Tortoise Capital Resources Corp. Releases Fiscal 2009 Second Quarter Financial Results
LEAWOOD, Kan.--(BUSINESS WIRE)-- Tortoise Capital Resources Corp. (NYSE: TTO) (the company) today announced that it has filed its Form 10-Q for its second quarter ended May 31, 2009.
Recent Highlights
-- Net assets of $80.2 million or $8.91 per share as of May 31, 2009
-- Total assets of $100.9 million as of May 31, 2009
-- Distributable cash flow of $1.3 million for the fiscal quarter ended May
31, 2009
-- Second quarter 2009 distribution of $0.13 per share paid June 01, 2009
-- Credit facility balance of $11.7 million as of July 06, 2009
Performance Review
The company views distributable cash flow (DCF) as a key indicator of its core financial performance. The company determines the amount of distributions paid to stockholders based on DCF, which is distributions received from investments less total expenses. Credit constraints and liquidity concerns have been factors in the reduction or suspension of cash distributions of certain investments in the portfolio, including Eagle Rock Energy Partners, L.P., Quest Midstream Partners, L.P. and Abraxas Energy Partners, L.P., thus reducing the company's DCF. DCF for the fiscal quarter ended May 31, 2009, was approximately $1.3 million as shown below. On June 1, 2009, the company paid a distribution of $0.13 per common share, a decrease of $0.10 per share compared to the prior quarter.
Leverage
On June 19, 2009, the company entered into a 60-day extension of its amended credit facility effective June 20, 2009, through August 20, 2009. The company reduced the balance on its credit facility from $23.1 million at Feb. 28, 2009, to a current balance of $11.7 million. The amended credit facility retains the provision from the previous extension requiring the company to apply 100 percent of the proceeds from any private investment liquidation and 50 percent of the proceeds from the sale of any publicly traded portfolio assets to the outstanding balance of the facility. In addition, each prepayment of principal of the loans under the amended credit facility will permanently reduce the maximum amount of the loans under the amended credit agreement to an amount equal to the outstanding principal balance of the loans under the amended credit agreement immediately following the prepayment. During the extension, outstanding loan balances generally will accrue interest at a variable rate equal to the greater of (i) one-month LIBOR plus 3.00 percent, and (ii) 5.50 percent. The company continues to seek a longer-term lending arrangement and to reduce its leverage position through the sale of publicly traded securities. Additionally, the company may have opportunities to realize liquidity from private holdings in order to further reduce, or even eliminate, its leverage.
Net Asset Value
At May 31, 2009, the company's net asset value was $8.91 per share compared to $8.67 per share at Feb. 28, 2009. Total assets decreased from $103.5 million as of Feb. 28, 2009, to $100.9 million as of May 31, 2009. The decrease in total assets resulted from a $16.4 million increase in net unrealized appreciation of investments (before income taxes), offset by a reduction in assets due to sales of publicly traded securities and the utilization of those sales proceeds to reduce leverage. Total assets also decreased this quarter due to a decrease in the deferred tax asset (as a result of the increase in unrealized appreciation) to $5.2 million (net of a $5.3 million valuation allowance), or approximately $0.58 per share, compared to $9.3 million (net of a $4.0 million valuation allowance), or approximately $1.04 per share at Feb. 28, 2009 . The company does not include the deferred tax asset in the calculation of its management fee.
Portfolio Review
As of May 31, 2009, the fair value of the company's investment portfolio (excluding short-term investments) totaled $91.2 million, including equity investments of $82.4 million and debt investments of $8.8 million. The portfolio consists of 60 percent midstream and downstream investments, 8 percent upstream investments, and 32 percent in aggregates and coal. The weighted average yield-to-cost on the investment portfolio (excluding short-term investments) as of May 31, 2009, was 6.2 percent.
