Tortoise Capital Resources Corp. Releases Fiscal 2011 Third Quarter Financial Results
 
Oct 13, 2011 - LEAWOOD, Kan.--(BUSINESS WIRE)-- Tortoise Capital Resources Corp. (NYSE: TTO) (the company) today announced that it has filed its Form 10-Q for the third quarter ended Aug. 31, 2011.
 
 
Recent Highlights
 
·  
Withdrew election to be regulated as a business development company
 
·  
Distribution guidance of not less than $0.40 per share annually
 
·  
Net asset value $10.62 per share as of Aug.31, 2011
 
 
Regulatory Structure and Investment Outlook
 
TTO is focused on identifying and acquiring real property assets in the U.S. energy infrastructure sector that have the potential to become real estate investment trust qualified. The company acquired its first real property asset in June 2011 with the purchase of a 40 percent undivided interest in the New Mexico transmission line, known as the Eastern Interconnect Project. The project moves electricity between Albuquerque and Clovis, New Mexico, and is subject to a triple-net-lease with Public Service Company of New Mexico that expires in 2015. The lessee and operator of the transmission line, Public Service Company of New Mexico, performed as expected and a recent strategy announcement led to Standard & Poor's upgrading the utility's senior unsecured debt rating to BBB- from BB+. If TTO finds sufficient suitable, REIT-qualifying investments during the remainder of 2011 and satisfies the REIT requirements throughout 2012, then TTO expects to make an election to be treated as a REIT for tax purposes for 2012.
 
Liquidity and Capital Resources
 
Subsequent to the withdrawal of its election to be regulated as a business development company, the company expects to have greater flexibility in raising both equity and debt capital. On Sept. 21, 2011, the company filed a shelf registration statement with the SEC which effectively converted the previously filed N-2 registration under the 1940 Act, to an S-3 registration statement under the 1933 Act. When effective, the shelf registration will allow TTO to prudently raise additional capital. The company is also currently seeking to obtain a secured facility to support future working capital needs and potential investments.
 
TTO does not plan to make additional investments in securities (other than short-term, highly liquid investments to be held pending acquisition of real property assets) and will liquidate its securities portfolio in an orderly manner. The publicly traded securities can be liquidated more readily than the private company securities.
 
Distribution Guidance
 
On Sept. 1, 2011, the company paid a quarterly distribution of $0.10 per common share, the same amount as the prior quarter. The company expects its earned distributable cash flow to support a quarterly distribution of $0.10 per share ($0.40 annually), with upside potential depending on the performance of its private equity investments.
 
Quarterly Performance Review
 
As of Aug. 31, 2011, the company's net asset value was $10.62 per share compared to $10.66 per share at May 31, 2011. The fair value of the company's securities investment portfolio (excluding short-term investments) totaled $81.5 million, with approximately $54.5 million in private securities and approximately $27.0 million in publicly-traded securities. In the future, the company will not be required to include net asset value per share on the face of its financial statements; however, the company does plan to provide net asset value (book value) per share as supplemental non-GAAP information.
 
In June 2011, TTO invested $9.9 million in Magnetar MLP Investment LP (Magnetar MLP) which was formed solely to invest in Lightfoot Capital Partners LP. The Magnetar MLP investment represents an indirect investment into Lightfoot Capital Partners, LP (Lightfoot) which owns 83.5 percent of the outstanding limited partner units of Arc Terminals LP (Arc) and 100 percent of Arc Terminals GP, which also includes a 2.0 percent limited partnership interest. At the time of the investment, Lightfoot held approximately $60 million in cash set aside for other platform investments or additional investments in Arc. Arc is an independent operator of above ground storage and delivery services for petroleum products and chemicals including refined products, renewable fuels and crude oil. As of August 2011, Arc had nine terminals located in the United States with a combined working capacity of 3.6 million barrels.
 
High Sierra's fair value increased approximately $2.7 million this quarter. In May, High Sierra completed the sale of Monroe Gas Storage for $148 million. In June, High Sierra acquired the assets of Marcum Midstream, a Colorado-based water disposal company serving the oil and gas industry.
 
Mowood reported a very strong third quarter, due largely to its July performance in which revenues and EBITDA were well above projections. Mowood's fair value increased approximately $0.3 million for the quarter.
 
In August 2011, VantaCore completed an acquisition of Cherry Grove Quarry in Todd County, Kentucky. TTO provided VantaCore $1.2 million in August to help fund the acquisition in exchange for newly issued Preferred B units. The fair value of VantaCore securities decreased approximately $3.3 million in total in the quarter, exclusive of these Preferred B units. As VantaCore was unable to meet its minimum quarterly distribution of $0.475 per unit for its quarter ended June 30, 2011, TTO received 27,167 preferred units in addition to $0.04 in cash per common and preferred unit.
 
