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 Three
Months Ended
August 31,
2011
  
For the Three
Months Ended
August 31,
2010
  
For the Nine
Months Ended
August 31,
2011
  
For the Nine
Months Ended
August 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 three
months ended
August 31, 2011
  
For the three
months ended
August 31, 2010
  
For the nine
months ended
August 31, 2011
  
For the nine
months ended
August 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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