Business & Finance
Business and Finance
Business and Finance
Thu, July 14, 2011
Wed, July 13, 2011 Tortoise Capital Resources Corp. Releases Fiscal 2011 Second Quarter Financial Results
LEAWOOD, Kan.--([ BUSINESS WIRE ])--Tortoise Capital Resources Corp. (NYSE: TTO) (the company) today announced that it has filed its Form 10-Q for the second quarter ended May 31, 2011.
Recent Highlights
- Distribution guidance of not less than $0.40 per share annually
- Acquired first real property asset for $16.1 million a" electric transmission line in New Mexico
- Invested $9.9 million indirectly in Arc Terminals a" a refined products storage business
- Net asset value $10.66 per share as of May 31, 2011
Distribution Guidance
On June 1, 2011, the company paid a quarterly distribution of $0.10 per common share, the same amount as the prior quarter. This quartera™s distribution of $0.10 per share was in excess of distributable cash flow for the quarter, therefore the company elected to pay out a small portion of the IRP gains. After investing most of the proceeds of the IRP sale, the company expects its earned DCF 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 and Investment Outlook
As of May 31, 2011, the companya™s net asset value was $10.66 per share compared to $10.46 per share at February 28, 2011. The fair value of the companya™s securities investment portfolio (excluding short-term investments) totaled $70.1 million, with approximately $43.3 million in private securities and approximately $26.8 million in publicly-traded securities, diversified among 85 percent midstream and downstream, 14 percent aggregates and 1 percent upstream.
High Sierraa™s fair value increased approximately $4.5 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. The completion of these transactions, along with a new credit facility which closed in March, is expected to result in the resumption of a modest quarterly cash distribution as early as next quarter.
Mowooda™s fair value decreased slightly this quarter, due to the delay in the completion of construction projects. Mowood expects that revenues from Ft. Leonard Wood-based pipeline assets, managed by its subsidiary, Omega Pipeline, will bolster its performance for the remainder of 2011.
VantaCorea™s fair value decreased approximately $2.0 million this quarter and VantaCore was unable to earn its minimum quarterly distribution (MQD) of $0.475 per unit for its quarter ended March 31, 2011. Common and preferred unitholders elected to receive their MQD as a combination of $0.12 in cash and the remainder in newly issued preferred units, compared to $0.09 in cash and the remainder in newly issued preferred units in the prior quarter. VantaCore has initiated a number of projects at both locations designed to improve profitability.
Subsequent to quarter end, the company successfully reinvested most of the proceeds from the recent IRP sale into two private investments and public MLPs. In early June, the company purchased a $9.9 million interest in Magnetar MLP Investment LP which was formed solely to invest in Lightfoot Capital Partners LP, the same team that was involved in the IRP investment. This investment in Lightfoot facilitated an indirect investment in its portfolio company, Arc Terminals, an independent operator of above ground storage and delivery services for petroleum products and chemicals including refined products, renewable fuels and crude oil. Since its inception in 2007, Arca™s business has grown to more than 3.5 million barrels of storage capacity through acquisitions and development projects. Lightfoot also holds approximately $60 million set aside for other platform investments or additional investments in Arc.
On June 30, 2011, the company acquired its first real property asset with the purchase of a 40 percent undivided interest in the Eastern Interconnect Project for approximately $16.1 million, including the assumption of $3.4 million of debt.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 company plans to utilize liquid assets on its balance sheet, plus leverage and proceeds of equity issuances to fund the acquisition of new REIT-qualifying assets. The company does not expect to make additional investments in securities, other than short term, highly liquid investments to be held pending acquisition of real property assets. If sufficient suitable REIT-qualifying investments are made during 2011 and held for calendar year 2012, TTO expects to qualify as a REIT for the 2012 tax year.
Earnings Call
On July 14, 2011, at 4 p.m. CDT, the company will host its second quarter conference call to discuss its financial results and investment strategy. Corridor Energya™s Managing Director Rick Green will join the call to discuss TTOa™s first real property asset investment. The toll-free conference call number is (800) 762-8779. The call will also be webcast in a listen-only format at [ www.tortoiseadvisors.com ].
A replay of the call will be available beginning at 6:00 p.m. CDT on July 14, 2011 and continuing through July 26, 2011, by dialing (800) 406-7325. The replay access code is 4449508#. A replay of the webcast will also be available at [ www.tortoiseadvisors.com ] through July 14, 2012.
