Tortoise Capital Resources Corp. Releases Fiscal 2008 Second Quarter Financial Results
LEAWOOD, Kan.--(BUSINESS WIRE)--
Tortoise Capital Resources Corp. (NYSE: TTO) today announced that it has filed its Form 10-Q for the second quarter ended May 31, 2008.
Recent Highlights
-- Second quarter distribution of $0.2625 per share paid June 02,
2008, representing achievement of the targeted annualized
yield of 7 percent (based on initial offering price of $15.00
per share)
-- Net assets at quarter end of $121.5 million or $13.69 per
share, an increase of $3.8 million or $0.41 per share over
last quarter
-- LONESTAR Midstream Partners LP entered into a definitive
agreement for the sale of its gas gathering and transportation
assets
Portfolio and Investment Activity
Net assets increased from $117.7 million or $13.28 per share at February 29, 2008 to $121.5 million or $13.69 per share at May 31, 2008. As of May 31, 2008, the fair value of the company's investment portfolio (excluding short-term investments) totaled $165.7 million including equity investments of $154.9 million and debt investments of $10.8 million. The portfolio represents a mix of 70 percent midstream and downstream investments, 14 percent aggregates and coal investments and 16 percent upstream investments. The weighted average yield-to-cost on the investment portfolio (excluding short-term investments) as of May 31, 2008 was 8.9 percent.
On June 17, 2008, LONESTAR Midstream Partners LP, entered into a definitive agreement with Penn Virginia Resource Partners, L.P. (NYSE: PVR) for the sale of the gas gathering and transportation assets of Lone Star Gathering LP (an affiliate of LONESTAR Midstream Partners, LP). LONESTAR Midstream Partners, LP plans to distribute substantially all of the sales proceeds to its limited partners, including TTO. We expect our portion of the proceeds to be approximately $13.5 million in cash and 494,191 unregistered common units of PVR at closing and approximately $1 million in cash payable on Dec. 31, 2009. Additionally, we may receive contingent payments totaling approximately $9.7 million based on the achievement of specific revenue targets for the Barnett Shale region by or before June 30, 2013. The company intends to use the cash proceeds from the transaction to pay down debt or make additional investments in accordance with its investment objective.
The company closely monitors portfolio performance and rates each investment's risk profile on a scale of one to three. As of May 31, 2008, all portfolio companies achieved a rating of one, indicating portfolio performance is at or above expectations with trends and risk factors that are generally favorable to neutral.
"Our strong portfolio performance this quarter was fueled by distribution increases from six of our portfolio companies, improved financial performance of several portfolio companies and the sale by LONESTAR Midstream Partners, LP of its gas gathering and transportation assets," said Tortoise Capital Resources' President, Ed Russell. "The LONESTAR transaction will provide us additional liquidity and a position in Penn Virginia Resource Partners, L.P. which we believe has an attractive combination of midstream and coal assets."
Capital Resources
On March 28, 2008, the company secured a $10 million increase to its credit facility allowing a maximum borrowing capacity of $50 million. On April 08, 2008, the company filed an initial shelf registration statement with the Securities and Exchange Commission and filed the first amendment on June 19. When effective, the shelf registration will allow the company to prudently raise additional capital. There are no plans currently to raise additional capital.
Performance Review
The company views distributable cash flow (DCF) as the best indicator of its operating performance and distribution-paying capacity. The Board of Directors determines the amount of distributions paid to stockholders based on DCF which is defined as distributions received from investments less total expenses. DCF for the three months ended May 31, 2008 was approximately $2.4 million, an increase over the prior quarter of approximately $0.2 million.
Distributions
In the second quarter of 2008, the Board of Directors declared a distribution of $0.2625 per share which was paid on June 02, 2008. The distribution represents achievement of the company's targeted annualized yield of 7 percent based upon the initial public offering price of $15.00 per share. The company expects to continue to focus on providing its stockholders with a high level of total return, with an emphasis on distribution growth.
Earnings Call
The company will host a conference call at 4:00 p.m. CDT on July 09, 2008 to discuss its second quarter financial results. Please dial-in approximately five to 10 minutes prior to the scheduled start time.
U.S./Canada: 800-218-8862
International: 303-262-2190
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 6:00 p.m. CDT on July 09, 2008 and continuing until 11:59 p.m. CDT July 23, 2008, by dialing 303-590-3000 (U.S./Canada). The replay access code is 11116396#. A replay of the webcast will also be available on the company's Web site at www.tortoiseadvisors.com through July 09, 2009.
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. Tortoise Capital Resources seeks to provide stockholders a high level of total return, with an emphasis on distributions and distribution growth.
About Tortoise Capital Advisors, LLC
Tortoise Capital Advisors, LLC, the adviser to Tortoise Capital Resources Corp., is a pioneer in the 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 infrastructure sector. As of June 30, 2008, the adviser had approximately $2.7 billion of assets under management.