On June 30, 2009, Abraxas Petroleum Corporation (NASDAQ: AXAS) ("Abraxas Petroleum") and Abraxas Energy Partners, L.P. ("Abraxas Energy") announced that they had entered into a definitive merger agreement pursuant to which Abraxas Energy will merge into Abraxas Petroleum. The agreement provides for Abraxas Petroleum to acquire the outstanding common units of Abraxas Energy not currently held by a wholly-owned subsidiary of Abraxas Petroleum for $6.00 per common unit payable in shares of Abraxas Petroleum common stock. The number of shares of Abraxas Petroleum common stock will be not less than 4.25 shares, and not more than 6.0 shares, per common unit of Abraxas Energy. The final number of shares will be determined by dividing $6.00 by the volume weighted average closing price of Abraxas Petroleum on the NASDAQ during the 20 trading days ending three business days prior to a special meeting of Abraxas Petroleum stockholders. Holders of 96% of the common units of Abraxas Energy not held by a wholly-owned subsidiary of Abraxas Petroleum have executed a voting, registration rights and lock-up agreement with Abraxas Petroleum and Abraxas Energy. The voting agreement provides an automatic vote, or proxy to vote, by the unaffiliated unitholders of Abraxas Energy in favor of the merger and for a 90-day lock-up period followed by a multi-year staggered lock-up period. The voting agreement also provides for a standstill by the private investors on their rights under the existing exchange and registration rights agreement and a standstill by Abraxas Energy on its initial public offering. The merger is subject to approval by the holders of a majority of the outstanding Abraxas Petroleum common stock and 80% of the outstanding Abraxas Energy common units, and other usual and customary closing conditions.
On July 6, 2009, Quest Resource Corporation (NASDAQ: QRCP) ("QRCP"), Quest Energy Partners, L.P. (NASDAQ: QELP) ("QELP") and Quest Midstream Partners, L.P. ("QMLP") announced that they had entered into a definitive merger agreement pursuant to which the three companies would recombine. The recombination would be effected by forming a new, yet to be named, publicly traded corporation that, through a series of mergers and entity conversions, would wholly-own all three entities. The completion of a recombination is subject to the satisfaction of a number of conditions, including the arrangement of one or more satisfactory credit facilities for the new entity, the approval of the transaction by the stockholders of QRCP and the unit holders of QELP and QMLP, and consents from each entity's existing lenders. There can be no assurance that the definitive documentation will be agreed to or that a recombination will occur.
Earnings Call
The company will host a conference call at 4 p.m. CST on Thursday, July 09, 2009, to discuss its financial results for the fiscal quarter ended May 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 7:00 p.m. CST on July 09, 2009, and continuing until 11:59 p.m. CST July 23, 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 July 09, 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 segment, of the U.S. energy infrastructure sector.
About Tortoise Capital Advisors
Tortoise Capital Advisors, LLC is a pioneer in capital markets for master limited partnership (MLP) investment companies and a leader in closed-end funds and separately managed accounts focused on MLPs in the energy sector. As of June 30, 2009, the adviser had approximately $2.0 billion of assets under management. 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
May 31, 2009 November 30, 2008
(Unaudited)
Assets
Investments at fair value, control (cost $ 32,264,166 $ 30,213,280
$29,312,205 and $30,418,802, respectively)
Investments at fair value, affiliated (cost 40,682,061 48,016,925
