Tortoise Capital Resources Corp. Releases Fiscal 2009 Third Quarter Financial Results

FOR IMMEDIATE RELEASE

LEAWOOD, Kan. – Oct. 12, 2009 – Tortoise Capital Resources Corp. (NYSE: TTO) (the company) today announced that on Friday, Oct. 9, 2009 it filed its Form 10-Q for its third quarter ended Aug. 31, 2009.

Recent Highlights

·  
Net assets of $79.1 million or $8.76 per share as of Aug. 31, 2009
·  
Total assets of $85.8 million as of Aug. 31, 2009
·  
Distributable cash flow (DCF) of $1.2 million for the fiscal quarter ended Aug. 31, 2009
·  
Third quarter 2009 distribution of $0.13 per share paid Sept. 1, 2009
·  
Credit facility balance of $4.6 million as of Oct. 12, 2009

Performance Review
 
On Sept. 1, 2009, the company paid a distribution of $0.13 per common share, the same amount paid last quarter. The company determines the amount of distributions paid to stockholders based on DCF which is distributions received from investments less total expenses. Two portfolio companies, High Sierra Energy, LP (High Sierra) and EV Energy Partners, L.P., increased their cash distributions to common unitholders this quarter.  VantaCore Partners LP (VantaCore) reduced its cash distribution this quarter by approximately five percent to its minimum quarterly distribution rate.
 
Leverage
 
On Aug. 20, 2009, the company entered into a six-month extension of its amended credit facility through Feb. 20, 2010.  The balance outstanding on the credit facility at Oct. 12, 2009 was $4.6 million.  The company does not expect any future leverage reductions to materially impact its distribution paying capacity.
 
Net Asset Value

At Aug. 31, 2009, the company’s net asset value was $8.76 per share compared to $8.91 per share at May 31, 2009.  The decrease in net asset value is primarily the result of an overall net decrease in the fair value of the company’s private investments.

Portfolio Review

As of Aug. 31, 2009, the fair value of the company’s investment portfolio (excluding short-term investments) totaled $78.3 million, including equity investments of $69.5 million and debt investments of $8.8 million. The portfolio consists of 61 percent midstream and downstream investments, 5 percent upstream investments, and 34 percent in aggregates and coal.  The weighted average yield-to-cost on the investment portfolio (excluding short-term investments) as of Aug. 31, 2009 was 6.5 percent.
 
The fair value of High Sierra and International Resource Partners LP increased this quarter due in part to improved operating performance and/or peer multiples.  The fair value of Mowood, LLC also increased this quarter and it continues to explore strategic alternatives based on growth opportunities at its Timberline subsidiary.  The fair value of Abraxas Energy Partners, L.P. (Abraxas Energy), Quest Midstream Partners, L.P. (Quest Midstream) and VantaCore declined this quarter due to company and/or market-specific issues.  VantaCore’s fair value was adversely affected by its decision to reduce its quarterly cash distribution to common unitholders and to suspend its distribution to certain subordinated unitholders in light of reduced distributable cash flow projections in 2009.   Quest Midstream and Abraxas Energy announced intentions to merge or recombine with their respective affiliated public entities, which would likely provide liquidity for the company’s investments in the future.  On October 6, 2009, Quest Resources Corp. (NASDAQ: QRCP) and Quest Energy Partners L.P. (NASDAQ: QELP) filed a Form S-4 Registration Statement to recombine with Quest Midstream as the newly-formed PostRock Energy Corporation, which is expected to be listed on the NASDAQ under the symbol “PSTR.”  The recombination is subject to the satisfaction of a number of conditions. On October 5, 2009, Abraxas Petroleum Corp. (NASDAQ: AXAS) (Abraxas Petroleum) closed its merger with Abraxas Energy.  Under the terms of the merger agreement, the company will receive 4.25 shares of Abraxas Petroleum in exchange for each common unit of Abraxas Energy it owns, which equates to approximately 1,946,377 Abraxas Petroleum shares.  These shares are subject to an initial 90 day lock-up period followed by a multi-year staggered lock-up period.

