Tortoise Capital Resources Corp. Releases Fiscal 2010 First Quarter Financial Results
LEAWOOD, Kan. - April 08, 2010 - Tortoise Capital Resources Corp. (NYSE: TTO) (the company) today announced that it has filed its Form 10-Q for its first quarter ended Feb. 28, 2010.
Recent Highlights
| · | Net assets of $87.1 million or $9.60 per share as of Feb. 28, 2010 |
| · | Total assets of $88.9 million as of Feb. 28, 2010 |
| · | Distributable cash flow (DCF) of $1.2 million for the fiscal quarter ended Feb. 28, 2010 |
| · | First quarter 2010 distribution of $0.13 per share paid March 1, 2010 |
| · | Mowood, LLC (Mowood) closed on sale of its subsidiary Timberline Energy, LLC (Timberline) on Feb. 9, 2010 |
| · | Credit facility fully repaid and terminated |
Performance Review
On March 1, 2010, 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.
Leverage
On Feb. 10, 2010, the company paid off the remaining balance under the credit facility with proceeds from the sale of investments and the credit facility was terminated.
Net Asset Value
At Feb. 28, 2010, the company's net asset value was $9.60 per share compared to $9.29 per share at Nov. 30, 2010. The increase in net asset value is largely attributable to an increase in the private company valuations, most notably International Resource Partners and Mowood (which continues to own and operate Omega Pipeline Company).
Portfolio Review
As of Feb. 28, 2010, the fair value of the company's investment portfolio (excluding short-term investments) totaled $76.9 million, including equity investments of $71.6 million and debt investments of $5.3 million. The company's portfolio is diversified among approximately 57 percent midstream and downstream investments, 8 percent upstream, and 35 percent in aggregates and coal. The weighted average yield-to-cost on the investment portfolio (excluding short-term investments) as of Feb. 28, 2010 was 6.9 percent.
As previously reported, Mowood closed the sale of its wholly owned subsidiary, Timberline Energy, LLC, to Landfill Energy Systems in February. The company received $9.0 million in cash distributions from Mowood, and used a portion of the proceeds to pay off its credit facility, which had an outstanding balance of $4.6 million as of Nov. 30, 2009. The company also invested $750,000 this quarter in Mowood, in the form of subordinated debt, to facilitate growth projects at Omega. The remainder of the proceeds received from the sale of Timberline was invested in publicly-traded securities after the company's quarter end. Over the next two years additional proceeds of up to $2.4 million could be received by the company from Mowood, based on the contingent and escrow terms contained in the sale agreement, as amended. The company expects the impact of the Timberline sale and the elimination of its credit facility to be neutral to its distributable cash flow.
Quest Midstream Partners, LP (Quest Midstream) completed its transformation into a publicly traded C-corp, PostRock Energy Corporation (PostRock) (NASDAQ: PSTR). PostRock is a new corporation formed for the purpose of wholly owning Quest Midstream, Quest Resource Partners, LP (formerly NASDAQ: QRCP) and Quest Energy Partners, LP (formerly NASDAQ: QELP). PostRock announced on March 5, 2010 that shareholders of QRCP and QELP and unit holders of Quest Midstream had approved the merger and PostRock began trading on the NASDAQ on March 8, 2010. Upon closing of the merger, the company received 490,769 freely tradable common units of PostRock in exchange for its 1,216,881 common units of Quest Midstream.
Earnings Call
The company will host a conference call at 4 p.m. CDT on Thursday, April 8, 2010 to discuss its financial results for the fiscal quarter ended Feb. 28, 2010. Please dial-in approximately five to 10 minutes prior to the scheduled start time.
