early Settlement” in the Equity Units Preliminary Prospectus Supplement, a holder of Corporate Units or Treasury Units may settle the related purchase contracts at any time prior to 4:00 p.m., New York City time, on the second business day immediately preceding the Purchase Contract Settlement Date, other than during a blackout period (as described in the Equity Units Preliminary Prospectus Supplement) in the case of Corporate Units. An early settlement may be made only in integral multiples of 20 Corporate Units or 20 Treasury Units; however, if the Treasury portfolio has replaced the RSNs as a component of the Corporate Units following a successful optional remarketing, holders of Corporate Units may settle early only in integral multiples of 16,000 Corporate Units. If a purchase contract is settled early, the number of shares of Common Stock to be issued per purchase contract will be equal to the Minimum Settlement Rate (subject to adjustment, as described in the Equity Units Preliminary Prospectus Supplement).

Early Settlement Upon a Fundamental Change

Subject to certain conditions described under “Description of the Purchase Contracts—Early Settlement Upon a Fundamental Change” in the Equity Units Preliminary Prospectus Supplement, following a “fundamental change” (as defined in the Equity Units Preliminary Prospectus Supplement) that occurs prior to the 20th business day preceding the Purchase Contract Settlement Date, each holder of a purchase contract will have the right to accelerate and settle the purchase contract early on the fundamental change early settlement date (as defined in the Equity Units Preliminary Prospectus Supplement) at the settlement rate determined as if the applicable market value equaled the stock price (as defined in the Equity Units Preliminary Prospectus Supplement), plus an additional make-whole amount of shares (such additional make-whole amount of shares being hereafter referred to as the “make-whole shares”). This right is referred to as the “fundamental change early settlement right.”

The number of make-whole shares per purchase contract applicable to a fundamental change early settlement will be determined by reference to the table below, based on the date on which the fundamental change occurs or becomes effective (the “effective date”) and the “stock price” (as defined in the Equity Units Preliminary Prospectus Supplement) for the fundamental change:

Stock Price on Effective Date

Effective Date 

$10.00

$20.00

$30.00

$35.00

$37.50

$40.25

$42.50

$45.00

$47.29

$50.00

November 23, 2015

0.5325

0.2378

0.0972

0.0445

0.0220

0.0000

0.0498

0.0995

0.1406

0.1274

November 1, 2016

0.3406

0.1547

0.0544

0.0084

0.0000

0.0000

0.0168

0.0669

0.1085

0.0960

November 1, 2017

0.1719

0.0806

0.0271

0.0000

0.0000

0.0000

0.0000

0.0392

0.0791

0.0655

November 1, 2018

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

Stock Price on Effective Date

Effective Date 

$55.00

$60.00

$70.00

$80.00

$90.00

$100.00

$110.00

$120.00

$130.00

$150.00

November 23, 2015

0.1075

0.0922

0.0709

0.0572

0.0476

0.0403

0.0346

0.0299

0.0259

0.0195

November 1, 2016

0.0777

0.0643

0.0472

0.0373

0.0308

0.0260

0.0222

0.0191

0.0164

0.0122

November 1, 2017

0.0471

0.0356

0.0241

0.0189

0.0157

0.0133

0.0114

0.0098

0.0084

0.0063

November 1, 2018

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

The stock prices set forth in the second row of the table above (i.e., the column headers) will be adjusted upon the occurrence of certain events requiring anti-dilution adjustments to the fixed settlement rates in a manner inversely proportional to the adjustments to the fixed settlement rates, as described in the Equity Units Preliminary Prospectus Supplement.

The exact stock price and effective date applicable to a fundamental change may not be set forth on the table, in which case:

·             if the stock price is between two stock prices on the table or the effective date is between two effective dates on the table, the amount of make-whole shares will be determined by straight line interpolation between the make-whole share amounts set forth for the higher and lower stock prices and the two effective dates based on a 365-day year, as applicable;

·             if the stock price is in excess of $150.00 per share (subject to adjustment in the same manner as the stock prices set forth in the second row of the table, as described above), then the make-whole share amount will be zero; and

·             if the stock price is less than $10.00 per share (subject to adjustment in the same manner as the stock prices set forth in the second row of the table, as described above) (the “minimum stock price”), then the make-whole share amount will be determined as if the stock price equaled the minimum stock price, using straight line interpolation, as described above in the first bullet, if the effective date is between two effective dates on the table.

Unless the Treasury portfolio has replaced the RSNs as a component of the Corporate Units as a result of a successful optional remarketing, holders of Corporate Units may exercise the fundamental change early settlement right only in integral multiples of 20 Corporate Units. If the Treasury portfolio has replaced the RSNs as a component of Corporate Units, holders of the Corporate Units may exercise the fundamental change early settlement right only in integral multiples of 16,000 Corporate Units. A holder of Treasury Units may exercise the fundamental change early settlement right only in integral multiples of 20 Treasury Units.