Tortoise Capital Resources Corp. Releases Fiscal 2008 First Quarter Financial Results
OVERLAND PARK, Kan.--(BUSINESS WIRE)--
Tortoise Capital Resources Corp. (NYSE: TTO) today announced that it has filed its Form 10-Q for the first quarter ended Feb. 29, 2008.
Recent Highlights
-- First quarter distribution of $0.25 per share paid March 03,
2008
-- Net assets at quarter end of $117.7 million or $13.28 per
share
-- Distributable cash flow for the quarter of $2.2 million
-- Renewed and increased credit facility by $10.0 million after
quarter end
Portfolio and Investment Activity
On Dec. 17, 2007, the company funded the final tranche of its original commitment to purchase units from Lonestar Midstream Partners, LP and LSMP GP, LP, for an aggregate price of approximately $1.2 million and after quarter end, invested an additional $1.5 million on the same terms. On January 10, 2008 the company invested an additional $2.0 million in its equity interest in Mowood, LLC to fund landfill-to-gas energy projects at Mowood's subsidiary, Timberline Energy LLC. In March 2008, the company was granted Board of Directors observation rights for Quest Midstream Partners, L.P.
As of Feb. 29, 2008, the value of the company's investment portfolio (excluding short-term investments) totaled $155.1 million including equity investments of $144.3 million and debt investments of $10.8 million. Net assets decreased from $121.9 million or $13.76 per share at November 30, 2007 to $117.7 million or $13.28 per share at February 29, 2009. Our net asset value decreased approximately 3.5 percent in the first quarter of 2008, compared with the overall MLP market which saw a decrease of approximately 2.8 percent in Wachovia's MLP Index.
The portfolio represents a strategic mix of 73 percent midstream and downstream investments, 15 percent in aggregates and coal investments and 12 percent upstream investments. The weighted average yield-to-cost on the investment portfolio (excluding short-term investments) as of Feb. 29, 2008 was 8.8 percent.
Tortoise Capital Resources closely monitors portfolio performance and rates each investment's risk profile on a scale of one to three. As of Feb. 29, 2008, all portfolio companies achieved a rating of one, meaning portfolio performance is at or above expectations with trends and risk factors that are generally favorable to neutral.
In February, the company's Adviser hired a full-time Valuation Officer to further its commitment to best practices related to its fair valuation policies and procedures. The company's procedures already include a multi-step valuation process each quarter in connection with determining the fair value of investments. Further, an independent valuation firm is engaged by the Board of Directors to provide third-party valuation consulting services on a selection of valuations as determined by the Board. The Valuation Officer is primarily responsible for oversight of the overall fair valuation process for private investments.
"We continue to be encouraged by what we believe are strong results at our portfolio companies. We are also excited to be moving towards full investment as we continue to invest proceeds from our line of credit," said Tortoise Capital Resources' President, Ed Russell.
Capital Resources
On Mar. 20, 2008, the company secured an extension to its revolving credit facility. The amended credit agreement provided for a revolving credit facility of $40 million that could be increased to $50 million. Subsequently we secured an additional $10 million increase for the credit facility and our maximum borrowing capacity is now $50 million. The revolving credit facility has a variable annual interest rate equal to the one-month LIBOR rate plus 1.75 percent and a quarterly non-usage fee equal to an annual rate of 0.375 percent of the difference between the total credit facility commitment and the average outstanding balance at the end of each day. The amended credit facility terminates on March 20, 2009.
On April 08, 2008, the company filed an initial shelf registration statement with the Securities and Exchange Commission. When effective, the shelf will allow the company to prudently 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 Feb. 29, 2008 was approximately $2.2 million. In the fourth quarter of 2007, the Adviser agreed to reimburse the company expenses in an amount equal to 0.25% of the company's average monthly managed assets through Dec. 31, 2008. This voluntary expense reimbursement reduced net expenses for the first quarter of 2008 by approximately $92,000.
