Tortoise Capital Resources Corp. Releases Fiscal 2009 Third Quarter Financial Results
LEAWOOD, Kan.--(BUSINESS WIRE)-- Tortoise Capital Resources Corp. (NYSE: TTO) (the company) today announced that on Friday, Oct. 9, 2009 it filed its Form 10-Q for its third quarter ended Aug. 31, 2009.
Recent Highlights
-- Net assets of $79.1 million or $8.76 per share as of Aug. 31, 2009
-- Total assets of $85.8 million as of Aug. 31, 2009
-- Distributable cash flow (DCF) of $1.2 million for the fiscal quarter
ended Aug. 31, 2009
-- Third quarter 2009 distribution of $0.13 per share paid Sept. 1, 2009
-- Credit facility balance of $4.6 million as of Oct. 12, 2009
Performance Review
On Sept. 1, 2009, the company paid a distribution of $0.13 per common share, the same amount paid last quarter. The company determines the amount of distributions paid to stockholders based on DCF which is distributions received from investments less total expenses. Two portfolio companies, High Sierra Energy, LP (High Sierra) and EV Energy Partners, L.P., increased their cash distributions to common unitholders this quarter. VantaCore Partners LP (VantaCore) reduced its cash distribution this quarter by approximately 5 percent to its minimum quarterly distribution rate.
Leverage
On Aug. 20, 2009, the company entered into a six-month extension of its amended credit facility through Feb. 20, 2010. The balance outstanding on the credit facility at Oct. 12, 2009 was $4.6 million. The company does not expect any future leverage reductions to materially impact its distribution paying capacity.
Net Asset Value
At Aug. 31, 2009, the company's net asset value was $8.76 per share compared to $8.91 per share at May 31, 2009. The decrease in net asset value is primarily the result of an overall net decrease in the fair value of the company's private investments.
Portfolio Review
As of Aug. 31, 2009, the fair value of the company's investment portfolio (excluding short-term investments) totaled $78.3 million, including equity investments of $69.5 million and debt investments of $8.8 million. The portfolio consists of 61 percent midstream and downstream investments, 5 percent upstream investments, and 34 percent in aggregates and coal. The weighted average yield-to-cost on the investment portfolio (excluding short-term investments) as of Aug. 31, 2009 was 6.5 percent.
The fair value of High Sierra and International Resource Partners LP increased this quarter due in part to improved operating performance and/or peer multiples. The fair value of Mowood, LLC also increased this quarter and it continues to explore strategic alternatives based on growth opportunities at its Timberline subsidiary. The fair value of Abraxas Energy Partners, L.P. (Abraxas Energy), Quest Midstream Partners, L.P. (Quest Midstream) and VantaCore declined this quarter due to company and/or market-specific issues. VantaCore's fair value was adversely affected by its decision to reduce its quarterly cash distribution to common unitholders and to suspend its distribution to certain subordinated unitholders in light of reduced distributable cash flow projections in 2009. Quest Midstream and Abraxas Energy announced intentions to merge or recombine with their respective affiliated public entities, which would likely provide liquidity for the company's investments in the future. On Oct. 6, 2009, Quest Resources Corp. (NASDAQ: QRCP) and Quest Energy Partners L.P. (NASDAQ: QELP) filed a Form S-4 Registration Statement to recombine with Quest Midstream as the newly-formed PostRock Energy Corporation, which is expected to be listed on the NASDAQ under the symbol "PSTR." The recombination is subject to the satisfaction of a number of conditions. On Oct. 5, 2009, Abraxas Petroleum Corp. (NASDAQ: AXAS) (Abraxas Petroleum) closed its merger with Abraxas Energy. Under the terms of the merger agreement, the company will receive 4.25 shares of Abraxas Petroleum in exchange for each common unit of Abraxas Energy it owns, which equates to approximately 1,946,377 Abraxas Petroleum shares. These shares are subject to an initial 90 day lock-up period followed by a multi-year staggered lock-up period.
