Tortoise Capital Resources Corp. Releases Fiscal 2010 Second Quarter Financial Results
 
 
LEAWOOD, Kan. - July 08, 2010 - Tortoise Capital Resources Corp. (NYSE: TTO or the company) today announced that it has filed its Form 10-Q for its second quarter ended May 31, 2010.
 
Recent Highlights
  • Net assets of $79.1 million or $8.69 per share as of May 31, 2010
  • Second quarter 2010 distribution of $0.10 per share paid June 1, 2010
 Performance Review
 
On June 1, 2010, the company paid a distribution of $0.10 per common share, a decrease of $0.03 per share compared to its prior quarter distribution of $0.13 per share. The company determines the amount of distributions paid to stockholders based on DCF, which is distributions received from investments less total expenses. In May, TTO received additional capital gain proceeds of $585,000 from Mowood, LLC as a result of a contingent payment from the February sale of its Timberline Energy subsidiary. TTO elected to include the capital gain proceeds from Mowood in its distribution this quarter and next, enabling a distribution of $0.10 per share this quarter.
 
Net Asset Value
 
At May 31, 2010, the company's net asset value was $8.69 per share compared to $9.60 per share at Feb. 28, 2010, a decrease of approximately 9 percent. The decrease in net asset value is largely attributable to a decrease in the fair value of our largest holding, High Sierra Energy, LP (High Sierra), as a result of the developments discussed below, as well as a significant decline in the market value of PostRock Energy Corporation (NASDAQ: PSTR), for which we received a substantial number of shares in exchange for our Quest Midstream units upon closing of the merger in March, partially offset by an increase in the value of International Resource Partners LP (IRP) due to strong performance relative to budget.
 
Portfolio Review
 
As of May 31, 2010, the fair value of the company's investment portfolio (excluding short-term investments) totaled $73.9 million, including equity investments of $68.6 million and debt investments of $5.3 million. The company's portfolio is approximately 49 percent midstream and downstream investments, 13 percent upstream, and 38 percent in aggregates and coal. The weighted average yield-to-cost on the investment portfolio (excluding short-term investments) as of May 31, 2010 was 5.1 percent.
 
As previously reported, High Sierra was unable to declare a cash distribution this quarter as a result of a credit agreement covenant default with its bank. High Sierra's results from operations were sufficient to support a distribution at or above the minimum quarterly distribution (MQD) level of $0.45 per share. High Sierra distributed $0.63 per common unit last quarter. The distribution suspension decreased TTO's distributable cash flow by approximately $0.07 per share. If High Sierra resumes cash distributions at the MQD level, TTO could maintain its $0.10-$0.11 per share quarterly distribution, absent any additional adjustments. TTO's fair value of High Sierra, inclusive of its interest in the general partner, declined by approximately $5.8 million this quarter.
 
PostRock Energy Corp (NASDAQ: PSTR), the new corporation formed for the purpose of wholly owning Quest Resource Corporation, Quest Energy Partners, L.P. and Quest Midstream Partners, L.P., announced on March 5, 2010 that shareholders had approved the merger. TTO received 490,769 freely tradable common units of PostRock in exchange for its 1,216,881 common units of Quest Midstream. PostRock began trading on the NASDAQ on March 8, 2010, at $19.00 per unit and closed that day at $16.36 per unit. Subsequently, the stock price declined significantly. TTO held 460,300 common units of PostRock as of May 31, 2010 at a fair value of $4.83 per unit, the NASDAQ closing price on that date.
 
TTO's fair value of IRP increased about $1.8 million this quarter. The strong met coal market and IRP improved production and cost controls have yielded year-to-date performance significantly above budget. IRP also announced a quarterly distribution increase from $0.40 per unit to $0.45 per unit effective this quarter.
 
Earnings Call
 
The company will host a conference call at 4 p.m. CDT on Thursday, July 8, 2010 to discuss its financial results for the fiscal quarter ended May 31, 2010. Please dial-in approximately five to 10 minutes prior to the scheduled start time.
 
U.S./Canada: (866) 225-8754
 
International: (480) 629-9692
 
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 6:00 p.m. CDT on July 8, 2010 and continuing until 11:59 p.m. CDT July 22, 2010, by dialing (800) 406-7325 (U.S./Canada). The replay access code is 4313836#. A replay of the webcast will also be available on the company's Web site at www.tortoiseadvisors.com through July 8, 2011.
 
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 June 30, 2010, the adviser had approximately $3.6 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.
 