Earnings Call

The company will host a conference call at 4 p.m. CDT on Monday, Oct. 12, 2009 to discuss its financial results for the fiscal quarter ended Aug. 31, 2009. Please dial-in approximately five to 10 minutes prior to the scheduled start time.
 
U.S./Canada: (866) 225-8754
 
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 Oct.12, 2009 and continuing until 11:59 p.m. CDT Oct. 26, 2009, by dialing (800) 406-7325 (U.S./Canada).  The replay access code is 4075823#.  A replay of the webcast will also be available on the company's Web site at www.tortoiseadvisors.com through Oct. 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 and coal/aggregate segments, of the U.S. energy infrastructure sector.

About Tortoise Capital Advisors
Tortoise is an investment manager specializing in listed energy infrastructure, such as pipeline and power companies.   As of Sept. 30, 2009, the adviser had approximately $2.4 billion of assets under management in five NYSE-listed investment companies and private accounts. 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.

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 company’s 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.

Contact information:
Tortoise Capital Advisors, LLC
Pam Kearney, Investor Relations, (866) 362-9331, pkearney@tortoiseadvisors.com

 
 
 


Tortoise Capital Resources Corporation
            
STATEMENTS OF ASSETS & LIABILITIES
            
             
             
   
August 31, 2009
    
November 30, 2008
  
   
(Unaudited)
        
Assets
            
Investments at fair value, control (cost $28,735,949 and $30,418,802, respectively)
   $ 32,818,564     $ 30,213,280  
Investments at fair value, affiliated (cost $53,091,607 and $56,662,500, respectively)
     39,230,799       48,016,925  
Investments at fair value, non-affiliated (cost $15,176,862 and $49,760,304, respectively)
     8,439,970       27,921,025  
Total investments (cost $97,004,418 and $136,841,606, respectively)
     80,489,333       106,151,230  
Income tax receivable
     -       212,054  
Receivable for investments sold
     65,104       -  
Receivable for Adviser expense reimbursement
     53,596       88,925  
Interest receivable from control investments
     68,200       76,609  
Dividends receivable
     255       696  
Deferred tax asset, net
     5,067,908       5,683,747  
Prepaid expenses and other assets
     43,966       107,796  
Total assets
     85,788,362       112,321,057  
                 
Liabilities
                
Base management fees payable to Adviser
     321,578       533,552  
Distribution payable to common stockholders
     1,173,679       -  
Accrued expenses and other liabilities
     216,398       362,205  
Short-term borrowings
     5,000,000       22,200,000  
Total liabilities
     6,711,655       23,095,757  
Net assets applicable to common stockholders
   $ 79,076,707     $ 89,225,300  
                 
Net Assets Applicable to Common Stockholders Consist of:
                
Warrants, no par value; 945,594 issued and outstanding
                
at August 31, 2009 and November 30, 2008
                
(5,000,000 authorized)
   $ 1,370,700     $ 1,370,700  
Capital stock, $0.001 par value; 9,028,301 shares issued and
                
outstanding at August 31, 2009 and 8,962,147 issued and outstanding at
          
  November 30, 2008 (100,000,000 shares authorized)
     9,028       8,962  
Additional paid-in capital
     102,817,178       106,869,132  
Accumulated net investment loss, net of income taxes
     (3,728,613 )     (2,544,267 )
Accumulated realized gain (loss), net of income taxes
     (14,316,148 )     6,364,262  
Net unrealized depreciation of investments, net of income taxes
     (7,075,438 )     (22,843,489 )
Net assets applicable to common stockholders
   $ 79,076,707     $ 89,225,300  
                 
Net Asset Value per common share outstanding (net assets applicable
          
to common stock, divided by common shares outstanding)
   $ 8.76     $ 9.96  
                 

 
 