U.S./Canada: 877-941-2332
International: 480-629-9722
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 April 8, 2010 and continuing until 11:59 p.m. CDT April 23, 2010, by dialing (800) 406-7325 (U.S./Canada). The replay access code is 4262236#. A replay of the webcast will also be available on the company's Web site at www.tortoiseadvisors.com through April 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 March 31, 2010, the adviser had approximately $3.3 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 | | | | | | |
| | | | | | | |
| | | | | | | |
| | | February 28, 2010 | | | November 30, 2009 | |
| | | (Unaudited) | | | | |
| Assets | | | | | | |
Investments at fair value, control (cost $20,952,193 and $28,180,070, respectively) | | $ | 27,765,626 | | | $ | 33,458,046 | |
Investments at fair value, affiliated (cost $51,439,159 and $52,676,299, respectively) | | | 41,629,781 | | | | 41,658,847 | |
Investments at fair value, non-affiliated (cost $15,139,576 and $9,568,566, respectively) | | | 14,633,831 | | | | 8,865,047 | |
Total investments (cost $87,530,928 and $90,424,935, respectively) | | | 84,029,238 | | | | 83,981,940 | |
| Receivable for Adviser expense reimbursement | | | 51,654 | | | | 49,843 | |
| Interest receivable from control investments | | | 55,031 | | | | - | |
| Dividends receivable | | | 103 | | | | 87 | |
| Deferred tax asset | | | 4,703,740 | | | | 5,429,391 | |
Prepaid expenses and other assets | | | 18,460 | | | | 16,792 | |
| Total assets | | | 88,858,226 | | | | 89,478,053 | |
| | | | | | | | | |
| Liabilities | | | | | | | | |
Base management fees payable to Adviser | | | 309,922 | | | | 299,060 | |
Distribution payable to common stockholders | | | 1,180,152 | | | | - | |
Accrued expenses and other liabilities | | | 234,196 | | | | 282,408 | |
Short-term borrowings | | | - | | | | 4,600,000 | |
| Total liabilities | | | 1,724,270 | | | | 5,181,468 | |
Net assets applicable to common stockholders | | $ | 87,133,956 | | | $ | 84,296,585 | |
| | | | | | | | | |
| Net Assets Applicable to Common Stockholders Consist of: | | | | | | | | |
Warrants, no par value; 945,594 issued and outstanding | | | | | | | | |
at February 28, 2010 and November 30, 2009 | | | | | | | | |
(5,000,000 authorized) | | $ | 1,370,700 | | | $ | 1,370,700 | |
Capital stock, $0.001 par value; 9,078,090 shares issued and | | | | | | | | |
outstanding at February 28, 2010 and November 30, 2009 | | | | | | | | |
(100,000,000 shares authorized) | | | 9,078 | | | | 9,078 | |
Additional paid-in capital | | | 100,749,155 | | | | 101,929,307 | |
Accumulated net investment loss, net of income taxes | | | (3,123,409 | ) | | | (3,304,416 | ) |
Accumulated realized loss, net of income taxes | | | (12,696,417 | ) | | | (14,041,614 | ) |
Net unrealized appreciation (depreciation) of investments, net of income taxes | | | 824,849 | | | | (1,666,470 | ) |
Net assets applicable to common stockholders | | $ | 87,133,956 | | | $ | 84,296,585 | |
| | | | | | | | | |
Net Asset Value per common share outstanding (net assets applicable | | | | | | | | |
to common stock, divided by common shares outstanding) | | $ | 9.60 | | | $ | 9.29 | |
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| Distributable Cash Flow | | For the three months ended February 28, 2010 | | | For the three months ended February 28, 2009 | |
| | | | | | | | |
| Total from Investments | | | | | | |
| | Distributions from investments | | $ | 1,488,756 | | | $ | 2,691,635 | |
| | Interest income from investments | | | 191,431 | | | | 201,598 | |
| | Dividends from money market mutual funds | | | 217 | | | | 725 | |
| | Other income | | | 10,392 | | | | 15,000 | |
Total from Investments | | | 1,690,796 | | | | 2,908,958 | |
| | | | | | | | | | |
| Operating Expenses Before Leverage Costs | | | | | | | | |
| | Advisory fees (net of expense reimbursement by Adviser) | | | 258,268 | | | | 327,308 | |
| | Other operating expenses | | | 174,568 | | | | 217,582 | |
Total Operating Expenses, before Leverage Costs | | | 432,836 | | | | 544,890 | |
| | Distributable cash flow before leverage costs | | | 1,257,960 | | | | 2,364,068 | |
| | Leverage costs | | | 45,619 | | | | 171,116 | |
| | Distributable Cash Flow | | $ | 1,212,341 | | | $ | 2,192,952 | |
| | | | | | | | | | |
| Distributions paid on common stock | | $ | 1,180,152 | | | $ | 2,061,294 | |
| | | | | | | | | | |
Payout percentage for period (1) | | | 97 | % | | | 94 | % |
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| DCF/GAAP Reconciliation | | | | | | | | |
| | Distributable Cash Flow | | $ | 1,212,341 | | | $ | 2,192,952 | |
