INCOME TAX PAYMENTS

As of August 31, 2011, the Company has increased its estimated income tax payments for 2011 by $2.1 million from its estimate as of May 31, 2011 (from $19.0 million to $21.2 million), principally due to additional realized gains generated during the third quarter. The Company paid $14.1 million in such taxes during August and will pay the remaining $7.1 million in November. The Company anticipates funding such payment with the sale of portfolio securities.

GUIDANCE

The Company estimates its portfolio will generate dividends, distributions, and interest income of approximately $6.6 million in the next quarter. The Company’s guidance is pro forma for the $7.1 million tax payments mentioned above. For the purpose of providing guidance, the Company has assumed that the payment will be funded through the sale of traded debt securities in its portfolio. This estimate includes a cash distribution of $0.45/quarter per common unit that Direct Fuels is expected to pay for the remainder of 2011 and $0.8 million per quarter ($0.475/quarter per common and Class A preferred units) from VantaCore. The Company expects that substantially all of the VantaCore distribution will be in the form of additional preferred units during the Company’s fourth fiscal quarter. 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 August 31, 2011.
Portfolio Category    

AmountInvested($ in millions)
   

Average AnnualYield (1)(2)
Private MLPs (3)     $ 65     14.4 %
Public MLPs, MLP Affiliates and Other Public Equity       175     7.0  
Debt Investments (4)(5)       45     10.6  

(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, MLP Affiliates and Other Public Equity are based on the most recently declared distributions as of August 31, 2011. Amounts invested for Private MLPs are based on August 31, 2011 valuations. Average yields reflect quarterly distributions of $0.45 per common unit for Direct Fuels and $0.475 per unit for VantaCore.
 

(3)

The amount invested excludes the Company’s equity investment in ProPetro (valued at $5.5 million as of August 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.
 

(5)

The amount invested is pro forma for the sale of $7.1 million of traded debt securities to fund the November 2011 tax payments.
 

Management Fees and Other Operating Expenses – Management fees are estimated to be approximately $1.31 million per quarter. Other operating expenses are estimated to be approximately $0.48 million per quarter.

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