 

 
   
For the three
months ended
    
 For the three
months ended
    
 For the nine
months ended
    
 For the nine
months ended
  
Distributable Cash Flow
  
August 31, 2009
    
August 31, 2008
    
August 31, 2009
    
August 31, 2008
  
                         
Total from Investments
                        
Distributions from investments
   $ 1,635,662     $ 2,734,812     $ 6,179,444     $ 8,129,460  
Distributions paid in stock (1)
     -       621,122       -       1,558,842  
Interest income from investments
     201,918       269,235       605,916       884,588  
Dividends from money market mutual funds
     304       3,643       1,449       6,770  
Other income
     15,000       -       45,000       28,987  
Total from Investments
     1,852,884       3,628,812       6,831,809       10,608,647  
                                 
Operating Expenses Before Leverage Costs
                                
Advisory fees (net of expense reimbursement by Adviser)
     267,982       504,109       877,111       1,483,483  
Other operating expenses (excluding capital gain incentive fees)
     266,601       253,236       720,196       766,032  
Total Operating Expenses
     534,583       757,345       1,597,307       2,249,515  
Distributable cash flow before leverage costs
     1,318,301       2,871,467       5,234,502       8,359,132  
Leverage Costs
     134,987       395,791       562,945       1,329,289  
Distributable Cash Flow
   $ 1,183,314     $ 2,475,676     $ 4,671,557     $ 7,029,843  
                                 
Distributions paid on common stock
   $ 1,173,679     $ 2,356,874     $ 4,405,226     $ 6,901,553  
                                 
Payout percentage for period (2)
     99 %     95 %     94 %     98 %
                                 
                                 
DCF/GAAP Reconciliation
                                
Distributable Cash Flow
   $ 1,183,314     $ 2,475,676     $ 4,671,557     $ 7,029,843  
Adjustments to reconcile to Net Investment Income, before Income Taxes
                                
Distributions paid in stock (1)
     -       (621,122 )     56,514       (1,558,842 )
Pro Forma distribution on new investment (3)
     -       (254,215 )     -       (254,215 )
Return of capital on distributions received from equity investments
     (1,075,398 )     (2,306,739 )     (5,792,784 )     (6,497,044 )
Capital gain incentive fees
     -       340,369       -       (747,134 )
Net Investment Income (Loss), before Income Taxes
   $ 107,916     $ (366,031 )   $ (1,064,713 )   $ (2,027,392 )
                                 
                                 
                                 
(1)   The only distributions paid in stock for the nine months ended August 31, 2009 were from Abraxas Energy Partners, L.P. which were paid
          
in stock as a result of credit constraints and therefore were not included in DCF. Distributions paid in stock for the three and nine months ended
          
August 31, 2008 include shares received from High Sierra Energy, LP as a distribution received in lieu of cash.
                  
 (2)   Distributions paid as a percentage of Distributable Cash Flow.
                                
(3)   Consists of $254,215 as pro forma distribution on new investment in VantaCore Partners, LP common units.
                  
                                 

 
 
 

Tortoise Capital Resources Corporation
                        
STATEMENTS OF OPERATIONS (Unaudited)
                        
                         
   
For the three
months ended
August 31, 2009
    
For the three
months ended
August 31, 2008
    
For the nine
months ended
August 31, 2009
    
For the nine
months ended
August 31, 2008
  
Investment Income
                        
   Distributions from investments
                        
 Control investments
   $ 555,879     $ 347,500     $ 1,714,309     $ 975,001  
Affiliated investments
     856,891       1,139,402       2,522,267       4,499,082  
Non-affiliated investments
     222,892       993,695       1,999,382       2,401,162  
   Total distributions from investments
     1,635,662       2,480,597       6,235,958       7,875,245  
   Less return of capital on distributions
     (1,075,398 )     (2,306,739 )     (5,792,784 )     (6,497,044 )
            Net distributions from investments
     560,264       173,858       443,174       1,378,201  
   Interest income from control investments
     201,918       269,235       605,916       884,588  
   Dividends from money market mutual funds
     304       3,643       1,449       6,770  
   Fee income
     15,000       -       45,000       -  
   Other income
     -       -       -       28,987  
Total Investment Income
     777,486       446,736       1,095,539       2,298,546  
                                 