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.
Tortoise Capital Resources Corporation
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STATEMENTS OF ASSETS & LIABILITIES
May 31, November 30,
2008 2007
------------- -------------
(Unaudited)
Assets
Investments at fair value, control (cost
$22,191,839 and $20,521,816,
respectively) $24,966,263 $23,292,904
Investments at fair value, affiliated
(cost $94,225,138 and $95,507,198,
respectively) 106,237,490 98,007,275
Investments at fair value, non-
affiliated (cost $30,547,112 and
$31,716,576, respectively) 34,648,388 37,336,154
------------- -------------
Total investments (cost $146,964,089
and $147,745,590, respectively) 165,852,141 158,636,333
Income tax receivable 218,935 218,935
Receivable for Adviser expense
reimbursement 98,333 94,181
Interest receivable from control
investments 125,280 68,686
Dividends and distributions receivable 133,034 1,419
Prepaid expenses and other assets 223,124 154,766
------------- -------------
Total assets 166,650,847 159,174,320
------------- -------------
Liabilities
Base management fees payable to Adviser 589,995 565,086
Accrued capital gain incentive fees
payable to Adviser 1,395,113 307,611
Distribution payable to common
stockholders 2,330,092 -
Payable for investments purchased - 1,235,994
Accrued expenses and other liabilities 427,307 419,744
Short-term borrowings 33,800,000 30,550,000
Deferred tax liability 6,590,578 4,182,919
------------- -------------
Total liabilities 45,133,085 37,261,354
------------- -------------
Net assets applicable to common
stockholders $121,517,762 $121,912,966
============= =============
Net Assets Applicable to Common
Stockholders Consist of:
Warrants, no par value; 945,594 issued
and outstanding at May 31, 2008 and
945,774 issued and outstanding at
November 30, 2007 (5,000,000
authorized) $1,370,700 $1,370,957
Capital stock, $0.001 par value;
8,876,540 shares issued and outstanding
at May 31, 2008 and 8,858,168 issued
and outstanding at November 30, 2007
(100,000,000 shares authorized) 8,858 8,858
Additional paid-in capital 110,863,178 115,186,412
Accumulated net investment loss, net of
deferred tax benefit (2,595,817) (1,565,774)
Accumulated realized gain, net of
deferred tax expense 160,474 160,474
Net unrealized appreciation of
investments, net of deferred tax
expense 11,710,369 6,752,039
------------- -------------
Net assets applicable to common
stockholders $121,517,762 $121,912,966
============= =============
Net Asset Value per common share
outstanding (net assets applicable to
common stock, divided by common shares
outstanding) $13.69 $13.76
============= =============
For the For the For the For the
Distributable Cash three three six six
Flow months months months months
ended May ended May ended May ended May
31, 2008 31, 2007 31, 2008 31, 2007
------------------------- -------------------------
Total
Distributions
Received from
Investments
Distributions
from investments $2,773,933 $1,425,467 $5,394,648 $2,029,154
Distributions
paid in stock 484,200 - 937,720 -
Interest income
from investments 301,944 162,404 615,353 290,876
Dividends from
money market
mutual funds 817 442,126 3,127 581,659
Other income - - 28,987 -
------------------------- -------------------------
Total from
Investments 3,560,894 2,029,997 6,979,835 2,901,689
Operating Expenses
Before Leverage
Costs and Current
Taxes
Advisory fees
(net of expense
reimbursement by
Adviser) 485,768 468,012 979,374 848,079
Other operating
expenses
(excluding
capital gain
incentive fees) 262,515 247,084 512,796 363,019
------------------------- -------------------------
Total Operating
Expenses 748,283 715,096 1,492,170 1,211,098
------------------------- -------------------------
Distributable
cash flow before
leverage costs
and current
taxes 2,812,611 1,314,901 5,487,665 1,690,591
Leverage Costs 435,594 (5,771) 933,498 346,460
------------------------- -------------------------
Distributable
Cash Flow $2,377,017 $1,320,672 $4,554,167 $1,344,131
------------------------- -------------------------
DCF/GAAP
Reconciliation
Distributable
Cash Flow $2,377,017 $1,320,672 $4,554,167 $1,344,131
Adjustments to
reconcile to
Net Investment
Loss, before
Income Taxes
Distributions
paid in stock (484,200) - (937,720) -
Return of capital
on distributions
received from
equity
investments (2,330,564) (1,484,141) (4,190,305) (1,964,198)
Capital gain
incentive fees (1,367,168) (1,008,867) (1,087,503) (1,496,494)
Loss on
redemption of
preferred stock 33,346 (731,713)
------------------------- -------------------------
Net Investment