About Tortoise Capital Resources Corp.
Tortoise Capital Resources Corp. (NYSE: TTO) invests primarily in the U.S. energy infrastructure sector. Tortoise 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 (Tortoise) is an investment manager specializing in listed energy infrastructure investments. Tortoise is considered a pioneer in managing portfolios of MLP securities and other energy companies for individual, institutional and closed-end fund investors. As of June 30, 2011, Tortoise had approximately $6.8 billion of assets under management in six NYSE-listed investment companies, an open-end investment company and private accounts. For more information, visit our website 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.
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| STATEMENTS OF ASSETS & LIABILITIES | ||||||||
| May 31, 2011 | November 30, 2010 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Investments at fair value, control (cost $4,593,000 and $18,122,054, respectively) | $ | 8,041,009 | $ | 23,260,566 | ||||
| Investments at fair value, affiliated (cost $35,424,242 and $31,329,809, respectively) | 35,146,925 | 49,066,009 | ||||||
| Investments at fair value, non-affiliated (cost $54,469,006 and $21,628,965, respectively) | 54,431,367 | 22,875,848 | ||||||
| Total investments (cost $94,486,248 and $71,080,828, respectively) | 97,619,301 | 95,202,423 | ||||||
| Escrow receivable | 1,677,052 | - | ||||||
| Receivable for Adviser expense reimbursement | 120,596 | 109,145 | ||||||
| Receivable for investments sold | - | 5,198 | ||||||
| Interest receivable from control investments | - | 42,778 | ||||||
| Dividends receivable | 4,082 | 83 | ||||||
| Deferred tax asset | - | 656,743 | ||||||
| Prepaid expenses and other assets | 91,068 | 25,023 | ||||||
| Total assets | 99,512,099 | 96,041,393 | ||||||
| Liabilities | ||||||||
| Base management fees payable to Adviser | 361,789 | 327,436 | ||||||
| Distribution payable to common stockholders | 915,701 | - | ||||||
| Accrued expenses and other liabilities | 167,058 | 234,784 | ||||||
| Deferred tax liability | 434,245 | - | ||||||
| Total liabilities | 1,878,793 | 562,220 | ||||||
| Net assets applicable to common stockholders | $ | 97,633,306 | $ | 95,479,173 | ||||
| Net Assets Applicable to Common Stockholders Consist of: | ||||||||
Warrants, no par value; 945,594 issued and outstanding | $ | 1,370,700 | $ | 1,370,700 | ||||
Capital stock, $0.001 par value; 9,156,931 shares issued and outstanding at | 9,157 | 9,147 | ||||||
| Additional paid-in capital | 96,702,793 | 98,444,952 | ||||||
| Accumulated net investment loss, net of income taxes | (3,264,474 | ) | (3,308,522 | ) | ||||
| Accumulated realized loss, net of income taxes | (1,175,336 | ) | (18,532,648 | ) | ||||
| Net unrealized appreciation of investments, net of income taxes | 3,990,466 | 17,495,544 | ||||||
Net assets applicable to common stockholders | $ | 97,633,306 | $ | 95,479,173 | ||||
Net Asset Value per common share outstanding (net assets applicable | $ | 10.66 | $ | 10.44 | ||||
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| Distributable Cash Flow | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
For the Three | For the Three | For the Six | For the Six | |||||||||||||||||
| Total from Investments | ||||||||||||||||||||
| Distributions from investments | $ | 587,960 | $ | 847,399 | $ | 1,319,951 | $ | 2,336,155 | ||||||||||||
| Distributions paid in stock | 24,394 | 20,972 | 47,760 | 20,972 | ||||||||||||||||
| Interest income from investments | 135,956 | 189,622 | 271,286 | 381,053 | ||||||||||||||||
| Dividends from money market mutual funds | 4,998 | 233 | 5,188 | 450 | ||||||||||||||||
