Tortoise Capital Resources Corp. Releases Fiscal 2010 Financial Results

LEAWOOD, Kan.--([ BUSINESS WIRE ])--Tortoise Capital Resources Corp. (NYSE: TTO) (the company) today announced its financial results for the fiscal year ended Nov. 30, 2010, in its Annual Report on Form 10-K filed Jan. 26, 2011.

Recent Highlights

Maintained $0.10 per share distribution
Net asset value of $10.44 per share as of Nov. 30, 2010, compared to $9.74 as of Aug. 31, 2010, and $9.29 per share as of Nov. 30, 2009
Filed a preliminary proxy statement which includes a proposal to withdraw its election to be regulated as a business development company (BDC)

Performance Review

On Nov. 30, 2010, the company paid a distribution of $0.10 per common share, the same amount as the prior quarter. The company determines the amount of distributions paid to stockholders based on distributable cash flow (DCF), which is distributions received from investments less total expenses. The company believes it will have sufficient cash flow to pay a $0.10 per share distribution through the first quarter of 2011, subject to the Board of Directors approval and continued portfolio company distributions at current levels.

Net Asset Value

At Nov. 30, 2010, the companya�s net asset value was $10.44 per share, compared to $9.74as of Aug. 31, 2010 and $9.29 per share at Nov. 30, 2009. Total investment return, based on net asset value and assuming reinvestment of distributions, was approximately 20 percent for the year ended Nov. 30, 2010.

Annual Portfolio Review

As of Nov. 30, 2010, the value of the companya�s investment portfolio (excluding short-term investments) was $93.7 million, with approximately 78 percent of the portfolio in private investments totaling $72.9 million and approximately 22 percent in publicly-traded investments totaling $20.8 million. The portfolio is diversified among approximately 43 percent midstream and downstream investments, 12 percent upstream, and 45 percent in aggregates and coal.

International Resource Partnersa� (IRP) fair value increased approximately $18 million this past year. Over the last twelve months there have been significant increases in comparable company valuations, two coal MLP IPOs and renewed M&A activity which, combined with IRPa�s improved financial performance, supported the significant increase in valuation. IRP also steadily increased its quarterly distribution this year, from $0.40 per unit in TTOa�s first quarter to $0.55 per unit in the fourth quarter.

In February 2010, Mowood, LLC (Mowood) closed the sale of Timberline to Landfill Energy Systems. TTO received $9.0 million in cash distributions from the sale and used the proceeds to pay off its credit facility and invest in publicly-traded securities. Subsequently, TTO received approximately $778,000 as a result of a contingent payment from the sale and carbon credit reimbursements. TTO may also receive additional contingent and escrow payments from the sale, currently expected to total up to $1.4 million. The fair value of the companya�s Mowood investment, including debt, equity and potential contingent payments, was approximately $9.3 million as of Nov. 30, 2010.

The fair value of VantaCore Partners LP (VantaCore) decreased approximately $2.4 million over this past year. VantaCore has struggled with lower than anticipated operating results, primarily attributed to its Southern Aggregates subsidiary, which has experienced a decrease in demand and pricing, and higher than expected costs, partially offset by better results from its Winn Materials and McIntosh operations. VantaCore was unable to meet its minimum quarterly distribution (aMQDa) for the past two quarters. Common unit holders received a cash distribution equal to MQD of $0.475 for each of those two quarters, due to preferred unit holdersa� acceptance of a paid-in-kind distribution, and no distributions were made to the holders of subordinated units.

The fair value of High Sierra Energy, LP (aHigh Sierraa) decreased by approximately $5 million over this past year. High Sierraa�s board elected not to declare a cash distribution for TTOa�s second, third and fourth quarters. High Sierra extended its existing credit facility through March 31, 2011.

