As of May 31, 2011, the Company’s net asset value included current and deferred income tax liabilities of $19.9 million and $7.3 million, respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of May 31, 2011, the Company had approximately $5.0 million in short-term investments in the form of a repurchase agreement. The Company’s repurchase agreement is collateralized by U.S. Treasury securities, and the Company’s counterparty is J.P. Morgan Securities Inc.
As of May 31, 2011, the Company had $67.0 million of borrowings under its credit facility (at an interest rate of 2.21%), which represented 49.6% of its borrowing base of $135.2 million (52.7% of its borrowing base attributable to quoted securities). The maximum amount that the Company can borrow under its credit facility is limited to the lesser of the commitment amount of $70.0 million or its borrowing base. As of July 14, 2011, the Company had $62.0 million of borrowings (at an interest rate of 2.19%), which represented 47.2% of the borrowing base of $131.3 million (50.3% of its borrowing base attributable to quoted securities).DISTRIBUTION On July 22, 2011, the Company will pay a distribution of $0.38 per share for the quarter ended May 31, 2011 to stockholders of record on July 13, 2011. As noted above, this represents an increase of $0.07 per share (22.6%) over the prior quarter’s distribution and represents an increase of $0.04 – $0.05 per share over the Company’s prior distribution guidance. GUIDANCE The Company’s guidance is pro forma for the $19 million tax payments that it expects to make in August 2011 (primarily associated with the IRP sale). For the purpose of providing guidance, the Company has assumed that the payment will be funded through the sale of portfolio securities ($9 million in public MLPs and $10 million in traded debt). The Company estimates the remaining portfolio will generate dividends, distributions, and interest income of approximately $6.3 million per quarter. This estimate does not include the full $0.45 per common unit cash distribution that Direct Fuels is expected to pay for the remainder of 2011. Rather, the estimate reflects cash distributions from Direct Fuels at a distribution rate of $0.37 per common unit, which reflects lower margins that are more consistent with long-term averages. The estimate also includes $0.7 million per quarter of distributions from VantaCore, substantially all of which will be in the form of additional preferred units during the Company’s fiscal third quarter, and $0.4 million of paid-in-kind interest from ProPetro. The Company’s guidance does not reflect any changes in cash distributions made by MLPs or changes in interest rates based on the movement in LIBOR rates since May 31, 2011.
|Portfolio Category||Amount Invested($ in millions)||Average AnnualYield (1)(2)|
|Private MLPs (3)||$66||12.5%|
|Public MLPs and MLP Affiliates||179||6.6|
|Debt Investments (4)||48||10.3|
|(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 MLP Affiliates are based on the most recently declared distributions as of May 31, 2011. Amounts invested for Private MLPs are based on May 31, 2011 valuations. Average yields reflect quarterly distributions of $0.45 per unit for Vantacore (the minimum quarterly distribution) and $0.37 per common unit for Direct Fuels.|
|(3)||The amount invested excludes the Company’s equity investment in ProPetro valued at $5.6 million as of May 31, 2011, which does not pay a dividend or distribution.|
|(4)||The average yield includes straight-line amortization of the purchase price discounts/premiums through the expected maturity.|
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