Tortoise Capital Resources Corp. Announces Fiscal 2008 Results and Distribution Decrease

LEAWOOD, Kan.--(BUSINESS WIRE)-- Tortoise Capital Resources Corp. (NYSE: TTO) today announced its financial results for the fiscal year ended Nov. 30, 2008, in its Annual Report on Form 10-K filed Feb. 12, 2009 and its first quarter 2009 distribution.

Announcement of First Quarter 2009 Distribution

The Board of Directors today declared the company's first quarter 2009 distribution of $0.23 per share. This represents a decrease of $0.035, or 13.2 percent from the fourth quarter 2008 distribution. The distribution represents an estimated 94 percent of distributable cash flow and will be paid on Mar. 02, 2009 to stockholders of record on Feb. 23, 2009. A portion of this distribution is expected to be treated as return of capital for income tax purposes, although the ultimate determination will not be made until determination of the company's earnings and profits after our year-end. Based on current financial information, this distribution is estimated to consist of 15-20 percent ordinary income and the remainder as return of capital for book purposes.

"In today's environment of reduced credit availability, private companies in particular, are reducing their equity distributions in order to fund working capital. Our NAV has declined reflecting the uncertainty of free cash flow available to pay to equity holders in future quarters," said Ed Russell, Tortoise Capital Resources Corp. President. "While we expect the next year to be challenging for almost every industry, including the energy infrastructure sector, we continue to believe the flow of energy commodities remains critical to the economy and that the long term prospects for our investments are attractive."

Highlights for the Year

    --  Net assets of $89.2 million or $9.96 per share as of Nov. 30, 2008
    --  Total assets of $112.3 million as of Nov. 30, 2008
    --  Realized gains of $8.7 million (before deferred taxes) during the fiscal
        year ended Nov. 30, 2008
    --  Distributable cash flow of $8.4 million for the fiscal year ended Nov.
        30, 2008
    --  Fourth quarter 2008 distribution of $0.2650 per share paid Nov. 28, 2008

Investment Review

As of Nov. 30, 2008, the fair value of the company's investment portfolio (excluding short-term investments) totaled $105.8 million, including equity investments of $97.5 million and debt investments of $8.3 million. The portfolio represents a mix of 60 percent midstream and downstream investments, 13 percent upstream investments, and 27 percent in aggregates and coal. The weighted average yield-to-cost on the investment portfolio (excluding short-term investments) as of Nov. 30, 2008 was 8.0 percent.

Two realization events occurred during this fiscal year resulting in realized gains of approximately $8.7 million (before deferred taxes). In July, Lonestar Midstream Partners, LP sold its gas gathering and transportation assets to Penn Virginia Resource Partners, L.P. (NYSE: PVR), and in October, Millennium sold its partnership interests to Eagle Rock Energy Partners, L.P. (NASDAQ: EROC).

The company made follow-on investments in two portfolio companies during the 2008 fiscal year. The company invested a total of $4.7 million in debt and equity of Mowood, LLC, in part to fund landfill gas-to-energy projects at its subsidiary, Timberline Energy LLC. Timberline now operates a high Btu facility, a direct use facility and an electricity generation facility--one of each of the three types of landfill gas-to-energy projects feasible using current technology. In August, VantaCore repaid the company's $3.75 million term note at a 3 percent premium to par value. The company reinvested those funds and an additional $6.1 million, to purchase common units and incentive distribution rights of VantaCore. VantaCore used the proceeds from this investment to partially fund its acquisition of Southern Aggregates LLC, a sand and gravel operation located near Baton Rouge, Louisiana.

Net Asset Value

At Nov. 30, 2008, the company's net asset value was $9.96 per share compared to $13.76 per share at Nov. 30, 2007. Total assets decreased from $159.2 million as of Nov. 30, 2007 to $112.3 million as of Nov. 30, 2008. Because the company is a taxpaying entity, the financial statements reflect deferred tax assets according to generally accepted accounting principles. Presently, the total cost basis of the company's investments for financial statement reporting purposes exceeds the fair value reflected on the Statement of Assets and Liabilities as shown below. That, combined with operating losses, results in a deferred tax asset. As a result, the Statement of Assets and Liabilities reflects a deferred tax asset of $5.7 million (net of a $2.8 million valuation allowance), or approximately $0.63 per share. A deferred tax asset is the benefit the company expects to realize from the reduction in taxes payable in future periods. The company does not include the deferred tax asset in the calculation of its management fee.

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 distributions paid to stockholders based on DCF which is defined as distributions received from investments less total expenses. DCF for the fiscal year ended Nov. 30, 2008 was approximately $8.4 million as shown below, an increase over last fiscal year of approximately $4.0 million. Historically we have included all paid-in-kind units in our distributable cash flow. In the future, we do not intend to include in distributable cash flow the value of distributions received from portfolio companies which are paid-in-kind as a result of credit constraints, market dislocation or other similar issues.