$54,231,519 and $56,662,500, respectively)
Investments at fair value, non-affiliated
(cost $39,046,320 and $49,760,304, 22,402,239 27,921,025
respectively)
Total investments (cost $122,590,044 and 95,348,466 106,151,230
$136,841,606, respectively)
Cash 68,200 -
Income tax receivable - 212,054
Receivable for Adviser expense reimbursement 56,364 88,925
Interest receivable from control investments - 76,609
Dividends receivable 94 696
Deferred tax asset, net 5,243,357 5,683,747
Prepaid expenses and other assets 157,945 107,796
Total assets 100,874,426 112,321,057
Liabilities
Base management fees payable to Adviser 338,187 533,552
Distribution payable to common stockholders 1,170,247 -
Accrued expenses and other liabilities 340,055 362,205
Short-term borrowings 18,800,000 22,200,000
Total liabilities 20,648,489 23,095,757
Net assets applicable to common stockholders $ 80,225,937 $ 89,225,300
Net Assets Applicable to Common Stockholders
Consist of:
Warrants, no par value; 945,594 issued and
outstanding $ 1,370,700 $ 1,370,700
at May 31, 2009 and November 30, 2008
(5,000,000 authorized)
Capital stock, $0.001 par value; 9,001,902
shares issued and
outstanding at May 31, 2009 and 8,962,147 9,002 8,962
issued and outstanding at
November 30, 2008 (100,000,000 shares
authorized)
Additional paid-in capital 103,868,927 106,869,132
Accumulated net investment loss, net of (3,809,797 ) (2,544,267 )
income taxes
Accumulated realized gain (loss), net of (2,091,430 ) 6,364,262
income taxes
Net unrealized depreciation of investments, (19,121,465 ) (22,843,489 )
net of income taxes
Net assets applicable to common stockholders $ 80,225,937 $ 89,225,300
Net Asset Value per common share outstanding
(net assets applicable $ 8.91 $ 9.96
to common stock, divided by common shares
outstanding)
For the three For the three For the six months For the six months
months ended months ended ended ended
Distributable May 31, 2009 May 31, 2008 May 31, 2009 May 31, 2008
Cash Flow
Total from
Investments
Distributions $ $ $ $
from 1,852,148 2,773,933 4,543,782 5,394,648
investments
Distributions
paid in stock - 484,200 - 937,720
(1)
Interest
income from 202,400 301,944 403,998 615,353
investments
Dividends
from money 420 817 1,145 3,127
market mutual
funds
Other income 15,000 - 30,000 28,987
Total from 2,069,968 3,560,894 4,978,925 6,979,835
Investments
Operating
Expenses
Before
Leverage Costs
Advisory fees
(net of
expense 281,821 485,768 609,129 979,374
reimbursement
by Adviser)
Other
operating
expenses
(excluding 236,014 262,515 453,596 512,796
capital gain
incentive
fees)
Total
Operating 517,835 748,283 1,062,725 1,492,170
Expenses
Distributable
cash flow
before 1,552,133 2,812,611 3,916,200 5,487,665
leverage
costs
Leverage 256,842 435,594 427,958 933,498
Costs
Distributable $ $ $ $
Cash Flow 1,295,291 2,377,017 3,488,242 4,554,167
Distributions $ $ $ $
paid on common 1,170,247 2,330,092 3,231,540 4,544,679
stock
Payout
percentage for 90 % 98 % 93 % 100 %
period(2)
DCF/GAAP
Reconciliation
Distributable $ $ $ $
Cash Flow 1,295,291 2,377,017 3,488,242 4,554,167
Adjustments to
reconcile to
Net Investment
Income, before
Income Taxes
Distributions
paid in stock 28,377 (484,200 ) 56,514 (937,720 )
(1)
Return of
capital on
distributions (2,864,138 ) (2,330,564 ) (4,717,386 ) (4,190,305 )
received from
equity
investments
Capital gain
incentive - (1,367,168 ) - (1,087,503 )
fees
Net
Investment $ $ $ $
Income, (1,540,470 ) (1,804,915 ) (1,172,630 ) (1,661,361 )
before Income
Taxes
(1) The only distributions paid in stock for the three and six months ended May
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 six months ended May 31, 2008
represent paid-in-kind distributions from LONESTAR Midstream Partners, LP
(2) Distributions paid as a percentage of Distributable Cash Flow.