Earnings Call
 
TTO will host a conference call on Thursday, Oct. 13, 2011 at 4:00 p.m. Central to report its earnings results for its third quarter ended Aug. 31, 2011. Please dial into the call using the toll free number: (800) 762-8779.
 
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 Oct. 13, 2011 and continuing through Oct. 27, 2011, by dialing (800) 406-7325. The replay access code is 4467190. A replay of the webcast will also be available on the company's website at www.tortoiseadvisors.com through Oct.13, 2012.
 
About Tortoise Capital Resources Corp.
 
Tortoise Capital Resources Corp. (NYSE: TTO) is focused on real asset acquisitions primarily in the U.S. energy infrastructure sector. Tortoise Capital Advisors, LLC entered into a consulting agreement with Corridor Energy LLC to identify, analyze and finance potential investments for TTO in real estate investment trust (REIT) qualifying assets. For more information, visit www.corridorenergy.com.
 
About Tortoise Capital Advisors, LLC
 
Tortoise Capital Advisors, LLC is an investment manager specializing in managing portfolios of MLPs and other energy companies. As of Sept. 30, 2011 the adviser had approximately $6.4 billion of assets under management in five NYSE-listed closed-end investment companies, TTO, an open-end fund and private accounts. For more information, visit 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
       
         
   
August 31, 2011
 
November 30, 2010
   
(Unaudited)
   
Assets
       
Investments at fair value, control (cost $4,615,500 and $18,122,054, respectively)
 
$
8,326,078
   
$
23,260,566
 
Investments at fair value, affiliated (cost $45,754,017 and $31,329,809, respectively)
   
46,030,656
     
49,066,009
 
Investments at fair value, non-affiliated (cost $30,392,767 and $21,628,965, respectively)
   
30,970,571
     
22,875,848
 
Total investments (cost $80,762,284 and $71,080,828, respectively)
   
85,327,305
     
95,202,423
 
Leased property, net of accumulated depreciation of $117,724
   
14,009,125
     
-
 
Intangible lease asset, net of accumulated amortization of $48,657
   
1,046,114
     
-
 
Escrow receivable
   
1,677,052
     
-
 
Receivable for Adviser expense reimbursement
   
124,173
     
109,145
 
Receivable for investments sold
   
-
     
5,198
 
Interest receivable from control investments
   
-
     
42,778
 
Dividends and distributions receivable
   
124,278
     
83
 
Lease receivable
   
1,185,381
     
-
 
Deferred tax asset
   
-
     
656,743
 
Prepaid expenses and other assets
   
33,671
     
25,023
 
Total assets
   
103,527,099
     
96,041,393
 
         
Liabilities
       
Base management fees payable to Adviser
   
372,518
     
327,436
 
Distribution payable to common stockholders
   
916,490
     
-
 
Accrued expenses and other liabilities
   
395,508
     
234,784
 
Long-term debt
   
3,551,320
     
-
 
Deferred tax liability
   
916,285
     
-
 
Total liabilities
   
6,152,121
     
562,220
 
Net assets applicable to common stockholders
 
$
97,374,978
   
$
95,479,173
 
         
Net Assets Applicable to Common Stockholders Consist of:
       
Warrants, no par value; 945,594 issued and outstanding
       
at August 31, 2011 and November 30, 2010
       
(5,000,000 authorized)
 
$
1,370,700
   
$
1,370,700
 
Capital stock, $0.001 par value; 9,164,865 shares issued and outstanding at
       
August 31, 2011 and 9,146,506 shares issued and outstanding at
       
November 30, 2010 (100,000,000 shares authorized)
   
9,165
     
9,147
 
Additional paid-in capital
   
95,853,818
     
98,444,952
 
Accumulated net investment loss, net of income taxes
   
(3,874,494
)
   
(3,308,522
)
Accumulated realized loss, net of income taxes
   
(1,207,160
)
   
(18,532,648
)
Net unrealized appreciation of investments, net of income taxes
   
5,222,949
     
17,495,544
 
Net assets applicable to common stockholders
 
$
97,374,978
   
$
95,479,173
 
         
Net Asset Value per common share outstanding (net assets applicable
       
to common stock, divided by common shares outstanding)
 
$
10.62
   
$
10.44
 
         
 

 
Tortoise Capital Resources Corporation
               
Distributable Cash Flow
               
(Unaudited)
               