Loss, before
Income Taxes $(1,804,915) $(1,138,990) $(1,661,361) $(2,848,274)
Tortoise Capital Resources Corporation
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STATEMENTS OF OPERATIONS (Unaudited)
For the For the For the For the
three three six six
months months months months
ended May ended May ended May ended May
31, 2008 31, 2007 31, 2008 31, 2007
----------- ----------- ----------- -----------
Investment Income
Distributions from
investments
Control investments $344,597 $- $627,501 $-
Affiliated
investments 1,709,792 1,078,025 3,359,680 1,333,282
Non-affiliated
investments 719,544 347,442 1,407,467 695,872
----------- ----------- ----------- -----------
Total distributions
from investments 2,773,933 1,425,467 5,394,648 2,029,154
Less return of
capital on
distributions (2,330,564) (1,484,141) (4,190,305) (1,964,198)
----------- ----------- ----------- -----------
Net distributions
from investments 443,369 (58,674) 1,204,343 64,956
Interest income from
control investments 301,944 162,404 615,353 290,876
Dividends from money
market mutual funds 817 442,126 3,127 581,659
Other income - - 28,987 -
----------- ----------- ----------- -----------
Total Investment
Income 746,130 545,856 1,851,810 937,491
----------- ----------- ----------- -----------
Operating Expenses
Base management fees 589,996 468,012 1,175,249 848,079
Capital gain
incentive fees 1,367,168 1,008,867 1,087,503 1,496,494
Professional fees 164,131 157,467 315,882 214,848
Administrator fees 27,408 20,063 54,558 30,736
Directors' fees 22,083 25,205 44,746 48,373
Reports to
stockholders 13,056 11,847 25,971 16,305
Fund accounting fees 8,550 8,428 17,038 14,277
Registration fees 7,458 6,395 14,834 8,063
Custodian fees and
expenses 4,684 2,545 9,369 5,145
Stock transfer agent
fees 3,403 3,680 6,769 7,280
Other expenses 11,742 11,454 23,629 17,992
----------- ----------- ----------- -----------
Total Operating
Expenses 2,219,679 1,723,963 2,775,548 2,707,592
----------- ----------- ----------- -----------
Interest expense 435,594 (5,771) 933,498 117,710
Preferred stock
distributions - - - 228,750
Loss on redemption of
preferred stock - (33,346) - 731,713
----------- ----------- ----------- -----------
Total Interest
Expense, Preferred
Stock Distributions
and Loss on
Redemption of
Preferred Stock 435,594 (39,117) 933,498 1,078,173
----------- ----------- ----------- -----------
Total Expenses 2,655,273 1,684,846 3,709,046 3,785,765
Less expense
reimbursement by
Adviser (104,228) - (195,875) -
----------- ----------- ----------- -----------
Net Expenses 2,551,045 1,684,846 3,513,171 3,785,765
----------- ----------- ----------- -----------
Net Investment Loss,
before Income Taxes (1,804,915) (1,138,990) (1,661,361) (2,848,274)
Deferred tax benefit 685,869 432,817 631,318 747,257
----------- ----------- ----------- -----------
Net Investment Loss (1,119,046) (706,173) (1,030,043) (2,101,017)
----------- ----------- ----------- -----------
Realized and
Unrealized Gain on
Investments
Net realized gain on
investments, before
deferred tax expense - 13,712 - 13,712
Deferred tax expense - (5,211) - (5,211)
----------- ----------- ----------- -----------
Net Realized Gain
on Investments - 8,501 - 8,501
Net unrealized
appreciation
(depreciation) of
control investments (1,257,164) 40,435 3,336 173,954
Net unrealized
appreciation of
affiliated
investments 10,055,991 1,505,983 9,749,617 1,965,951
Net unrealized
appreciation
(depreciation) of
non-affiliated
investments 2,646,187 5,179,360 (1,755,646) 7,507,863
----------- ----------- ----------- -----------
Net unrealized
appreciation, before
deferred taxes 11,445,014 6,725,778 7,997,307 9,647,768
Deferred tax expense (4,349,106) (2,555,796) (3,038,977) (3,666,151)
----------- ----------- ----------- -----------
Net Unrealized Gain
on Investments 7,095,908 4,169,982 4,958,330 5,981,617
----------- ----------- ----------- -----------
Net Realized and
Unrealized Gain on
Investments 7,095,908 4,178,483 4,958,330 5,990,118
----------- ----------- ----------- -----------
Net Increase in Net
Assets Applicable to
Common Stockholders
Resulting from
Operations $5,976,862 $3,472,310 $3,928,287 $3,889,101
=========== =========== =========== ===========
Net Increase in Net
Assets Applicable to
Common Stockholders
Resulting from
Operations Per Common
Share:
Basic $0.67 $0.39 $0.44 $0.58
Diluted $0.67 $0.35 $0.44 $0.51
Weighted Average
Shares of Common
Stock Outstanding:
Basic 8,876,540 8,830,580 8,858,213 6,653,445
Diluted 8,876,540 9,785,726 8,858,213 7,587,209
Source: Tortoise Capital Resources Corp.
Released July 9, 2008