Quest Midstream Partners completed its transformation into a publicly traded C-corp, PostRock Energy Corp. (NASDAQ: PSTR) in March 2010. PSTR was a new corporation formed for the purpose of wholly owning all three Quest entities. Upon closing of the merger, the company received 490,769 freely tradable common units of PSTR in exchange for its 1,216,881 common units of Quest Midstream. The company held 260,500 common units of PostRock as of Nov. 30, 2010 at a fair value of $3.65 per unit, the NASDAQ closing price on that date. Subsequent to its fiscal year end, the company sold all of its remaining PostRock units.

On Jan. 18, 2011, Abraxas Petroleum Corporation (NASDAQ: AXAS) (Abraxas) announced that it intends to offer 10,000,000 shares of common stock and certain selling stockholders intend to offer 8,503,347 shares of common stock, both subject to market conditions, in an underwritten offering. The selling stockholders received their shares of common stock in the merger of Abraxas Energy Partners, L.P. into a wholly-owned subsidiary of Abraxas in October 2009. TTO has elected to participate as a selling unit holder and include up to 1,646,376 common units in the offering. Abraxas intends to use the net proceeds from the offering to repay indebtedness outstanding under its credit facility, to increase its 2011 capital expenditure budget and for general corporate purposes.

Preliminary Proxy Statement

The company filed a preliminary proxy statement which includes a proposal to withdraw its election to be regulated as a business development company.

The Board of Directors believes it is in the best interests of the company and its stockholders to make this change for two primary reasons: 1) There are significant potential opportunities for investment in real assets in the energy infrastructure sector, but BDC constraints limit these types of direct investments; and 2) the company is expected to have greater access to capital and flexibility in raising capital for its investment strategy. The company's investment strategy will be very similar to the one it has historically followed, targeting investments in the energy infrastructure sector. However, the withdrawal will allow the company to expand its investment pool to invest in real, physical assets, rather than investment securities. The company will seek to identify and invest in energy infrastructure assets that have the potential to become real estate investment trust (REIT) qualified. The company may in the future elect to be taxed as a REIT, provided that it has qualifying assets and income to permit such election.

The company expects to file its definitive proxy statement soon. Stockholders should make no decision about this proposal or any other proposal until reviewing the definitive proxy statement. The company's Annual Meeting of Stockholders is April 8, 2011, and will be held in the company's office in Leawood, Kan.

Earnings Call

The company will host a conference call at 4 p.m. CST on Wednesday, Jan. 26, 2011 to discuss its financial results for the fiscal year. Please dial-in to the call at 480-629-9822 approximately five to 10 minutes prior to the scheduled start time.

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. CST on Jan. 26, 2011 and continuing until 11:59 p.m. CST Feb. 2, 2011, by dialing 800-406-7325. The replay access code is 4398228#. A replay of the webcast will also be available on the company's website at [ www.tortoiseadvisors.com ] through Jan. 26, 2012.

About Tortoise Capital Resources Corp.

Tortoise Capital Resources invests primarily in privately-held and micro-cap public companies operating in the U.S. energy infrastructure sector.

About Tortoise Capital Advisors, LLC

Tortoise is an investment manager specializing in listed energy infrastructure investments, such as pipeline and power companies. As of Dec. 31, 2010, the adviser had approximately $6.1 billion of assets under management in six 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 aforward-looking statementsa 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 companya�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 companya�s investments, its costs of leverage and other operating expenses and will be subject to the approval of the companya�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


			November 30, 2010		November 30, 2009

Assets
	Investments at fair value, control (cost $18,122,054 and $28,180,070, respectively)		$ 23,260,566		$ 33,458,046
	Investments at fair value, affiliated (cost $31,329,809 and $52,676,299, respectively)		49,066,009		41,658,847
	Investments at fair value, non-affiliated (cost $21,628,965 and $9,568,566, respectively)		22,875,848		8,865,047
		Total investments (cost $71,080,828 and $90,424,935, respectively)	95,202,423		83,981,940
	Receivable for Adviser expense reimbursement		109,145		49,843
	Receivable for investments sold		5,198		-
	Interest receivable from control investments		42,778		-
	Dividends receivable		83		87
	Deferred tax asset		656,743		5,429,391
	Prepaid expenses and other assets		25,023		16,792
		Total assets	96,041,393		89,478,053