Tortoise
Capital
Resources
Corporation
STATEMENTS OF
OPERATIONS
(Unaudited)
For the three For the three For the six For the six
months months months months
ended May 31, ended May 31, ended May 31, ended May 31,
2009 2008 2009 2008
Investment
Income
Distributions
from
investments
Control $ 579,215 $ 344,597 $ $ 627,501
investments 1,158,430
Affiliated 836,038 1,709,792 1,665,376 3,359,680
investments
Non-affiliated 465,272 719,544 1,776,490 1,407,467
investments
Total
distributions 1,880,525 2,773,933 4,600,296 5,394,648
from
investments
Less return of
capital on (2,864,138 ) (2,330,564 ) (4,717,386 ) (4,190,305 )
distributions
Net
distributions (983,613 ) 443,369 (117,090 ) 1,204,343
from
investments
Interest
income from 202,400 301,944 403,998 615,353
control
investments
Dividends from
money market 420 817 1,145 3,127
mutual funds
Fee income 15,000 - 30,000 -
Other income - - - 28,987
Total
Investment (765,793 ) 746,130 318,053 1,851,810
Income
Operating
Expenses
Base
management 338,186 589,996 730,955 1,175,249
fees
Capital gain - 1,367,168 - 1,087,503
incentive fees
Professional 145,017 164,131 274,109 315,882
fees
Administrator 15,782 27,408 34,111 54,558
fees
Directors' 22,080 22,083 43,737 44,746
fees
Reports to 15,408 13,056 30,481 25,971
stockholders
Fund
accounting 8,735 8,550 16,740 17,038
fees
Registration 7,891 7,458 15,610 14,834
fees
Custodian fees 4,673 4,684 7,760 9,369
and expenses
Stock transfer 3,403 3,403 6,584 6,769
agent fees
Other expenses 13,025 11,742 24,464 23,629
Total
Operating 574,200 2,219,679 1,184,551 2,775,548
Expenses
Interest 256,842 435,594 427,958 933,498
expense
Total Expenses 831,042 2,655,273 1,612,509 3,709,046
Less expense
reimbursement (56,365 ) (104,228 ) (121,826 ) (195,875 )
by Adviser
Net Expenses 774,677 2,551,045 1,490,683 3,513,171
Net Investment
Loss, before (1,540,470 ) (1,804,915 ) (1,172,630 ) (1,661,361 )
Income Taxes
Deferred tax
benefit 8,283 685,869 (92,900 ) 631,318
(expense)
Net Investment (1,532,187 ) (1,119,046 ) (1,265,530 ) (1,030,043 )
Loss
Realized and
Unrealized
Gain (Loss) on
Investments
Net realized
loss on
investments, (7,335,157 ) - (7,834,975 ) -
before income
taxes
Deferred tax (758,204 ) - (620,717 ) -
expense
Net realized
loss on (8,093,361 ) - (8,455,692 ) -
investments
Net unrealized
appreciation
(depreciation) 3,029,773 (1,257,164 ) 3,157,483 3,336
of control
investments
Net unrealized
appreciation
(depreciation) 3,374,165 10,055,991 (4,903,883 ) 9,749,617
of affiliated
investments
Net unrealized
appreciation
(depreciation) 9,978,917 2,646,187 5,195,197 (1,755,646 )
of
non-affiliated
investments
Net unrealized
appreciation, 16,382,855 11,445,014 3,448,797 7,997,307
before income
taxes
Deferred tax
benefit (3,284,590 ) (4,349,106 ) 273,227 (3,038,977 )
(expense)
Net unrealized
appreciation 13,098,265 7,095,908 3,722,024 4,958,330
of investments
Net Realized
and Unrealized 5,004,904 7,095,908 (4,733,668 ) 4,958,330
Gain (Loss) on
Investments
Net Increase
(Decrease) in
Net Assets
Applicable to $ $ $ ) $
Common 3,472,717 5,976,862 (5,999,198 3,928,287
Stockholders
Resulting from
Operations
Net Increase
(Decrease) in
Net Assets
Applicable to
Common
Stockholders
Resulting from
Operations Per
Common Share:
Basic and $ 0.39 $ 0.67 $ (0.67 ) $ 0.44
Diluted
Weighted
Average Shares
of Common
Stock
Outstanding:
Basic and 9,000,174 8,876,540 8,981,369 8,858,213
Diluted
Source: Tortoise Capital Resources Corporation
Released July 9, 2009