Earnings Call
The company will host a conference call at 4 p.m. CDT on Monday, Oct. 12, 2009 to discuss its financial results for the fiscal quarter ended Aug. 31, 2009. Please dial-in approximately five to 10 minutes prior to the scheduled start time.
U.S./Canada: 866-225-8754
The call will also be webcast in a listen-only format. A link to the webcast will be accessible at www.tortoiseadvisors.com.
A replay of the call will be available beginning at 7 p.m. CDT on Oct. 12, 2009 and continuing until 11:59 p.m. CDT Oct. 26, 2009, by dialing 800-406-7325 (U.S./Canada). The replay access code is 4075823#. A replay of the webcast will also be available on the company's Web site at www.tortoiseadvisors.com through Oct. 12, 2010.
About Tortoise Capital Resources Corp.
Tortoise Capital Resources invests primarily in privately-held and micro-cap public companies operating in the midstream and downstream segments, and to a lesser extent the upstream and coal/aggregate segments, of the U.S. energy infrastructure sector.
About Tortoise Capital Advisors
Tortoise is an investment manager specializing in listed energy infrastructure, such as pipeline and power companies. As of Sept. 30, 2009, the adviser had approximately $2.4 billion of assets under management in five NYSE-listed investment companies and private accounts. For more information, visit our Web site at www.tortoiseadvisors.com.
Safe Harbor Statement
This press release shall not constitute an offer to sell or a solicitation to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer or solicitation or sale would be unlawful prior to registration or qualification under the laws of such state or jurisdiction.
Forward-Looking Statement
This press release contains certain statements that may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included herein are "forward-looking statements." Although the company and Tortoise Capital Advisors believe that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the company's reports that are filed with the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required by law, the company and Tortoise Capital Advisors do not assume a duty to update this forward-looking statement. Any distribution paid in the future to our stockholders will depend on the actual performance of the company's investments, its costs of leverage and other operating expenses and will be subject to the approval of the company's Board and compliance with asset coverage requirements of the Investment Company Act of 1940 and the leverage covenants.
Tortoise Capital Resources Corporation
STATEMENTS OF ASSETS & LIABILITIES
August 31, 2009 November 30, 2008
(Unaudited)
Assets
Investments at fair value, control (cost $ 32,818,564 $ 30,213,280
$28,735,949 and $30,418,802, respectively)
Investments at fair value, affiliated (cost 39,230,799 48,016,925
$53,091,607 and $56,662,500, respectively)
Investments at fair value, non-affiliated
(cost $15,176,862 and $49,760,304, 8,439,970 27,921,025
respectively)
Total investments (cost $97,004,418 and 80,489,333 106,151,230
$136,841,606, respectively)
Income tax receivable - 212,054
Receivable for investments sold 65,104 -
Receivable for Adviser expense reimbursement 53,596 88,925
Interest receivable from control investments 68,200 76,609
Dividends receivable 255 696
Deferred tax asset, net 5,067,908 5,683,747
Prepaid expenses and other assets 43,966 107,796
Total assets 85,788,362 112,321,057
Liabilities
Base management fees payable to Adviser 321,578 533,552
