Tortoise Capital Resources Corp. (NYSE: TTO) today announced that on November 1, 2012 it entered into a definitive agreement with Public Service Company of New Mexico (PNM) for the sale of its 40-percent undivided interest in the Eastern Interconnect Project (EIP) upon lease termination on April 1, 2015. The lease provides PNM an end-of-lease option to purchase TTO’s interest for fair market value, and the parties agreed to a value of $7.7 million for the transaction.
TTO acquired an existing lease for the EIP—a 216 mile, 345-kV bulk power transmission line and related equipment and substations—on June 30, 2011 and will continue to lease its interest in the EIP to PNM through April 1, 2015.
The negotiation of the end-of-lease purchase option was prompted in part by a directive from the Federal Energy Regulatory Commission (FERC). FERC directed PNM, in consultation with TTO, to identify the party that would provide transmission service over the leased portion of the EIP beyond the lease expiration in 2015. The announced agreement completes the response to FERC’s order and is subject to FERC approval.
“As expected with the risk profile of this type of asset, the return on this transaction will be at the low end of our targeted range,” said TTO’s Chief Executive Officer Dave Schulte. “We continue to execute our strategy to become a Real Estate Investment Trust (REIT), and expect to qualify for REIT status for 2013.”
About Tortoise Capital Resources Corp.
Tortoise Capital Resources Corp. (NYSE: TTO) is an energy infrastructure asset financing company that provides capital to pipeline, storage and power transmission operators. TTO’s investments include securities and real assets with long-term, stable cash flows, limited commodity price sensitivity, and growth opportunities. TTO is managed by Corridor InfraTrust Management, LLC. (
). Corridor is an affiliate of Tortoise Capital Advisors, L.L.C., an investment manager specializing in listed energy infrastructure investments with approximately $9.1 billion of assets under management as of September 30, 2012.
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