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.
-- 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
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.
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.
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.
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.
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.
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