| | Adjustments to reconcile to Net Investment Income, before Income Taxes: | | | | | |
| | Distributions paid in stock (2) | | | - | | | | 28,136 | |
| | Return of capital on distributions received from equity investments | | | (998,640 | ) | | | (1,853,248 | ) |
| | Net Investment Income, before Income Taxes | | $ | 213,701 | | | $ | 367,840 | |
| | | | | | | | | | |
| | | | | | | | | | |
| (1) | Distributions paid as a percentage of Distributable Cash Flow. | | | | | |
| (2) | The only distributions paid in stock for the three months ended February 28, 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. | | | | | |
| Tortoise Capital Resources Corporation | | | | | | | |
| STATEMENTS OF OPERATIONS | | | | | | | |
| (Unaudited) | | | | | | | |
| | | For the three months ended February 28, 2010 | For the three months ended February 28, 2009 | |
| Investment Income | | | | | | | |
| Distributions from investments | | | | | | | |
Control investments | | $ | 555,879 | | | $ 579,215 | |
Affiliated investments | | | 856,892 | | | 829,338 | |
Non-affiliated investments | | | 75,985 | | | 1,311,218 | |
| Total distributions from investments | | | 1,488,756 | | | 2,719,771 | |
| Less return of capital on distributions | | | (998,640 | ) | | (1,853,248 | ) |
| Net distributions from investments | | | 490,116 | | | 866,523 | |
| Interest income from control investments | | | 191,431 | | | 201,598 | |
| Dividends from money market mutual funds | | | 217 | | | 725 | |
| Fee income | | | 10,392 | | | 15,000 | |
Total Investment Income | | | 692,156 | | | 1,083,846 | |
| | | | | | | | |
| Operating Expenses | | | | | | | |
| Base management fees | | | 309,922 | | | 392,769 | |
| Professional fees | | | 85,162 | | | 129,092 | |
| Directors' fees | | | 26,161 | | | 21,657 | |
| Reports to stockholders | | | 15,703 | | | 15,073 | |
| Administrator fees | | | 14,460 | | | 18,329 | |
| Fund accounting fees | | | 6,972 | | | 8,005 | |
| Registration fees | | | 6,355 | | | 7,719 | |
| Stock transfer agent fees | | | 3,130 | | | 3,181 | |
| Franchise tax expense | | | 2,572 | | | - | |
| Custodian fees and expenses | | | 1,575 | | | 3,087 | |
| Other expenses | | | 12,478 | | | 11,439 | |
Total Operating Expenses | | | 484,490 | | | 610,351 | |
| Interest expense | | | 45,619 | | | 171,116 | |
Total Expenses | | | 530,109 | | | 781,467 | |
| Less expense reimbursement by Adviser | | | (51,654 | ) | | (65,461 | ) |
Net Expenses | | | 478,455 | | | 716,006 | |
| Net Investment Income, before Income Taxes | | | 213,701 | | | 367,840 | |
Deferred tax expense | | | (32,694 | ) | | (101,183 | ) |
| Net Investment Income | | | 181,007 | | | 266,657 | |
| | | | | | | | |
| Realized and Unrealized Gain (Loss) on Investments | | | | | | | |
| Net realized gain on control investments | | | 1,578,001 | | | - | |
| Net realized loss on affiliated investments | | | (17,445 | ) | | (499,818 | ) |
| Net realized gain on non-affiliated investments | | | 27,612 | | | - | |
Net realized gain (loss), before income taxes | | | 1,588,168 | | | (499,818 | ) |
Deferred tax benefit (expense) | | | (242,971 | ) | | 137,487 | |
Net realized gain (loss) on investments | | | 1,345,197 | | | (362,331 | ) |
| Net unrealized appreciation of control investments | | | 1,535,457 | | | 127,710 | |
| Net unrealized appreciation (depreciation) of affiliated investments | | | 1,208,074 | | | (8,278,048 | ) |
| Net unrealized appreciation (depreciation) of non-affiliated investments | | 197,774 | | | (4,783,720 | ) |
Net unrealized appreciation (depreciation), before income taxes | | | 2,941,305 | | | (12,934,058 | ) |
Deferred tax benefit (expense) | | | (449,986 | ) | | 3,557,817 | |
Net unrealized appreciation (depreciation) of investments | | | 2,491,319 | | | (9,376,241 | ) |
| Net Realized and Unrealized Gain (Loss) on Investments | | | 3,836,516 | | | (9,738,572 | ) |
| | | | | | | | |
| Net Increase (Decrease) in Net Assets Applicable to Common Stockholders | | | | | | |
| Resulting from Operations | | $ | 4,017,523 | | | $ (9,471,915 | ) |
| | | | | | | | |
| Net Increase (Decrease) in Net Assets Applicable to Common Stockholders | | | | | | |
| Resulting from Operations Per Common Share: | | | | | | | |
Basic and Diluted | | $ | 0.44 | | | $ (1.06 | ) |
| | | | | | | | |
| Weighted Average Shares of Common Stock Outstanding: | | | | | | | |
Basic and Diluted | | | 9,078,090 | | | 8,962,147 | |
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Tortoise Capital Advisors, LLC
Pam Kearney
Investor Relations
(866) 362-9331
pkearney@tortoiseadvisors.com