| Other income | 40,000 | 8,688 | 40,000 | 19,080 | ||||||||||||||||
| Total from Investments | 793,308 | 1,066,914 | 1,684,185 | 2,757,710 | ||||||||||||||||
| Operating Expenses Before Leverage Costs | ||||||||||||||||||||
| Advisory fees (net of expense reimbursement by Adviser) | 241,193 | 258,087 | 475,873 | 516,355 | ||||||||||||||||
| Other operating expenses | 157,012 | 216,177 | 310,855 | 390,745 | ||||||||||||||||
| Total Operating Expenses, before Leverage Costs | 398,205 | 474,264 | 786,728 | 907,100 | ||||||||||||||||
| Distributable cash flow before leverage costs | 395,103 | 592,650 | 897,457 | 1,850,610 | ||||||||||||||||
| Leverage costs | - | - | - | 45,619 | ||||||||||||||||
| Distributable Cash Flow | $ | 395,103 | $ | 592,650 | $ | 897,457 | $ | 1,804,991 | ||||||||||||
| Capital gain proceeds | 520,590 | 292,500 | 520,589 | 292,500 | ||||||||||||||||
| Cash Available for Distribution | $ | 915,693 | $ | 885,150 | $ | 1,418,046 | $ | 2,097,491 | ||||||||||||
| Distributions paid on common stock | $ | 915,693 | $ | 909,904 | $ | 1,830,344 | $ | 2,090,055 | ||||||||||||
| Payout percentage for period (1) | 100 | % | 103 | % | 129 | % | 100 | % | ||||||||||||
| DCF/GAAP Reconciliation | ||||||||||||||||||||
| Distributable Cash Flow | $ | 395,103 | $ | 592,650 | $ | 897,457 | $ | 1,804,991 | ||||||||||||
Adjustments to reconcile to Net Investment Income (Loss), | ||||||||||||||||||||
| Distributions paid in stock (2) | (24,394 | ) | (20,972 | ) | (47,760 | ) | (20,972 | ) | ||||||||||||
| Return of capital on distributions received from equity investments | (475,518 | ) | (656,759 | ) | (781,243 | ) | (1,655,399 | ) | ||||||||||||
| Non-recurring professional fees | - | (38,881 | ) | - | (38,881 | ) | ||||||||||||||
Net Investment Income (Loss), before Income Taxes | $ | (104,809 | ) | $ | (123,962 | ) | $ | 68,454 | $ | 89,739 | ||||||||||
(1) Distributions paid as a percentage of Distributable Cash Flow | ||||||||||||||||||||
(2) Distributions paid in stock for the three and six months ended May 31, 2011 and May 31, 2010 were paid as part of normal operations | ||||||||||||||||||||
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| STATEMENTS OF OPERATIONS | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
For the three | For the three | For the six | For the six | |||||||||||||
| Investment Income | ||||||||||||||||
| Distributions from investments | ||||||||||||||||
| Control investments | $ | 69,544 | $ | 478,380 | $ | 139,711 | $ | 1,034,259 | ||||||||
| Affiliated investments | 113,279 | 224,999 | 497,288 | 1,081,891 | ||||||||||||
| Non-affiliated investments | 405,137 | 144,020 | 682,952 | 220,005 | ||||||||||||
| Total distributions from investments | 587,960 | 847,399 | 1,319,951 | 2,336,155 | ||||||||||||
| Less return of capital on distributions | (475,518 | ) | (656,759 | ) | (781,243 | ) | (1,655,399 | ) | ||||||||
| Net distributions from investments | 112,442 | 190,640 | 538,708 | 680,756 | ||||||||||||
| Interest income from control investments | 135,956 | 189,622 | 271,286 | 381,053 | ||||||||||||
| Dividends from money market mutual funds | 4,998 | 233 | 5,188 | 450 | ||||||||||||
| Fee income | 40,000 | 8,688 | 40,000 | 19,080 | ||||||||||||
| Total Investment Income | 293,396 | 389,183 | 855,182 | 1,081,339 | ||||||||||||
| Operating Expenses | ||||||||||||||||
| Base management fees | 361,789 | 309,704 | 713,809 | 619,626 | ||||||||||||
| Professional fees | 82,952 | 153,693 | 163,828 | 238,855 | ||||||||||||
| Directors' fees | 15,396 | 33,271 | 29,969 | 59,432 | ||||||||||||
| Stockholder communication expenses | 13,200 | 16,174 | 26,112 | 31,877 | ||||||||||||
