Kayne Anderson Energy Development Company Announces Results for the Quarter Ended May 31, 2012
HOUSTON--(BUSINESS WIRE)-- (NYSE:KED) Kayne Anderson Energy Development Company (KED) (the Company) today announced its financial results for the quarter ended May 31, 2012.
- Net asset value: $22.68 per share
- The Company increased its distribution to $0.41 per share (5.1% increase over prior quarter)
- Net investment income: $0.04 million
- Net realized gains: $2.9 million
- Net unrealized losses: $18.2 million
RESULTS OF OPERATIONS QUARTER ENDED MAY 31, 2012
Investment income totaled $2.5 million for the quarter and consisted primarily of net dividends and distributions and interest income. The Company received $4.9 million of cash dividends and distributions, of which $3.8 million was treated as a return of capital during the period. During the quarter, the Company received $1.5 million of interest income, of which $0.4 million was paid-in-kind interest from ProPetro Services, Inc. (ProPetro). The Company also received $0.6 million of paid-in-kind distributions, of which $0.4 million was from VantaCore Partners LP (VantaCore). These paid-in-kind distributions are not included in investment income, but are reflected as an unrealized gain.
Operating expenses totaled $2.4 million, including $1.5 million of investment management fees; $0.6 million of interest expense and $0.3 million of other operating expenses. Interest expense included $0.1 million of amortization of debt issuance costs. Investment management fees were equal to an annual rate of 1.75% of average total assets.
The Companys net investment income totaled $0.04 million and included a deferred income tax expense of $0.03 million.
The Company had net realized gains from investments of $2.9 million, after taking into account a deferred income tax expense of $1.8 million.
The Company had a net change in unrealized losses from investments of $18.2 million. The net change consisted of $28.9 million of unrealized losses and a deferred income tax benefit of $10.7 million.
The Company had a decrease in net assets resulting from operations of $15.3 million. This decrease was comprised of net investment income of $0.04 million; net realized gains of $2.9 million; and net unrealized losses of $18.2 million, as noted above.
NET ASSET VALUE
As of May 31, 2012, the Companys net asset value was $235.2 million or $22.68 per share. This represents a decrease of $1.86 per share for the quarter.
As of May 31, 2012, the Company had long-term investments of $321.4 million, of which approximately 56% were public MLPs and other public equity securities, 26% were private MLPs and other private equity securities and 18% were debt securities. The Companys long-term investments consisted of 47 portfolio companies.
LIQUIDITY AND CAPITAL RESOURCES
As of May 31, 2012, the Company had $79.0 million of borrowings under its credit facility (at an interest rate of 2.27%), which represented 63.1% of its borrowing base of $125.2 million (69.7% of its borrowing base attributable to quoted securities). At the same date, the Companys asset coverage ratio under the Investment Company Act of 1940 was 398%. The maximum amount that the Company can borrow under its credit facility is limited to the lesser of the commitment amount of $85.0 million or its borrowing base. As of July 19, 2012, the Company had $80.0 million borrowed under its credit facility and had $5.4 million in cash. Outstanding borrowings represented 61.1% of the borrowing base of $131.0 million (67.5% of its borrowing base attributable to quoted securities).
On June 28, 2012, the Company declared a distribution of $0.41 per share for the quarter ended May 31, 2012, which was paid on July 20, 2012 to stockholders of record on July 13, 2012. This distribution represents an increase of 5.1% from the prior quarters distribution of $0.39 per share and an increase of 7.9% from the distribution for the quarter ended May 31, 2011.
The Company estimates its portfolio will generate dividends, distributions, and interest income of approximately $6.9 million in the next quarter. This estimate includes cash distributions of $1.5 million per quarter for Direct Fuels. The estimate also includes distributions of $0.6 million per quarter from VantaCore, which is based on only the cash distribution the Company expects to receive, on average, over the next four quarters of $0.275 per common and preferred A unit. Unlike prior guidance, the Companys estimate does not include payment-in-kind distributions that the Company expects to receive on VantaCores common and preferred A units. The Companys guidance does not reflect any changes in cash distributions made by MLPs or changes in interest rates based on the movement in LIBOR rates since May 31, 2012.
|Public MLPs and Other Public Equity(4)||176||7.2|
|(1)||Average yields include return of capital distributions. Return of capital distributions are reported as a reduction to gross dividends and distributions to arrive at net investment income reported under generally accepted accounting principles.|
|(2)||Average yields for Public MLPs and Other Public Equity are based on the most recently declared distributions as of May 31, 2012. Amounts invested for Private MLPs are based on May 31, 2012 valuations.|
|(3)||The amount invested excludes the Companys equity investment in ProPetro (valued at $7.5 million as of May 31, 2012), which does not pay a dividend.|
|(4)||Amounts are pro forma for a partial distribution the Company expects to receive related to the $4.8 million incremental investment in VantaCore. The Company made this investment on June 8, 2012 and, as a result, will only receive approximately 25% of the distribution with respect to VantaCores second quarter. The investment was funded with proceeds from the sale of public MLPs and other public equity. The amounts in the table above are pro forma for the sale of these public securities.|
|(5)||The average yield includes straight-line amortization of the purchase price discounts/premiums through the expected maturity.|
|(6)||The amount invested includes the Companys $12.8 million debt investment in ProPetro. This investment pays paid-in-kind interest at an annual rate of 13.0%.|
Management Fees and Other Operating Expenses Management fees are estimated to be approximately $1.44 million per quarter. Other operating expenses are estimated to be approximately $0.40 million per quarter.
