Tortoise Capital Resources Corp. Releases Fiscal 2007 Results


Tortoise Capital Resources Corp. (NYSE: TTO) today announced its financial results for the fiscal year ended Nov. 30, 2007, in its Annual Report on Form 10-K filed Feb. 27, 2008.

    Highlights for the Year

    --  Fourth quarter 2007 dividend of $0.23 per share paid Nov. 30,
        2007 (First quarter 2008 dividend of $0.25 to be paid March 3,

    --  Completed full investment of IPO proceeds and began to deploy
        leverage proceeds

    --  Funded $116 million in investments during the year ($100.7
        million in ten new portfolio companies and $15.3 in follow-on

    --  Net assets of $121.9 million or $13.76 per share

    --  Adviser voluntarily agreed to expense reimbursement of 0.25%
        of average monthly managed assets from Sept. 01, 2007 through
        Dec. 31, 2008 and terminated a portion of the capital gains
        incentive fee

    --  Distributable cash flow for the year of $4.4 million

    Portfolio and Investment Activity

As of Nov. 30, 2007, the value of the company's investment portfolio (excluding short-term investments) totaled $158.4 million including equity investments of $147.6 million and debt investments of $10.8 million. The portfolio represents a strategic mix of 67 percent midstream investments, 13 percent upstream investments, 14 percent in aggregates and coal and 6 percent downstream investments. The weighted average yield-to-cost on the investment portfolio (excluding short-term investments) as of Nov. 30, 2007 was 8.8 percent. The company continues to invest proceeds from its line of credit, which had approximately $9.5 million available at Nov. 30, 2007.

Tortoise Capital Resources closely monitors portfolio performance and rates each investment's risk profile on a scale of one to three. As of Nov. 30, 2007, 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.

"We are proud of our performance for the quarter and the year, despite the continuing turmoil in the market," said Tortoise Capital Resources' President, Ed Russell. "Our portfolio companies are continuing to report what we believe are strong results which should provide our investors with a growing dividend consistent with our initial objectives. Since our initial public offering we have seen three of our private portfolio companies complete acquisitions and three of our private portfolio companies complete follow-on equity investments to fund acquisitions or organic growth projects."

Performance Review

The company views distributable cash flow (DCF) as the best indicator of its core financial performance and prospects for the future. The company determines the amount of dividends paid to stockholders based on DCF which is defined as distributions received from investments less total expenses. DCF increased from $1.3 million in the second and third quarters of 2007 to $1.7 million in the fourth quarter of 2007 as the company utilized its IPO proceeds and line of credit. DCF for the year ended Nov. 30, 2007 was approximately $4.4 million. In the fourth quarter, 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 reduces expenses and thereby increases DCF.

Unrealized appreciation for the year was $6.2 million after deferred taxes and the provision for the capital gains incentive fee. In the fourth quarter, the Adviser terminated its right to receive the portion of the capital gains incentive fee attributable to normal distributions characterized as return of capital for book purposes, resulting in a $1.3 million reduction in the provision for capital gains incentive fees for the year ended Nov. 30, 2007.

"Tortoise Capital Resources' focus on equity securities distinguishes us from a typical mezzanine BDC, and we believe the equity investments facilitate our ability to provide our stockholders with a growing dividend and capital appreciation," said Russell. "We strive to make investments that have significant distribution coverage on our units and can weather the ups and downs of the economic cycle."

Recent Developments

On Dec. 17, 2007, the company fulfilled its commitment to purchase approximately $1.2 million in additional Class A Common Units from Lonestar Midstream Partners, LP and GP LP Units from LSMP GP LP.

On Jan. 10, 2008, the company invested an additional $2.0 million in equity of Mowood, LLC to fund landfill-to-gas energy projects with Mowood's subsidiary Timberline Energy LLC.

On Dec. 21, 2007, the company withdrew its registration statement for a public offering filed with the Securities and Exchange Commission on Aug. 14, 2007 due to current market conditions and the expected impact on the stock price.


As previously announced, on Feb. 11, 2008, the Board of Directors declared the company's first quarter 2008 dividend of $0.25 per share compared to $0.23 in the previous quarter. The dividend will be distributed on March 3, 2008 to stockholders of record on Feb. 21, 2008. The dividend reflects distributions received from investments at the time of the announcement, and is not indicative of targeted annualized dividend. For tax purposes, 100 percent of dividends paid in fiscal year 2007 were characterized as return of capital, and the company expects a substantial amount of dividends paid in 2008 will also be characterized as return of capital.

"As demand for energy and the need for capital in this sector continues to rise, we believe we can deliver a high level of total return through a growing dividend with solid total return prospects," said Russell.