Distributions
As previously announced, the Board of Directors declared the company's first quarter 2008 distribution of $0.25 per share which was paid on Mar. 03, 2008. The distribution reflects distributions received from investments at the time of the announcement, and is not indicative of the targeted annualized distribution.
Earnings Call
The company will host a conference call at 4:00 p.m. CDT on April 09, 2008 to discuss its first quarter financial results. Please dial-in approximately five to 10 minutes prior to the scheduled start time.
U.S./Canada: 800-218-4007
International: 303-262-2194
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. CDT on April 09, 2008 and continuing until 11:59 p.m. CDT April 23, 2008, by dialing 800-405-2236 (U.S./Canada). The replay access code is 11112635#. A replay of the webcast will also be available on the company's Web site at www.tortoiseadvisors.com through April 09, 2009.
Annual Stockholders' Meeting
The company will discuss financial results at its annual stockholders' meeting on April 21, 2008 at 11 a.m. CDT at the Doubletree Hotel, 10100 College Blvd, Overland Park, Kan.
For those unable to attend the meeting, a conference call will be provided. Please dial-in approximately five to 10 minutes prior to the scheduled start time:
U.S./Canada: 800-218-0713
International: 303-262-2139
The meeting will also be webcast in a listen-only format. The link to the webcast and supplemental information will be accessible at www.tortoiseadvisors.com.
A replay of the meeting will be available beginning at 4 p.m. CDT on April 21, 2008 and continuing until 11:59 p.m. CDT May 06, 2008, by dialing 800-405-2236 (U.S./Canada). The replay access code is 11107205#. A replay of the webcast will also be available on the company's Web site at www.tortoiseadvisors.com through April 21, 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 March 31, 2008, the adviser had approximately $2.6 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
February 29, November 30,
2008 2007
------------- -------------
(Unaudited)
Assets
Investments at fair value, control (cost
$22,319,937 and $20,521,816,
respectively) $26,351,525 $23,292,904
Investments at fair value, affiliated
(cost $94,373,029 and $95,507,198,
respectively) 96,722,889 98,007,275
Investments at fair value, non-affiliated
(cost $31,097,155 and $31,716,576,
respectively) 32,158,746 37,336,154
------------- -------------
Total investments (cost $147,790,121
and $147,745,590, respectively) 155,233,160 158,636,333
Income tax receivable 218,935 218,935
Receivable for Adviser reimbursement 91,647 94,181
Interest receivable from control
investments 131,443 68,686
Dividends and distributions receivable 70,884 1,419
Prepaid expenses and other assets 204,460 154,766
------------- -------------
Total assets 155,950,529 159,174,320
------------- -------------
Liabilities
Base management fees payable to Adviser 585,253 565,086
Accrued capital gain incentive fees
payable to Adviser 27,946 307,611
Distribution payable on common stock 2,214,587 -
Payable for investments purchased - 1,235,994
Accrued expenses and other liabilities 442,898 419,744
Short-term borrowings 32,100,000 30,550,000
Deferred tax liability 2,927,341 4,182,919
------------- -------------
Total liabilities 38,298,025 37,261,354
------------- -------------
Net assets applicable to common
stockholders $117,652,504 $121,912,966
============= =============
Net Assets Applicable to Common
Stockholders Consist of:
Warrants, no par value; 945,594 issued
and outstanding at February 29, 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;
8,858,348 shares issued and outstanding
at February 29, 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 112,974,782 115,186,412
Accumulated net investment loss, net of
deferred tax benefit (1,476,771) (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 4,614,461 6,752,039
------------- -------------
Net assets applicable to common
stockholders $117,652,504 $121,912,966
============= =============
Net Asset Value per common share
outstanding (net assets applicable to
common stock, divided by common shares
outstanding) $13.28 $13.76
============= =============
Distributable Cash Flow
For the three months