| Administrator fees | 9,648 | 14,456 | 19,035 | 28,916 | ||||||||||||
| Fund accounting fees | 7,519 | 7,039 | 14,847 | 14,011 | ||||||||||||
| Registration fees | 6,296 | 6,496 | 12,456 | 12,851 | ||||||||||||
| Franchise tax expense | 5,109 | 4,958 | 10,107 | 7,530 | ||||||||||||
| Stock transfer agent fees | 3,428 | 3,462 | 6,781 | 6,592 | ||||||||||||
| Custodian fees and expenses | 900 | 2,755 | 2,282 | 4,330 | ||||||||||||
| Other expenses | 12,564 | 12,754 | 25,438 | 25,232 | ||||||||||||
| Total Operating Expenses | 518,801 | 564,762 | 1,024,664 | 1,049,252 | ||||||||||||
| Interest expense | - | - | - | 45,619 | ||||||||||||
| Total Expenses | 518,801 | 564,762 | 1,024,664 | 1,094,871 | ||||||||||||
| Less expense reimbursement by Adviser | (120,596 | ) | (51,617 | ) | (237,936 | ) | (103,271 | ) | ||||||||
| Net Expenses | 398,205 | 513,145 | 786,728 | 991,600 | ||||||||||||
| Net Investment Income (Loss), before Income Taxes | (104,809 | ) | (123,962 | ) | 68,454 | 89,739 | ||||||||||
| Deferred tax benefit (expense) | 35,914 | (967 | ) | (24,406 | ) | (33,661 | ) | |||||||||
| Net Investment Income (Loss) | (68,895 | ) | (124,929 | ) | 44,048 | 56,078 | ||||||||||
| Realized and Unrealized Gain (Loss) on Investments | ||||||||||||||||
| Net realized gain on control investments | - | 585,000 | - | 2,163,001 | ||||||||||||
| Net realized gain (loss) on affiliated investments | 24,096,236 | (9,607,112 | ) | 24,096,236 | (9,624,557 | ) | ||||||||||
| Net realized gain (loss) on non-affiliated investments | 1,637,300 | (1,239,501 | ) | 2,011,122 | (1,211,889 | ) | ||||||||||
| Net realized gain (loss), before income taxes | 25,733,536 | (10,261,613 | ) | 26,107,358 | (8,673,445 | ) | ||||||||||
| Current tax expense | (200,000 | ) | - | (200,000 | ) | - | ||||||||||
| Deferred tax benefit (expense) | (8,978,436 | ) | 1,540,708 | (8,550,046 | ) | 1,297,737 | ||||||||||
| Income tax benefit (expense), net | (9,178,436 | ) | 1,540,708 | (8,750,046 | ) | 1,297,737 | ||||||||||
| Net realized gain (loss) on investments | 16,555,100 | (8,720,905 | ) | 17,357,312 | (7,375,708 | ) | ||||||||||
| Net unrealized appreciation (depreciation) of control investments | (695,358 | ) | (765,835 | ) | (1,690,503 | ) | 769,622 | |||||||||
| Net unrealized appreciation (depreciation) of affiliated investments | (18,813,426 | ) | 9,841,655 | (18,013,517 | ) | 11,049,729 | ||||||||||
| Net unrealized depreciation of non-affiliated investments | (1,783,681 | ) | (5,525,233 | ) | (1,284,522 | ) | (5,327,459 | ) | ||||||||
| Net unrealized appreciation (depreciation), before income taxes | (21,292,465 | ) | 3,550,587 | (20,988,542 | ) | 6,491,892 | ||||||||||
| Deferred tax benefit (expense) | 7,589,272 | (1,985,123 | ) | 7,483,464 | (2,435,109 | ) | ||||||||||
Net unrealized appreciation (depreciation) of investments | (13,703,193 | ) | 1,565,464 | (13,505,078 | ) | 4,056,783 | ||||||||||
| Net Realized and Unrealized Gain (Loss) on Investments | 2,851,907 | (7,155,441 | ) | 3,852,234 | (3,318,925 | ) | ||||||||||
| Net Increase (Decrease) in Net Assets Applicable to | ||||||||||||||||
| Common Stockholders Resulting from Operations | $ | 2,783,012 | $ | (7,280,370 | ) | $ | 3,896,282 | $ | (3,262,847 | ) | ||||||
| Net Increase (Decrease) in Net Assets Applicable to Common Stockholders | ||||||||||||||||
| Resulting from Operations Per Common Share: | ||||||||||||||||
Basic and Diluted | $ | 0.30 | $ | (0.80 | ) | $ | 0.43 | $ | (0.36 | ) | ||||||
| Weighted Average Shares of Common Stock Outstanding: | ||||||||||||||||
| Basic and Diluted | 9,156,931 | 9,099,037 | 9,151,776 | 9,088,679 | ||||||||||||