   
For the ThreeMonths EndedAugust 31,2011
 
For the ThreeMonths EndedAugust 31,2010
 
For the NineMonths EndedAugust 31,2011
 
For the NineMonths EndedAugust 31,2010
                 
Total from Investments
               
Distributions from investments
 
$
800,733
   
$
889,895
   
$
2,120,684
   
$
3,226,050
 
Distributions paid in stock
   
24,608
     
21,746
     
72,368
     
42,718
 
Lease income (1)
   
415,915
     
-
     
415,915
     
-
 
Interest income from investments
   
135,956
     
182,622
     
407,242
     
563,675
 
Dividends from money market mutual funds
   
3,008
     
230
     
8,196
     
680
 
Other income
   
-
     
8,000
     
40,000
     
27,080
 
Total from Investments
   
1,380,220
     
1,102,493
     
3,064,405
     
3,860,203
 
                 
Operating Expenses Before Leverage Costs
               
Advisory fees (net of expense reimbursement by Adviser)
   
248,367
     
191,174
     
724,240
     
707,529
 
Other operating expenses
   
243,431
     
168,115
     
554,286
     
558,860
 
Total Operating Expenses, before Leverage Costs
   
491,798
     
359,289
     
1,278,526
     
1,266,389
 
Distributable cash flow before leverage costs
   
888,422
     
743,204
     
1,785,879
     
2,593,814
 
Leverage costs
   
-
     
-
     
-
     
45,619
 
Distributable Cash Flow
 
$
888,422
   
$
743,204
   
$
1,785,879
   
$
2,548,195
 
                 
Capital gain proceeds
   
-
     
292,500
     
520,589
     
585,000
 
Cash Available for Distribution
 
$
888,422
   
$
1,035,704
   
$
2,306,468
   
$
3,133,195
 
                 
Distributions paid on common stock
 
$
916,486
   
$
911,646
   
$
2,746,830
   
$
3,001,701
 
                 
Payout percentage for period (2)
   
103
%
   
88
%
   
119
%
   
96
%
                 
DCF/GAAP Reconciliation
               
Distributable Cash Flow
 
$
888,422
   
$
743,204
   
$
1,785,879
   
$
2,548,195
 
Adjustments to reconcile to Net Investment Loss,
               
before Income Taxes:
               
Distributions paid in stock (3)
   
(24,608
)
   
(21,746
)
   
(72,368
)
   
(42,718
)
Return of capital on distributions received from equity investments
   
(1,128,698
)
   
(1,057,882
)
   
(1,909,941
)
   
(2,713,281
)
Non-cash depreciation and amortization
   
(122,208
)
   
-
     
(122,208
)
   
-
 
Non-recurring asset acquisition expenses
   
(583,248
)
   
-
     
(583,248
)
   
-
 
Non-recurring professional fees
   
-
     
(202,619
)
   
-
     
(241,500
)
Net Investment Loss, before Income Taxes
 
$
(970,340
)
 
$
(539,043
)
 
$
(901,886
)
 
$
(449,304
)
 
(1)
 
Reflects lease income to be received, less borrowing costs on debt related to the leased assets.
(2)
 
Distributions paid as a percentage of Cash Available for Distribution.
(3)
 
Distributions paid in stock for the three and nine months ended August 31, 2011 and August 31, 2010 were paid as part of normal operations and are included in DCF.
     
 

 
Tortoise Capital Resources Corporation
               
STATEMENTS OF OPERATIONS
               
(Unaudited)
               
   
For the threemonths endedAugust 31, 2011
 
For the threemonths endedAugust 31, 2010
 
For the ninemonths endedAugust 31, 2011
 
For the ninemonths endedAugust 31, 2010
Investment Income
               
Distributions from investments
               
Control investments
 
$
69,545
   
$
485,379
   
$
209,256
   
$
1,519,638
 
Affiliated investments
   
319,027
     
250,000
     
816,315
     
1,331,891
 
Non-affiliated investments
   
412,161
     
154,516
     
1,095,113
     
374,521
 
Total distributions from investments
   
800,733
     
889,895
     
2,120,684
     
3,226,050
 
Less return of capital on distributions
   
(1,128,698
)
   
(1,057,882
)
   
(1,909,941
)
   
(2,713,281
)
Net distributions from investments
   
(327,965
)
   
(167,987
)
   