Liabilities
	Base management fees payable to Adviser		327,436		299,060
	Accrued expenses and other liabilities		234,784		282,408
	Short-term borrowings		-		4,600,000
		Total liabilities	562,220		5,181,468
		Net assets applicable to common stockholders	$ 95,479,173		$ 84,296,585

Net Assets Applicable to Common Stockholders Consist of:
	Warrants, no par value; 945,594 issued and outstanding
		at November 30, 2010 and November 30, 2009
		(5,000,000 authorized)	$ 1,370,700		$ 1,370,700
	Capital stock, $0.001 par value; 9,146,506 shares issued and outstanding at
		November 30, 2010 and 9,078,090 issued and outstanding at November 30, 2009
		(100,000,000 shares authorized)	9,147		9,078
	Additional paid-in capital		98,444,952		101,929,307
	Accumulated net investment loss, net of income taxes		(3,308,522	)	(3,304,416	)
	Accumulated realized loss, net of income taxes		(18,532,648	)	(14,041,614	)
	Net unrealized appreciation (depreciation) of investments, net of income taxes		17,495,544		(1,666,470	)
		Net assets applicable to common stockholders	$ 95,479,173		$ 84,296,585

	Net Asset Value per common share outstanding (net assets applicable
		to common stock, divided by common shares outstanding)	$ 10.44		$ 9.29



Distributable Cash Flow			Year Ended November 30, 2010		Year Ended November 30, 2009		Year Ended November 30, 2008

Total from Investments
	Distributions from investments		$ 4,196,269		$ 7,724,577		$ 9,688,521
	Distributions paid in stock		65,268		-		2,186,767
	Interest income from investments		720,323		807,848		1,103,059
	Dividends from money market mutual funds		859		1,986		18,205
	Other income		38,580		61,514		28,987
Total from Investments			5,021,299		8,595,925		13,025,539

Operating Expenses Before Leverage Costs
	Advisory fees (net of expense reimbursement by Adviser)		925,820		1,126,327		1,928,109
	Other operating expenses		684,739		911,779		1,037,624
Total Operating Expenses, before Leverage Costs			1,610,559		2,038,106		2,965,733
	Distributable cash flow before leverage costs		3,410,740		6,557,819		10,059,806
	Leverage costs		45,619		627,707		1,650,926
		Distributable Cash Flow	$ 3,365,121		$ 5,930,112		$ 8,408,880

		Capital gain proceeds	882,212		-		-
		Cash Available for Distribution	$ 4,247,333		$ 5,930,112		$ 8,408,880

Distributions paid on common stock			$ 3,915,124		$ 5,582,473		$ 9,265,351

Payout percentage for period ⁽¹⁾			92	%	94	%	110	%

DCF/GAAP Reconciliation
	Distributable Cash Flow		$ 3,365,121		$ 5,930,112		$ 8,408,880
	Adjustments to reconcile to Net Investment Loss, before Income Taxes:
	Distributions paid in stock⁽²⁾		(65,268	)	-		(2,186,767	)
	Return of capital on distributions received from equity investments		(3,064,204	)	(6,791,394	)	(7,894,819	)
	Capital gain incentive fees		-		-		307,611
	Non-recurring professional fees		(242,198	)	-		-
		Net Investment Loss, before Income Taxes	$ (6,549	)	$ (861,282	)	$ (1,365,095	)

(1)	Distributions paid as a percentage of Cash Available for Distribution.
(2)	Distributions paid in stock for the years ended November 30, 2010 and November 30, 2008 were paid as part of normal operations and are included in DCF.