 
 
 

Tortoise Capital Resources Corporation
            
STATEMENTS OF ASSETS & LIABILITIES
            
             
             
   
May 31, 2010
    
November 30, 2009
  
   
(Unaudited)
        
Assets
            
Investments at fair value, control (cost $20,508,813 and $28,180,070, respectively)
   $ 26,556,411     $ 33,458,046  
Investments at fair value, affiliated (cost $31,804,095 and $52,676,299, respectively)
     31,836,372       41,658,847  
Investments at fair value, non-affiliated (cost $23,757,178 and $9,568,566, respectively)
     17,726,201       8,865,047  
Total investments (cost $76,070,086 and $90,424,935, respectively)
     76,118,984       83,981,940  
Receivable for Adviser expense reimbursement
     51,617       49,843  
 Dividends receivable
     89       87  
  Deferred tax asset
     4,258,358       5,429,391  
Prepaid expenses and other assets
     98,919       16,792  
  Total assets
     80,527,967       89,478,053  
                 
Liabilities
                
Base management fees payable to Adviser
     309,703       299,060  
Distribution payable to common stockholders
     909,910       -  
Accrued expenses and other liabilities
     219,927       282,408  
 Short-term borrowings
     -       4,600,000  
  Total liabilities
     1,439,540       5,181,468  
Net assets applicable to common stockholders
   $ 79,088,427     $ 84,296,585  
                 
Net Assets Applicable to Common Stockholders Consist of:
                
Warrants, no par value; 945,594 issued and outstanding
                
at May 31, 2010 and November 30, 2009
                
(5,000,000 authorized)
   $ 1,370,700     $ 1,370,700  
Capital stock, $0.001 par value; 9,099,037 shares issued and outstanding at
                
  May 31, 2010 and 9,078,090 issued and outstanding at November 30, 2009
                
(100,000,000 shares authorized)
     9,099       9,078  
Additional paid-in capital
     99,983,975       101,929,307  
Accumulated net investment loss, net of income taxes
     (3,248,338 )     (3,304,416 )
Accumulated realized loss, net of income taxes
     (21,417,322 )     (14,041,614 )
Net unrealized appreciation (depreciation) of investments, net of income taxes
     2,390,313       (1,666,470 )
Net assets applicable to common stockholders
   $ 79,088,427     $ 84,296,585  
                 
Net Asset Value per common share outstanding (net assets applicable
                
to common stock, divided by common shares outstanding)
   $ 8.69     $ 9.29  
                 
                 
                 

Tortoise Capital Resources Corporation
                        
                           
Distributable Cash Flow
  
For the three
months ended
May 31, 2010
    
For the three
months ended
May 31, 2009
    
For the six
months ended
May 31, 2010
    
For the six
months ended
May 31, 2009
  
                           
Total from Investments
                        
 
Distributions from investments
   $ 847,399     $ 1,852,148     $ 2,336,155     $ 4,543,782  
 
Distributions paid in stock
     20,972       -       20,972       -  
 
Interest income from investments
     189,622       202,400       381,053       403,998  
 
Dividends from money market mutual funds
     233       420       450       1,145  
 
Other income
     8,688       15,000       19,080       30,000  
Total from Investments
     1,066,914       2,069,968       2,757,710       4,978,925  
                                   
Operating Expenses Before Leverage Costs
                                
 
Advisory fees (net of expense reimbursement by Adviser)
     258,087       281,821       516,355       609,129  
 
Other operating expenses
     216,177       236,014       390,745       453,596  
Total Operating Expenses, before Leverage Costs
     474,264       517,835       907,100       1,062,725  
 
Distributable cash flow before leverage costs
     592,650       1,552,133       1,850,610       3,916,200  
 
Leverage costs
     -       256,842       45,619       427,958  
 
Distributable Cash Flow
   $ 592,650     $ 1,295,291     $ 1,804,991     $ 3,488,242  
                                   
 
Capital gain proceeds
     292,500       -       292,500       -  
 
Cash Available for Distribution
   $ 885,150     $ 1,295,291     $ 2,097,491     $ 3,488,242  
                                   
Distributions paid on common stock
   $ 909,904     $ 1,170,247     $ 2,090,055     $ 3,231,540  
                                   
Payout percentage for period (1)
     103 %     90 %     100 %     93 %
                                   
DCF/GAAP Reconciliation
                                
 
Distributable Cash Flow
   $ 592,650     $ 1,295,291     $ 1,804,991     $ 3,488,242  
 
Adjustments to reconcile to Net Investment Income (Loss), before Income Taxes:
                          
 
   Distributions paid in stock (2)
     (20,972 )     28,377       (20,972 )     56,514  
 
   Return of capital on distributions received from equity investments
     (656,759 )     (2,864,138 )     (1,655,399 )     (4,717,386 )
 
   Non-recurring professional fees
     (38,881 )     -       (38,881 )     -  
 
Net Investment Income (Loss), before Income Taxes
   $ (123,962 )   $ (1,540,470 )   $ 89,739     $ (1,172,630 )
                                   
(1)
Distributions paid as a percentage of Cash Available for Distribution.
                                
(2)
Distributions paid in stock for the three and six months ended May 31, 2010 were paid as part of normal operations and are included in DCF. Distributions paid in stock for the three and six months ended May 31, 2009 were paid in stock as a result of credit constraints and therefore were not included in DCF.
  