Earnings Call

The company will host a conference call at 10:30 a.m. CT on Thursday, Feb. 28, 2008 to discuss its financial results. Please dial-in approximately five to 10 minutes prior to the scheduled start time.

    U.S./Canada: 800-257-2101

    International: 303-262-2191

The call will also be webcast in a listen-only format. A link to the webcast will be accessible at

A replay of the call will be available beginning at 11:30 p.m. CT on Feb. 28, 2008 and continuing until 11:30 p.m. CT March 13, 2008, by dialing 303-590-3000 (U.S./Canada). The replay access code is 11109564#. A replay of the webcast will also be available on the company's Web site at through Feb. 27, 2009.

Annual Stockholders' Meeting

The company will discuss financial results at its annual stockholders' meeting on April 21, 2008 at 11 a.m. CT 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

A replay of the meeting will be available beginning at 1 p.m. CT on April 21, 2008 and continuing until 11:30 p.m. CT May 6, 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 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 dividends and dividend 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 Jan. 31, 2008, the adviser had approximately $2.9 billion of energy investment 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

                                           November 30,  November 30,
                                               2007          2006
                                           ------------- -------------

  Investments at value, non-affiliated
   (cost $31,716,576 and $21,867,831,
   respectively)                            $37,336,154   $22,196,689
  Investments at value, affiliated (cost
   $95,507,198 and $14,828,825,
   respectively)                             98,007,275    14,828,825
  Investments at value, control (cost
   $20,521,816 and $5,550,000,
   respectively)                             23,292,904     5,550,000
                                           ------------- -------------
    Total investments (cost $147,745,590
     and $42,246,656, respectively)         158,636,333    42,575,514
  Income tax receivable                         218,935             -
  Receivable for Adviser reimbursement           94,181             -
  Interest receivable from control
   investments                                   68,686        43,983
  Other receivable from affiliate                     -        44,487
  Dividends receivable                            1,419        24,262
  Prepaid expenses and other assets             154,766       244,766
                                           ------------- -------------
    Total assets                            159,174,320    42,933,012
                                           ------------- -------------

  Base management fees payable to Adviser       565,086       112,765
  Accrued capital gain incentive fees
   payable to Adviser (Note 4)                  307,611             -
  Payable for investments purchased           1,235,994             -
  Accrued expenses and other liabilities        419,744       155,303
  Short-term borrowings                      30,550,000             -
  Current tax liability                               -        86,386
  Deferred tax liability                      4,182,919       250,156
                                           ------------- -------------
    Total liabilities                        37,261,354       604,610
                                           ------------- -------------
      Net assets applicable to common
       stockholders                        $121,912,966   $42,328,402
                                           ============= =============

Net Assets Applicable to Common
 Stockholders Consist of:
  Warrants, no par value; 945,774 issued
   and outstanding at November 30, 2007
   and 772,124 issued and outstanding at
   November 30, 2006 (5,000,000
   authorized)                               $1,370,957    $1,104,137
  Capital stock, $0.001 par value;
   8,858,168 shares issued and outstanding
   at November 30, 2007 and 3,088,596
   issued and outstanding at November 30,
   2006 (100,000,000 shares authorized)           8,858         3,089
  Additional paid-in capital                115,186,412    41,018,413
  Accumulated net investment loss, net of
   deferred tax benefit                      (1,565,774)            -
  Accumulated realized gain (loss), net of
   deferred tax expense (benefit)               160,474          (906)
  Net unrealized appreciation of
   investments, net of deferred tax
   expense                                    6,752,039       203,669
                                           ------------- -------------
      Net assets applicable to common
       stockholders                        $121,912,966   $42,328,402
                                           ============= =============

  Net Asset Value per common share
   outstanding (net assets applicable to
   common stock, divided by common shares
   outstanding)                                  $13.76        $13.70
                                           ============= =============
Distributable Cash Flow

                                                        Year ended
                                                     November 30, 2007

Total Distributions Received from Investments
  Distributions from investments                           $6,520,432
  Distributions paid in stock                                 295,120
  Interest income from investments                            921,978
  Dividends from money market mutual funds                    624,385
    Total from Investments                                  8,361,915

Operating Expenses Before Leverage Costs and
 Current Taxes
  Advisory fees (net of expense reimbursement by
   Adviser)                                                 1,831,878
  Other operating expenses (excluding capital gain
   incentive fees)                                          1,094,677
  Distributable cash flow before leverage costs and
   current taxes                                            5,435,360
  Leverage Costs (excluding loss on redemption of
   preferred stock)                                         1,076,171
      Distributable Cash Flow                             $ 4,359,189