Earnings Call

The company will host a conference call at 4 p.m. CST on Thursday, Feb. 12, 2009 to discuss its financial results for the fiscal year ended Nov. 30, 2008. Please dial-in approximately five to 10 minutes prior to the scheduled start time.

U.S./Canada: (800) 218-0713

International: (303) 275-2170

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 6:00 p.m. CST on Feb. 12, 2009 and continuing until 11:59 p.m. CST Feb. 27, 2009, by dialing (800) 405-2236 (U.S./Canada). The replay access code is 11124158#. A replay of the webcast will also be available on the company's Web site at through Feb. 12, 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. 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

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 Jan. 31, 2009, the adviser had approximately $1.7 billion of assets under management. For more information, visit our Web site at

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 funds' 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


                                       November 30, 2008     November 30, 2007


 Investments at fair value, control
 (cost $30,418,802 and $20,521,816,    $ 30,213,280          $ 23,292,904

 Investments at fair value,
 affiliated (cost $56,662,500 and      48,016,925            98,007,275
 $95,507,198, respectively)

 Investments at fair value,
 non-affiliated (cost $49,760,304 and  27,921,025            37,336,154
 $31,716,576, respectively)

 Total investments (cost $136,841,606  106,151,230           158,636,333
 and $147,745,590, respectively)

 Income tax receivable                 212,054               218,935

 Receivable for Adviser expense        88,925                94,181

 Interest receivable from control      76,609                68,686

 Dividends receivable                  696                   1,419

 Deferred tax asset, net               5,683,747             -

 Prepaid expenses and other assets     107,796               154,766

 Total assets                          112,321,057           159,174,320


 Base management fees payable to       533,552               565,086

 Accrued capital gain incentive fees   -                     307,611
 payable to Adviser (Note 4)

 Payable for investments purchased     -                     1,235,994

 Accrued expenses and other            362,205               419,744

 Short-term borrowings                 22,200,000            30,550,000

 Deferred tax liability, net           -                     4,182,919

 Total liabilities                     23,095,757            37,261,354

 Net assets applicable to common       $ 89,225,300          $ 121,912,966

Net Assets Applicable to Common
Stockholders Consist of:

 Warrants, no par value; 945,594
 issued and outstanding at
 November 30, 2008 and 945,774 issued
 and outstanding at                    $ 1,370,700           $ 1,370,957

 November 30, 2007 (5,000,000

 Capital stock, $0.001 par value;
 8,962,147 shares issued and
 outstanding at November 30, 2008 and  8,962                 8,858
 8,858,168 issued and outstanding
 at November 30, 2007 (100,000,000
 shares authorized)

 Additional paid-in capital            106,869,132           115,186,412

 Accumulated net investment loss, net  (2,544,267        )   (1,565,774        )
 of income taxes

 Accumulated realized gain, net of     6,364,262             160,474
 income taxes

 Net unrealized appreciation
 (depreciation) of investments, net    (22,843,489       )   6,752,039
 of income taxes

 Net assets applicable to common       $ 89,225,300          $ 121,912,966

 Net Asset Value per common share
 outstanding (net assets applicable    $ 9.96                $ 13.76
 to common stock, divided by common
 shares outstanding)

Distributable Cash Flow                      Year Ended        Year Ended
                                             November 30, 2008 November 30, 2007

Total from Investments

 Distributions from investments              $ 9,688,521       $ 6,520,432

 Distributions paid in stock (1)             2,186,767         295,120

 Interest income from investments            1,103,059         921,978

 Dividends from money market mutual funds    18,205            624,385

 Other income                                28,987            -

Total from Investments                       13,025,539        8,361,915

Operating Expenses Before Leverage Costs and
Current Taxes

 Advisory fees (net of expense reimbursement 1,928,109         1,831,878
 by Adviser)

 Other operating expenses (excluding capital 1,037,624         1,094,677
 gain incentive fees)

Total Operating Expenses                     2,965,733         2,926,555

 Distributable cash flow before leverage     10,059,806        5,435,360
 costs and current taxes

 Leverage Costs                              1,650,926         1,076,171

  Distributable Cash Flow                    $ 8,408,880       $ 4,359,189

Distributions paid on common stock           $ 9,265,351       $ 5,349,244

Payout percentage for period(2)              110          %    123          %

DCF/GAAP Reconciliation

Distributable Cash Flow                      $ 8,408,880       $ 4,359,189

Adjustments to reconcile to Net Investment
Loss, before Income Taxes

 Distributions paid in stock                 (2,186,767   )    (295,120     )