                                   
                                   
 
 
 

Tortoise Capital Resources Corporation
                        
STATEMENTS OF OPERATIONS
                        
(Unaudited)
                        
   
For the three
months ended
May 31, 2010
    
For the three
months ended
May 31, 2009
    
For the six
months ended
May 31, 2010
    
For the six
months ended
May 31, 2009
  
Investment Income
                        
   Distributions from investments
                        
Control investments
   $ 478,380     $ 579,215     $ 1,034,259     $ 1,158,430  
Affiliated investments
     224,999       836,038       1,081,891       1,665,376  
Non-affiliated investments
     144,020       465,272       220,005       1,776,490  
   Total distributions from investments
     847,399       1,880,525       2,336,155       4,600,296  
   Less return of capital on distributions
     (656,759 )     (2,864,138 )     (1,655,399 )     (4,717,386 )
            Net distributions from investments
     190,640       (983,613 )     680,756       (117,090 )
   Interest income from control investments
     189,622       202,400       381,053       403,998  
   Dividends from money market mutual funds
     233       420       450       1,145  
   Fee income
     8,688       15,000       19,080       30,000  
Total Investment Income
     389,183       (765,793 )     1,081,339       318,053  
                                 
Operating Expenses
                                
   Base management fees
     309,704       338,186       619,626       730,955  
   Professional fees
     153,693       145,017       238,855       274,109  
   Directors' fees
     33,271       22,080       59,432       43,737  
   Reports to stockholders
     16,174       15,408       31,877       30,481  
   Administrator fees
     14,456       15,782       28,916       34,111  
   Fund accounting fees
     7,039       8,735       14,011       16,740  
   Registration fees
     6,496       7,891       12,851       15,610  
   Stock transfer agent fees
     3,462       3,403       6,592       6,584  
   Franchise tax expense
     4,958       -       7,530       -  
   Custodian fees and expenses
     2,755       4,673       4,330       7,760  
   Other expenses
     12,754       13,025       25,232       24,464  
Total Operating Expenses
     564,762       574,200       1,049,252       1,184,551  
   Interest expense
     -       256,842       45,619       427,958  
Total Expenses
     564,762       831,042       1,094,871       1,612,509  
   Less expense reimbursement by Adviser
     (51,617 )     (56,365 )     (103,271 )     (121,826 )
Net Expenses
     513,145       774,677       991,600       1,490,683  
Net Investment Income, before Income Taxes
     (123,962 )     (1,540,470 )     89,739       (1,172,630 )
     Deferred tax benefit (expense)
     (967 )     8,283       (33,661 )     (92,900 )
Net Investment Income (Loss)
     (124,929 )     (1,532,187 )     56,078       (1,265,530 )
                                 
Realized and Unrealized Gain (Loss) on Investments
                                
   Net realized gain on control investments
     585,000       -       2,163,001       -  
   Net realized loss on affiliated investments
     (9,607,112 )     -       (9,624,557 )     (173,145 )
   Net realized loss on non-affiliated investments
     (1,239,501 )     (7,335,157 )     (1,211,889 )     (7,661,830 )
Net realized loss, before income taxes
     (10,261,613 )     (7,335,157 )     (8,673,445 )     (7,834,975 )
Deferred tax benefit (expense)
     1,540,708       (758,204 )     1,297,737       (620,717 )
Net realized loss on investments
     (8,720,905 )     (8,093,361 )     (7,375,708 )     (8,455,692 )
   Net unrealized appreciation (depreciation) of control investments
     (765,835 )     3,029,773       769,622       3,157,483  
   Net unrealized appreciation (depreciation) of affiliated investments
     9,841,655       3,374,165       11,049,729       (4,903,883 )
   Net unrealized appreciation (depreciation) of non-affiliated investments
     (5,525,233 )     9,978,917       (5,327,459 )     5,195,197  
 Net unrealized appreciation, before income taxes
     3,550,587       16,382,855       6,491,892       3,448,797  
 Deferred tax benefit (expense)
     (1,985,123 )     (3,284,590 )     (2,435,109 )     273,227  
Net unrealized appreciation of investments
     1,565,464       13,098,265       4,056,783       3,722,024  
Net Realized and Unrealized Gain (Loss) on Investments
     (7,155,441 )     5,004,904       (3,318,925 )     (4,733,668 )
                                 
Net Increase (Decrease) in Net Assets Applicable to Common Stockholders
                          
   Resulting from Operations
   $ (7,280,370 )   $ 3,472,717     $ (3,262,847 )   $ (5,999,198 )
                                 
Net Increase (Decrease) in Net Assets Applicable to Common Stockholders
                          
   Resulting from Operations Per Common Share:
                                
Basic and Diluted
   $ (0.80 )   $ 0.39     $ (0.36 )   $ (0.67 )
                                 
Weighted Average Shares of Common Stock Outstanding:
                                
Basic and Diluted
     9,099,037       9,000,174       9,088,679       8,981,369  
                                 

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