Tortoise Capital Resources Corporation
STATEMENTS OF OPERATIONS

	Year Ended November 30, 2010		Year Ended November 30, 2009			Year Ended November 30, 2008
Investment Income
Distributions from investments
Control investments	$ 2,021,943		$ 2,270,189			$ 1,576,716
Affiliated investments	1,606,891		3,379,159			4,699,082
Non-affiliated investments	567,435		2,075,229			3,412,723
Total distributions from investments	4,196,269		7,724,577			9,688,521
Less return of capital on distributions	(3,064,204	)	(6,791,394	)		(7,894,819	)
Net distributions from investments	1,132,065		933,183			1,793,702
Interest income from control investments	720,323		807,848			1,103,059
Dividends from money market mutual funds	859		1,986			18,205
Fee income	38,580		61,514			-
Other income	-		-			28,987
Total Investment Income	1,891,827		1,804,531			2,943,953

Operating Expenses
Base management fees	1,233,823		1,351,593			2,313,731
Capital gain incentive fees (Note 4)	-		-			(307,611	)
Professional fees	590,486		553,856			642,615
Directors' fees	92,053		90,257			86,406
Stockholder communication expenses	53,807		61,130			58,943
Administrator fees	57,578		63,074			107,325
Fund accounting fees	27,723		31,968			34,546
Registration fees	25,889		31,306			29,668
Stock transfer agent fees	13,421		13,506			13,538
Franchise tax expense	9,470		-			-
Custodian fees and expenses	6,361		16,928			17,426
Other expenses	50,149		49,754			47,157
Total Operating Expenses	2,160,760		2,263,372			3,043,744
Interest expense	45,619		627,707			1,650,926
Total Expenses	2,206,379		2,891,079			4,694,670
Less expense reimbursement by Adviser	(308,003	)	(225,266	)		(385,622	)
Net Expenses	1,898,376		2,665,813			4,309,048
Net Investment Loss, before Income Taxes	(6,549	)	(861,282	)		(1,365,095	)
Current tax expense	-		-			(6,881	)
Deferred tax benefit	2,443		101,133			393,483
Income tax benefit, net	2,443		101,133			386,602
Net Investment Loss	(4,106	)	(760,149	)		(978,493	)

Realized and Unrealized Gain (Loss) on Investments
Net realized gain on control investments	2,356,404		-			112,500
Net realized gain (loss) on affiliated investments	(9,520,748	)	(338,572	)		8,603,697
Net realized loss on non-affiliated investments	(3,954,175	)	(22,782,176	)		-
Net realized gain (loss), before income taxes	(11,118,519	)	(23,120,748	)		8,716,197
Deferred tax benefit (expense)	6,627,485		2,714,872			(2,512,409	)
Net realized gain (loss) on investments	(4,491,034	)	(20,405,876	)		6,203,788
Net unrealized appreciation (depreciation) of control investments	(139,464	)	5,483,497			(2,976,609	)
Net unrealized appreciation (depreciation) of affiliated investments	28,753,652		(2,371,877	)		(11,145,652	)
Net unrealized appreciation (depreciation) of non-affiliated investments	1,950,402		21,135,760			(27,458,859	)
Net unrealized appreciation (depreciation), before income taxes	30,564,590		24,247,380			(41,581,120	)
Deferred tax benefit (expense)	(11,402,576	)	(3,070,361	)		11,985,592
Net unrealized appreciation (depreciation) of investments	19,162,014		21,177,019			(29,595,528	)
Net Realized and Unrealized Gain (Loss) on Investments	14,670,980		771,143			(23,391,740	)

Net Increase (Decrease) in Net Assets Applicable to Common Stockholders
Resulting from Operations	$ 14,666,874		$ 10,994			$ (24,370,233	)

Net Increase (Decrease) in Net Assets Applicable to Common Stockholders
Resulting from Operations Per Common Share:
Basic and Diluted	$ 1.61		$ 0.00		⁽¹⁾	$ (2.74	)

Weighted Average Shares of Common Stock Outstanding:
Basic and Diluted	9,107,070		8,997,145			8,887,085


⁽¹⁾ Less than $0.01 per share.

Contributing Sources

Market Wire

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Tortoise Capital Resources Corp. Releases Fiscal 2010 Financial Results