Operating Expenses
                                
   Base management fees
     321,578       604,930       1,052,533       1,780,179  
   Capital gain incentive fees (Note 4)
     -       (340,369 )     -       747,134  
   Professional fees
     176,947       153,157       451,056       469,039  
   Administrator fees
     15,007       27,930       49,118       82,488  
   Directors' fees
     22,080       22,181       65,817       66,927  
   Reports to stockholders
     15,409       13,057       45,890       39,028  
   Fund accounting fees
     8,032       8,652       24,772       25,690  
   Registration fees
     7,891       7,458       23,501       22,292  
   Custodian fees and expenses
     5,315       5,545       13,075       14,914  
   Stock transfer agent fees
     3,556       3,403       10,140       10,172  
   Other expenses
     12,364       11,853       36,827       35,482  
Total Operating Expenses
     588,179       517,797       1,772,729       3,293,345  
   Interest expense
     134,987       395,791       562,945       1,329,289  
Total Expenses
     723,166       913,588       2,335,674       4,622,634  
   Less expense reimbursement by Adviser
     (53,596 )     (100,821 )     (175,422 )     (296,696 )
Net Expenses
     669,570       812,767       2,160,252       4,325,938  
Net Investment Income (Loss), before Income Taxes
     107,916       (366,031 )     (1,064,713 )     (2,027,392 )
     Deferred tax benefit (expense)
     (26,733 )     139,090       (119,633 )     770,408  
Net Investment Income (Loss)
     81,183       (226,941 )     (1,184,346 )     (1,256,984 )
                                 
Realized and Unrealized Gain (Loss) on Investments
                                
   Net realized gain (loss) on investments, before income taxes
     (10,756,469 )     2,224,706       (18,591,444 )     2,224,706  
Deferred tax expense
     (1,468,249 )     (845,388 )     (2,088,966 )     (845,388 )
Net realized gain (loss) on investments
     (12,224,718 )     1,379,318       (20,680,410 )     1,379,318  
   Net unrealized appreciation of control investments
     1,130,654       234,767       4,288,137       238,103  
   Net unrealized appreciation (depreciation) of affiliated investments
     (311,350 )     641,373       (5,215,233 )     10,390,990  
   Net unrealized appreciation (depreciation) of non-affiliated investments
     9,907,190       (3,309,808 )     15,102,387       (5,065,454 )
Net unrealized appreciation (depreciation), before income taxes
     10,726,495       (2,433,668 )     14,175,291       5,563,639  
Deferred tax benefit (expense)
     1,319,533       924,795       1,592,760       (2,114,182 )
Net unrealized appreciation (depreciation) of investments
     12,046,028       (1,508,873 )     15,768,051       3,449,457  
Net Realized and Unrealized Gain (Loss) on Investments
     (178,690 )     (129,555 )     (4,912,359 )     4,828,775  
                                 
Net Increase (Decrease) in Net Assets Applicable to Common Stockholders
                  
   Resulting from Operations
   $ (97,507 )   $ (356,496 )   $ (6,096,705 )   $ 3,571,791  
                                 
Net Increase (Decrease) in Net Assets Applicable to Common Stockholders
                  
   Resulting from Operations Per Common Share:
                                
Basic and Diluted
   $ (0.01 )   $ (0.04 )   $ (0.68 )   $ 0.40  
                                 
Weighted Average Shares of Common Stock Outstanding:
                                
Basic and Diluted
     9,014,094       8,893,866       8,997,031       8,876,079