Distribution payable to common stockholders 1,173,679 -
Accrued expenses and other liabilities 216,398 362,205
Short-term borrowings 5,000,000 22,200,000
Total liabilities 6,711,655 23,095,757
Net assets applicable to common stockholders $ 79,076,707 $ 89,225,300
Net Assets Applicable to Common Stockholders
Consist of:
Warrants, no par value; 945,594 issued and
outstanding at August 31, 2009 and November $ 1,370,700 $ 1,370,700
30, 2008 (5,000,000 authorized)
Capital stock, $0.001 par value; 9,028,301
shares issued and outstanding at August 31,
2009 and 8,962,147 issued and outstanding at 9,028 8,962
November 30, 2008 (100,000,000 shares
authorized)
Additional paid-in capital 102,817,178 106,869,132
Accumulated net investment loss, net of (3,728,613 ) (2,544,267 )
income taxes
Accumulated realized gain (loss), net of (14,316,148 ) 6,364,262
income taxes
Net unrealized depreciation of investments, (7,075,438 ) (22,843,489 )
net of income taxes
Net assets applicable to common stockholders $ 79,076,707 $ 89,225,300
Net Asset Value per common share outstanding
(net assets applicable to common stock, $ 8.76 $ 9.96
divided by common shares outstanding)
For the three For the three For the nine For the nine
months ended months ended months ended months ended
Distributable August 31, August 31, August 31, 2009 August 31, 2008
Cash Flow 2009 2008
Total from
Investments
Distributions
from $ 1,635,662 $ 2,734,812 $ 6,179,444 $ 8,129,460
investments
Distributions
paid in stock - 621,122 - 1,558,842
(1)
Interest
income from 201,918 269,235 605,916 884,588
investments
Dividends from
money market 304 3,643 1,449 6,770
mutual funds
Other income 15,000 - 45,000 28,987
Total from 1,852,884 3,628,812 6,831,809 10,608,647
Investments
Operating
Expenses
Before
Leverage Costs
Advisory fees
(net of
expense 267,982 504,109 877,111 1,483,483
reimbursement
by Adviser)
Other
operating
expenses
(excluding 266,601 253,236 720,196 766,032
capital gain
incentive
fees)
Total
Operating 534,583 757,345 1,597,307 2,249,515
Expenses
Distributable
cash flow 1,318,301 2,871,467 5,234,502 8,359,132
before
leverage costs
Leverage Costs 134,987 395,791 562,945 1,329,289
Distributable $ 1,183,314 $ 2,475,676 $ 4,671,557 $ 7,029,843
Cash Flow
Distributions
paid on common $ 1,173,679 $ 2,356,874 $ 4,405,226 $ 6,901,553
stock
Payout
percentage for 99 % 95 % 94 % 98 %
period(2)
DCF/GAAP
Reconciliation
Distributable $ 1,183,314 $ 2,475,676 $ 4,671,557 $ 7,029,843
Cash Flow
Adjustments to
reconcile to
Net Investment
Income, before
Income Taxes
Distributions
paid in stock - (621,122 ) 56,514 (1,558,842 )
(1)
Pro Forma
distribution - (254,215 ) - (254,215 )
on new
investment (3)
Return of
capital on
distributions (1,075,398 ) (2,306,739 ) (5,792,784 ) (6,497,044 )
received from
equity
investments
Capital gain - 340,369 - (747,134 )
incentive fees
Net Investment
Income (Loss), $ 107,916 $ (366,031 ) $ (1,064,713 ) $ (2,027,392 )
before Income
Taxes
(1) The only distributions paid in stock for the nine months ended August 31,
2009 were from Abraxas Energy Partners, L.P. which were paid in stock as a
result of credit constraints and therefore were not included in DCF.
Distributions paid in stock for the three and nine months ended August 31, 2008
include shares received from High Sierra Energy, LP as a distribution received
in lieu of cash.
(2) Distributions paid as a percentage of Distributable Cash Flow.
(3) Consists of $254,215 as pro forma distribution on new investment in
VantaCore Partners, LP common units.
