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 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
