Tortoise
Capital Resources Corp. Responds to Recent Developments Related to Quest
Midstream Partners, L.P.
FOR
IMMEDIATE RELEASE
LEAWOOD,
Kan. –
Aug. 26, 2008 – Tortoise Capital Resources Corp. (NYSE: TTO) is
responding to yesterday’s announcement by the boards of directors of Quest
Resource Corporation (NASDAQ: QRCP), Quest Energy Partners, L.P. (NASDAQ: QELP)
and Quest Midstream Partners, L.P. (“QMP”) (collectively, “Quest”) that they
have accepted the resignation of Jerry Cash, as Chairman and CEO of all three
entities, effective immediately. The resignation followed the discovery, in
connection with an inquiry from the Oklahoma Department of Securities, of
questionable transfers of company funds to an entity controlled by Mr. Cash.
It
has been reported that initial indications are that the amount in question
appears to involve about $10 million.
TTO
owns
1,180,946 common units of privately-held QMP, representing 12 percent of TTO’s
total assets, based on the fair value of $20.1 million as of May 31, 2008.
On
Aug. 13, 2008, TTO received QMP’s second quarter cash distribution of $0.425 per
common unit. QMP’s capital structure includes common units held by
outside investors and subordinated units held by QRCP. As of June 30, 2008,
there are 8,614,866 common units, 35,134 Class A subordinated units, 4,900,000
Class B subordinated units and 276,531 general partner units of QMP
outstanding.
It
has
been reported that promptly following the discovery of alleged misappropriation
of funds, members of the three boards met in joint sessions on Friday and over
last weekend. The boards immediately formed a Joint Special Committee comprised
of representatives from each board, including the chairs of the audit committees
of QRCP and QELP, to investigate the matter and consider the effects on the
companies' financial statements. The Joint Special Committee has retained
Spencer C. Barasch of Andrews Kurth LLP to lead the investigation. QRCP, QELP
and QMP Chief Financial Officer David Grose was placed on a paid administrative
leave of absence during the investigation. In Quest’s announcement, it was
stated that Quest has reported this matter to, and intends to fully cooperate
with, the U.S. Securities and Exchange Commission and other appropriate
governmental and regulatory organizations.
The
board
of directors of QMP was increased to seven members and Ed Russell, the
President of TTO, was named as a director of QMP on Aug. 24, 2008.
QMP
is a
privately-held limited partnership with two main assets: Bluestem Pipeline,
LLC,
which serves QELP and other third parties,
and the KPC Pipeline System, a 1,120 mile of interstate gas pipeline extending
from northern Oklahoma and western Kansas to the metropolitan Wichita and Kansas
City markets. QMP’s latest financial statements reflect that the KPC
and Bluestem assets each account for approximately 50 percent of QMP’s
year-to-date EBITDA.
QMP
was
formed by QRCP to own, operate and acquire midstream energy assets. QRCP is
a
fully integrated E&P company that owns 100 percent of the general
partner and a 57 percent limited partner interest in QELP; and 85
percent of the general partner and a 36 percent limited partner interest in
QMP. QRCP operates and controls QELP and QMP through its ownership of their
general partners.
About
Tortoise Capital Resources Corp.
Tortoise
Capital Resources Corp. 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 Corp. 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 July
31,
2008, the adviser had approximately $2.6 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.
Contact
information:
Tortoise
Capital Advisors, LLC
Pam
Kearney, Investor Relations, (866) 362-9331,
pkearney@tortoiseadvisors.com