Interest Expense Interest expense is estimated to be approximately $0.46 million per quarter based on $82.5 million borrowed under the Companys credit facility, assuming a 30-day LIBOR rate of 0.24% and a spread of 2.00%.
Based on the foregoing assumptions, the Company is expected to generate net distributable income (NDI) per share of $0.44 to $0.45 in the third quarter of fiscal 2012.
The Company will host a conference call at 4 p.m. Central time, on July 24, 2012 to discuss its results. All interested parties are welcome to participate. You can access the conference call by dialing (877) 563-8315 approximately 5-10 minutes prior to the call. International callers should dial (706) 679-4383. All callers should reference "Conference ID # 97250332". For the convenience of the Companys stockholders, an archived replay of the call will be available on the Companys website (www.kaynefunds.com/ked/webcasts-and-presentations/).
The Companys filings with the Securities and Exchange Commission, press releases and other financial information are available on the Companys website at www.kaynefunds.com.
KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2012
(amounts in 000s, except share and per share amounts)
|Investments, at fair value:|
|Non-affiliated (Cost $184,577)||$||200,760|
|Affiliated (Cost $127,567)||120,679|
|Total investments (Cost $312,144)||321,439|
|Income tax receivable||332|
|Receivable for securities sold||1,178|
|Interest, dividends and distributions receivable||833|
|Debt issuance costs, prepaid expenses and other assets||1,042|
|Deferred income tax liability||15,397|
|Payable for securities purchased||157|
|Investment management fee payable||1,501|
|Accrued directors fees and expenses||72|
|Accrued expenses and other liabilities||511|
|NET ASSETS CONSIST OF|
|Common stock, $0.001 par value (200,000,000 shares authorized; 10,372,420 shares issued and outstanding)||$||10|
|Accumulated net investment loss, net of income taxes, less dividends||(28,845||)|
|Accumulated net realized gains on investments, net of income taxes||58,453|
|Net unrealized gains on investments, net of income taxes||5,505|
|NET ASSET VALUE PER SHARE||$||22.68|
KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MAY 31, 2012
(amounts in 000s)
|Dividends and Distributions:|
|Non-affiliated investments||$ 2,545|
|Total dividends and distributions||4,874|
|Return of capital||(3,836)|
|Net dividends and distributions||1,038|
|Interest and other income non-affiliated investments||1,051|
|Interest affiliated investments||425|
|Total investment income||2,514|
|Investment management fees||1,501|
|Directors fees and expenses||76|
|Total expenses before interest expense||1,835|
|Net Investment Income Before Income Taxes||77|
|Deferred income tax expense||(33)|
|Net Investment Income||44|
|REALIZED AND UNREALIZED GAINS (LOSSES)|
|Net Realized Gains (Losses)|
|Deferred income tax expense||(1,757)|
|Net Realized Gains||2,910|
|Net Change in Unrealized Gains (Losses)|
|Deferred income tax benefit||10,697|
|Net Change in Unrealized Losses||(18,208)|
|Net Realized and Unrealized Losses||(15,298)|
|NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS||$ (15,254)|
The Company is a non-diversified, closed-end investment company that elected to be treated as a business development company under the Investment Company Act of 1940. The Company's investment objective is to generate both current income and capital appreciation primarily through equity and debt investments. The Company will seek to achieve this objective by investing at least 80% of its net assets together with the proceeds of any borrowings (its "total assets") in securities of companies that derive the majority of their revenue from activities in the energy industry, including: (a) Midstream Energy Companies, which are businesses that operate assets used to gather, transport, process, treat, terminal and store natural gas, natural gas liquids, propane, crude oil or refined petroleum products; (b) Upstream Energy Companies, which are businesses engaged in the exploration, extraction and production of natural resources, including natural gas, natural gas liquids and crude oil, from onshore and offshore geological reservoirs; and (c) Other Energy Companies, which are businesses engaged in owning, leasing, managing, producing, processing and sale of coal and coal reserves; the marine transportation of crude oil, refined petroleum products, liquefied natural gas, as well as other energy-related natural resources using tank vessels and bulk carriers; and refining, marketing and distributing refined energy products, such as motor gasoline and propane to retail customers and industrial end-users.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This press release contains "forward-looking statements" as defined under the U.S. federal securities laws. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to materially differ from the Company's historical experience and its present expectations or projections indicated in any forward-looking statement. These risks include, but are not limited to, changes in economic and political conditions; regulatory and legal changes; energy industry risk; commodity pricing risk; leverage risk; valuation risk; non-diversification risk; interest rate risk; tax risk; and other risks discussed in the Company's filings with the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements made herein. There is no assurance that the Company's investment objectives will be attained.
KA Fund Advisors, LLC
Monique Vo, 877-657-3863
Source: Kayne Anderson Energy Development CompanyCopyright Business Wire 2012