DCF/GAAP Reconciliation
  Adjustments to reconcile to Net Investment Loss,
   before Income Taxes
  Distributions paid in stock                               $(295,120)
  Return of capital on distributions received from
   equity investments                                      (5,031,851)
  Capital gain incentive fees                                (307,611)
  Loss on redemption of preferred stock                      (731,713)
      Net Investment Loss, before Income Taxes            $(2,007,106)
Tortoise Capital Resources Corporation

                                                        Period from
                                                     December 8, 2005
                                     Year ended         (1) through
                                  November 30, 2007  November 30, 2006
                                  -----------------  -----------------
Investment Income
  Distributions from investments
    Non-affiliated investments          $1,885,231         $4,122,244
    Affiliated investments               4,245,481            100,000
    Control investments                    389,720                  -
                                  -----------------  -----------------
  Total distributions from
   investments                           6,520,432          4,222,244
  Less return of capital on
   distributions                        (5,031,851)        (3,808,154)
                                  -----------------  -----------------
      Net distributions from
       investments                       1,488,581            414,090
  Fee income                                     -            225,000
  Dividends from money market
   mutual funds                            624,385          1,210,120
  Interest income from affiliated
   investments                                   -            270,633
  Interest income from control
   investments                             921,978                  -
                                  -----------------  -----------------
    Total Investment Income              3,034,944          2,119,843
                                  -----------------  -----------------

Operating Expenses
  Base management fees                   1,926,059            634,989
  Capital gain incentive fees
   (Note 4)                                307,611                  -
  Professional fees                        727,055            205,018
  Directors' fees                           84,609             69,550
  Administrator fees                        81,002              1,322
  Reports to stockholders                   53,610             15,810
  Registration fees                         40,660                  -
  Fund accounting fees                      32,183             25,536
  Stock transfer agent fees                 13,600             17,329
  Custodian fees and expenses               10,174              6,647
  Other expenses                            51,784             18,944
                                  -----------------  -----------------
    Total Operating Expenses             3,328,347            995,145
                                  -----------------  -----------------
  Interest expense                         847,421                  -
  Preferred stock dividends                228,750                  -
  Loss on redemption of preferred
   stock                                   731,713                  -
                                  -----------------  -----------------
    Total Interest Expense,
     Preferred Stock Dividends
     and Loss on Redemption of
     Preferred Stock                     1,807,884                  -
                                  -----------------  -----------------
    Total Expenses                       5,136,231            995,145
  Less expense reimbursement by
   Adviser                                 (94,181)                 -
                                  -----------------  -----------------
    Net Expenses                         5,042,050            995,145
                                  -----------------  -----------------
Net Investment Income (Loss),
 before Income Taxes                    (2,007,106)         1,124,698
  Current tax benefit (expense)            261,667           (266,455)
  Deferred tax benefit (expense)           179,665           (124,967)
                                  -----------------  -----------------
    Total tax benefit (expense)            441,332           (391,422)
                                  -----------------  -----------------
Net Investment Income (Loss)            (1,565,774)           733,276
                                  -----------------  -----------------

Realized and Unrealized Gain
 (Loss) on Investments
  Net realized gain (loss) on
   investments, before deferred
   tax benefit (expense)                   260,290             (1,462)
    Current tax benefit                          -                556
    Deferred tax expense                   (98,910)                 -
                                  -----------------  -----------------
      Net realized gain (loss) on
       investments                         161,380               (906)
  Net unrealized appreciation of
   non-affiliated investments            5,528,064            328,858
  Net unrealized appreciation of
   affiliated investments                2,262,736                  -
  Net unrealized appreciation of
   control investments                   2,771,088                  -
                                  -----------------  -----------------
    Net unrealized appreciation,
     before deferred taxes              10,561,888            328,858
      Deferred tax expense              (4,013,518)          (125,189)
                                  -----------------  -----------------
        Net unrealized
         appreciation of
         investments                     6,548,370            203,669
                                  -----------------  -----------------
Net Realized and Unrealized Gain
 (Loss) on Investments                   6,709,750            202,763
                                  -----------------  -----------------

Net Increase in Net Assets
 Applicable to Common
 Stockholders Resulting from
 Operations                             $5,143,976           $936,039
                                  =================  =================

Net Increase in Net Assets
 Applicable to Common
  Resulting from Operations Per
   Common Share
  Basic and diluted                          $0.66              $0.30

Weighted Average Shares of Common
 Stock Outstanding:
  Basic and diluted                      7,751,591          3,088,596

(1) Commencement of Operations.

Source: Tortoise Capital Resources Corp.