ended February 29, 2008
-----------------------
Total Distributions Received from Investments
Distributions from investments $2,620,715
Distributions paid in stock 453,520
Interest income from investments 313,409
Dividends from money market mutual funds 2,310
Other income 28,987
-----------------------
Total from Investments 3,418,941
Operating Expenses Before Leverage Costs and
Current Taxes
Advisory fees (net of expense reimbursement
by Adviser) 493,606
Other operating expenses (excluding capital
gain incentive fees) 250,281
-----------------------
Total Operating Expenses 743,887
-----------------------
Distributable cash flow before leverage
costs and current taxes 2,675,054
Leverage Costs 497,904
-----------------------
Distributable Cash Flow $ 2,177,150
=======================
DCF/GAAP Reconciliation
Distributable Cash Flow $2,177,150
Adjustments to reconcile to Net Investment
Income, before Income Taxes
Distributions paid in stock (453,520)
Return of capital on distributions received
from equity investments (1,859,741)
Capital gain incentive fees 279,665
-----------------------
Net Investment Income, before Income
Taxes $143,554
Tortoise Capital Resources Corporation
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STATEMENTS OF OPERATIONS (Unaudited)
For the three For the three
months ended months ended
February 29, February 28,
2008 2007
------------- -------------
Investment Income
Distributions from investments
Non-affiliated investments $687,923 $348,430
Affiliated investments 1,649,888 255,257
Control investments 282,904 -
------------- -------------
Total distributions from investments 2,620,715 603,687
Less return of capital on distributions (1,859,741) (480,057)
------------- -------------
Net distributions from investments 760,974 123,630
Interest income from control investments 313,409 128,472
Dividends from money market mutual funds 2,310 139,533
Other income 28,987 -
------------- -------------
Total Investment Income 1,105,680 391,635
------------- -------------
Operating Expenses
Base management fees 585,253 380,067
Capital gain incentive fees (279,665) 487,627
Professional fees 151,751 57,381
Administrator fees 27,150 10,673
Directors' fees 22,663 23,168
Reports to stockholders 12,915 4,458
Fund accounting fees 8,488 5,849
Registration fees 7,376 1,668
Custodian fees and expenses 4,685 2,600
Stock transfer agent fees 3,366 3,600
Other expenses 11,887 6,538
------------- -------------
Total Operating Expenses 555,869 983,629
------------- -------------
Interest expense 497,904 123,481
Preferred stock distributions - 228,750
Loss on redemption of preferred stock - 765,059
------------- -------------
Total Interest Expense, Preferred Stock
Distributions and Loss on Redemption
of Preferred Stock 497,904 1,117,290
------------- -------------
Total Expenses 1,053,773 2,100,919
Less expense reimbursement by Adviser (91,647) -
------------- -------------
Net Expenses 962,126 2,100,919
------------- -------------
Net Investment Income (Loss), before
Income Taxes 143,554 (1,709,284)
Deferred tax benefit (expense) (54,551) 314,440
------------- -------------
Net Investment Income (Loss) 89,003 (1,394,844)
------------- -------------
Unrealized Gain (Loss) on Investments
Net unrealized appreciation of control
investments 1,260,500 133,519
Net unrealized appreciation
(depreciation) of affiliated investments (306,374) 459,968
Net unrealized appreciation
(depreciation) of non-affiliated
investments (4,401,833) 2,328,503
------------- -------------
Net unrealized appreciation
(depreciation), before deferred taxes (3,447,707) 2,921,990
Deferred tax benefit (expense) 1,310,129 (1,110,356)
------------- -------------
Net Unrealized Gain (Loss) on Investments (2,137,578) 1,811,634
------------- -------------
Net Increase (Decrease) in Net Assets
Applicable to Common Stockholders
Resulting from Operations $(2,048,575) $416,790
============= =============
Net Increase (Decrease) in Net Assets
Applicable to Common Stockholders:
Resulting from Operations Per Common
Share
Basic and diluted $(0.23) $0.09
Weighted Average Shares of Common Stock
Outstanding:
Basic and diluted 8,858,212 4,491,707
Source: Tortoise Capital Resources Corp.
Released April 9, 2008