 Return of capital on distributions received (7,894,819   )    (5,031,851   )
 from equity investments

 Capital gain incentive fees                 307,611           (307,611     )

 Loss on redemption of preferred stock       -                 (731,713     )

  Net Investment Loss, before Income Taxes   $ (1,365,095 )    $ (2,007,106 )

 (1) Distributions paid in stock for the year ended November 30, 2008 include
 paid-in-kind distributions from Lonestar Midstream, LP, High Sierra Energy, LP
 and High Sierra Energy GP, LLC. Distributions paid in stock for the year ended
 November 30, 2007 include paid-in-kind distributions from Lonestar Midstream,

 (2) Distributions paid as a percentage of Distributable Cash Flow.

Tortoise Capital
Resources Corporation


                         Year Ended       Year Ended        Period from December
                         November 30,     November 30,      8, 2005(1)through
                         2008             2007              November 30, 2006

Investment Income

Distributions from

 Control investments     $ 1,576,716      $ 389,720         $ -

 Affiliated investments  4,699,082        4,245,481         100,000

 Non-affiliated          3,412,723        1,885,231         4,122,244

Total distributions      9,688,521        6,520,432         4,222,244
from investments

Less return of capital   (7,894,819  )    (5,031,851 )      (3,808,154 )
on distributions

Net distributions from   1,793,702        1,488,581         414,090

Interest income from     1,103,059        921,978           270,633
control investments

Dividends from money     18,205           624,385           1,210,120
market mutual funds

Fee income               -                -                 225,000

Other income             28,987           -                 -

 Total Investment        2,943,953        3,034,944         2,119,843

Operating Expenses

Base management fees     2,313,731        1,926,059         634,989

Capital gain incentive   (307,611    )    307,611           -
fees (Note 4)

Professional fees        642,615          727,055           205,018

Administrator fees       107,325          81,002            1,322

Directors' fees          86,406           84,609            69,550

Reports to stockholders  58,943           53,610            15,810

Fund accounting fees     34,546           32,183            25,536

Registration fees        29,668           40,660            -

Custodian fees and       17,426           10,174            6,647

Stock transfer agent     13,538           13,600            17,329

Other expenses           47,157           51,784            18,944

 Total Operating         3,043,744        3,328,347         995,145

Interest expense         1,650,926        847,421           -

Preferred stock          -                228,750           -

Loss on redemption of    -                731,713           -
preferred stock

 Total Interest
 Expense, Preferred
 Stock Distributions     1,650,926        1,807,884         -
 Loss on Redemption of
 Preferred Stock

 Total Expenses          4,694,670        5,136,231         995,145

Less expense
reimbursement by         (385,622    )    (94,181    )      -

 Net Expenses            4,309,048        5,042,050         995,145

Net Investment Income
(Loss), before Income    (1,365,095  )    (2,007,106 )      1,124,698

Current tax benefit      (6,881      )    261,667           (266,455   )

Deferred tax benefit     393,483          179,665           (124,967   )

 Income tax benefit      386,602          441,332           (391,422   )

Net Investment Income    (978,493    )    (1,565,774 )      733,276

Realized and Unrealized
Gain (Loss) on

Net realized gain
(loss) on investments,   8,716,197        260,290           (1,462     )
before deferred tax

  Current tax benefit    -                -                 556

  Deferred tax expense   (2,512,409  )    (98,910    )      -

   Net realized gain
   (loss) on             6,203,788        161,380           (906       )

Net unrealized
appreciation             (2,976,609  )    2,771,088         -
(depreciation) of
control investments

Net unrealized
appreciation             (11,145,652 )    2,262,736         328,858
(depreciation) of
affiliated investments

Net unrealized
(depreciation) of        (27,458,859 )    5,528,064         -

 Net unrealized
 appreciation            (41,581,120 )    10,561,888        328,858
 (depreciation), before
 deferred taxes

  Deferred tax benefit   11,985,592       (4,013,518 )      (125,189   )

   Net unrealized
   appreciation          (29,595,528 )    6,548,370         203,669
   (depreciation) of

Net Realized and
Unrealized Gain (Loss)   (23,391,740 )    6,709,750         202,763
on Investments

Net Increase (Decrease)
in Net Assets
Applicable to Common

Resulting from           $           )    $                 $ 936,039
Operations               (24,370,233      5,143,976

Net Increase (Decrease)
in Net Assets
Applicable to Common

Resulting from
Operations Per Common

 Basic and Diluted       $ (2.74     )    $ 0.66            $ 0.30

Weighted Average Shares
of Common Stock

 Basic and Diluted       8,887,085        7,751,591         3,088,596

(1) Commencement of

    Source: Tortoise Capital Advisors, LLC