Tortoise
Capital
Resources
Corporation
STATEMENTS OF
OPERATIONS
(Unaudited)
For the three For the three For the nine For the nine
months months months months
ended August ended August ended August ended August 31,
31, 31, 31, 2008
2009 2008 2009
Investment
Income
Distributions
from
investments
Control $ 555,879 $ 347,500 $ 1,714,309 $ 975,001
investments
Affiliated 856,891 1,139,402 2,522,267 4,499,082
investments
Non-affiliated 222,892 993,695 1,999,382 2,401,162
investments
Total
distributions 1,635,662 2,480,597 6,235,958 7,875,245
from
investments
Less return of
capital on (1,075,398) (2,306,739) (5,792,784) (6,497,044)
distributions
Net
distributions 560,264 173,858 443,174 1,378,201
from
investments
Interest income
from control 201,918 269,235 605,916 884,588
investments
Dividends from
money market 304 3,643 1,449 6,770
mutual funds
Fee income 15,000 - 45,000 -
Other income - - - 28,987
Total
Investment 777,486 446,736 1,095,539 2,298,546
Income
Operating
Expenses
Base management 321,578 604,930 1,052,533 1,780,179
fees
Capital gain
incentive fees - (340,369) - 747,134
(Note 4)
Professional 176,947 153,157 451,056 469,039
fees
Administrator 15,007 27,930 49,118 82,488
fees
Directors' fees 22,080 22,181 65,817 66,927
Reports to 15,409 13,057 45,890 39,028
stockholders
Fund accounting 8,032 8,652 24,772 25,690
fees
Registration 7,891 7,458 23,501 22,292
fees
Custodian fees 5,315 5,545 13,075 14,914
and expenses
Stock transfer 3,556 3,403 10,140 10,172
agent fees
Other expenses 12,364 11,853 36,827 35,482
Total Operating 588,179 517,797 1,772,729 3,293,345
Expenses
Interest 134,987 395,791 562,945 1,329,289
expense
Total Expenses 723,166 913,588 2,335,674 4,622,634
Less expense
reimbursement (53,596) (100,821) (175,422) (296,696)
by Adviser
Net Expenses 669,570 812,767 2,160,252 4,325,938
Net Investment
Income (Loss), 107,916 (366,031) (1,064,713) (2,027,392)
before Income
Taxes
Deferred tax
benefit (26,733) 139,090 (119,633) 770,408
(expense)
Net Investment 81,183 (226,941) (1,184,346) (1,256,984)
Income (Loss)
Realized and
Unrealized Gain
(Loss) on
Investments
Net realized
gain (loss) on
investments, (10,756,469) 2,224,706 (18,591,444) 2,224,706
before income
taxes
Deferred tax (1,468,249) (845,388) (2,088,966) (845,388)
expense
Net realized
gain (loss) on (12,224,718) 1,379,318 (20,680,410) 1,379,318
investments
Net unrealized
appreciation of 1,130,654 234,767 4,288,137 238,103
control
investments
Net unrealized
appreciation
(depreciation) (311,350) 641,373 (5,215,233) 10,390,990
of affiliated
investments
Net unrealized
appreciation
(depreciation) 9,907,190 (3,309,808) 15,102,387 (5,065,454)
of
non-affiliated
investments
Net unrealized
appreciation
(depreciation), 10,726,495 (2,433,668) 14,175,291 5,563,639
before income
taxes
Deferred tax
benefit 1,319,533 924,795 1,592,760 (2,114,182)
(expense)
Net unrealized
appreciation 12,046,028 (1,508,873) 15,768,051 3,449,457
(depreciation)
of investments
Net Realized
and Unrealized (178,690) (129,555) (4,912,359) 4,828,775
Gain (Loss) on
Investments
Net Increase
(Decrease) in
Net Assets
Applicable to
Common
Stockholders
Resulting from $ (97,507) $ (356,496) $ (6,096,705) $ 3,571,791
Operations
Net Increase
(Decrease) in
Net Assets
Applicable to
Common
Stockholders
Resulting from
Operations Per
Common Share:
Basic and $ (0.01) $ (0.04) $ (0.68) $ 0.40
Diluted
Weighted
Average Shares
of Common Stock
Outstanding:
Basic and 9,014,094 8,893,866 8,997,031 8,876,079
Diluted
Source: Tortoise Capital Resources Corp.
Released October 12, 2009