210,743
     
512,769
 
Interest income from control investments
   
135,956
     
182,622
     
407,242
     
563,675
 
Lease income
   
425,496
     
-
     
425,496
     
-
 
Dividends from money market mutual funds
   
3,008
     
230
     
8,196
     
680
 
Fee income
   
-
     
8,000
     
40,000
     
27,080
 
Total Investment Income
   
236,495
     
22,865
     
1,091,677
     
1,104,204
 
                 
Operating Expenses
               
Base management fees
   
372,551
     
286,761
     
1,086,360
     
906,387
 
Asset acquisition expense
   
583,248
     
-
     
583,248
     
-
 
Professional fees
   
165,360
     
290,606
     
329,188
     
529,461
 
Depreciation expense
   
117,724
     
-
     
117,724
     
-
 
Directors' fees
   
18,697
     
17,543
     
48,666
     
76,975
 
Stockholder communication expenses
   
13,199
     
16,053
     
39,311
     
47,930
 
Administrator fees
   
9,935
     
13,382
     
28,970
     
42,298
 
Fund accounting fees
   
7,565
     
6,442
     
22,412
     
20,453
 
Registration fees
   
6,297
     
6,297
     
18,753
     
19,148
 
Franchise tax expense
   
5,109
     
2,798
     
15,216
     
10,328
 
Stock transfer agent fees
   
3,428
     
3,403
     
10,209
     
9,995
 
Custodian fees and expenses
   
1,165
     
1,457
     
3,447
     
5,787
 
Other expenses
   
12,677
     
12,753
     
38,115
     
37,985
 
Total Operating Expenses
   
1,316,955
     
657,495
     
2,341,619
     
1,706,747
 
Interest expense
   
14,064
     
-
     
14,064
     
45,619
 
Total Expenses
   
1,331,019
     
657,495
     
2,355,683
     
1,752,366
 
Less expense reimbursement by Adviser
   
(124,184
)
   
(95,587
)
   
(362,120
)
   
(198,858
)
Net Expenses
   
1,206,835
     
561,908
     
1,993,563
     
1,553,508
 
Net Investment Loss, before Income Taxes
   
(970,340
)
   
(539,043
)
   
(901,886
)
   
(449,304
)
Deferred tax benefit
   
360,320
     
202,195
     
335,914
     
168,534
 
Net Investment Loss
   
(610,020
)
   
(336,848
)
   
(565,972
)
   
(280,770
)
                 
Realized and Unrealized Gain on Investments
               
Net realized gain (loss) on control investments
   
(90,000
)
   
-
     
(90,000
)
   
2,163,001
 
Net realized gain (loss) on affiliated investments
   
678,301
     
-
     
24,774,537
     
(9,624,557
)
Net realized gain (loss) on non-affiliated investments
   
22,750
     
(1,340,452
)
   
2,033,872
     
(2,552,341
)
Net realized gain (loss), before income taxes
   
611,051
     
(1,340,452
)
   
26,718,409
     
(10,013,897
)
Current tax expense
   
-
     
-
     
(200,000
)
   
-
 
Deferred tax benefit (expense)
   
(642,875
)
   
4,102,850
     
(9,192,921
)
   
5,400,587
 
Income tax benefit (expense), net
   
(642,875
)
   
4,102,850
     
(9,392,921
)
   
5,400,587
 
Net realized gain (loss) on investments
   
(31,824
)
   
2,762,398
     
17,325,488
     
(4,613,310
)
Net unrealized appreciation (depreciation) of control investments
   
262,569
     
(729,984
)
   
(1,427,934
)
   
39,638
 
Net unrealized appreciation (depreciation) of affiliated investments
   
553,956
     
12,627,879
     
(17,459,561
)
   
23,677,608
 
Net unrealized appreciation (depreciation) of non-affiliated investments
   
615,443
     
1,092,409
     
(669,079
)
   
(4,235,050
)
Net unrealized appreciation (depreciation), before income taxes
   
1,431,968
     
12,990,304
     
(19,556,574
)
   
19,482,196
 
Deferred tax benefit (expense)
   
(199,485
)
   
(4,872,663
)
   
7,283,979
     
(7,307,772
)
Net unrealized appreciation (depreciation) of investments
   
1,232,483
     
8,117,641
     
(12,272,595
)
   
12,174,424
 
Net Realized and Unrealized Gain on Investments
   
1,200,659
     
10,880,039
     
5,052,893
     
7,561,114
 
                 
Net Increase in Net Assets Applicable to
               
Common Stockholders Resulting from Operations
 
$
590,639
   
$
10,543,191
   
$
4,486,921
   
$
7,280,344
 
                 
Net Increase in Net Assets Applicable to Common Stockholders
             
Resulting from Operations Per Common Share:
               
Basic and Diluted
 
$
0.06
   
$
1.16
   
$
0.49
   
$
0.80
 
                 
Weighted Average Shares of Common Stock Outstanding:
             
Basic and Diluted
   
9,164,865
     
9,116,456
     
9,156,171
     
9,098,005
 
 
 
 
Tortoise Capital Advisors, LLC
Pam Kearney, 866-362-9331
Investor Relations
pkearney@tortoiseadvisors.com
Source: Tortoise Capital Resources Corp.
 
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