Kayne Anderson Energy Development Company Announces Results For The Quarter Ended February 29, 2012

(NYSE:KED) Kayne Anderson Energy Development Company (the “Company”) today announced its financial results for the quarter ended February 29, 2012.

HIGHLIGHTS
  • Net asset value: $24.54 per share; up $1.53 per share (6.6%) for the quarter
  • The Company declared a distribution of $0.39 per share
  • Net investment income: $0.6 million
  • Net realized gains: $1.9 million
  • Net change in unrealized gains: $17.4 million

RESULTS OF OPERATIONS – QUARTER ENDED FEBRUARY 29, 2012

Investment income totaled $3.3 million and consisted primarily of net dividends and distributions and interest income. The Company received $4.8 million of cash dividends and distributions, of which $3.0 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 $0.8 million of paid-in-kind distributions, of which $0.6 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 Company’s net investment income totaled $0.6 million and included a deferred income tax expense of $0.3 million.

The Company had net realized gains from investments of $1.9 million, after taking into account a deferred income tax expense of $1.1 million.

The Company had a net change in unrealized gains from investments of $17.4 million. The net change consisted of $27.7 million of unrealized gains and a deferred income tax expense of $10.3 million.

The Company had an increase in net assets resulting from operations of $19.9 million. This increase was composed of net investment income of $0.6 million; net realized gains of $1.9 million; and net unrealized gains of $17.4 million, as noted above.

NET ASSET VALUE

As of February 29, 2012, the Company’s net asset value was $254.2 million or $24.54 per share. This represents an increase of $1.53 per share (6.6%) for the quarter.

PORTFOLIO

As of February 29, 2012, the Company had long-term investments of $345.9 million, of which approximately 58% were public MLPs and other public equity securities, 25% were private MLPs and other private equity securities and 17% were debt securities. Our long-term investments consisted of 51 portfolio companies.

LIQUIDITY AND CAPITAL RESOURCES

As of February 29, 2012, the Company had $77.0 million of borrowings under its credit facility (at an interest rate of 2.26%), which represented 54.4% of its borrowing base of $141.4 million (59.6% of its borrowing base attributable to quoted securities). At the same date, the Company’s asset coverage ratio under the Investment Company Act of 1940 was 430%. 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 April 23, 2012, the Company had $80.0 million borrowed under its credit facility and had $5.9 million in cash. Outstanding borrowings represented 58.8% of the borrowing base of $136.0 million (64.6% of its borrowing base attributable to quoted securities).

GUIDANCE

The Company estimates its portfolio will generate dividends, distributions, and interest income of approximately $7.0 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 $0.8 million per quarter from VantaCore, all of which is expected to be paid in additional preferred units during the Company’s second quarter of fiscal 2012. 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 February 29, 2012.
Portfolio Category    

AmountInvested($ in millions)
   

Average AnnualYield (1)(2)
Private MLPs (3)     $ 69     13.8 %
Public MLPs and Other Public Equity       200     6.2  
Debt Investments (4)(5)       57     10.1  
(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 February 29, 2012. Amounts invested for Private MLPs are based on February 29, 2012 valuations.
(3) The amount invested excludes the Company’s equity investment in ProPetro (valued at $19.3 million as of February 29, 2012) which does not pay a dividend.
(4) The average yield includes straight-line amortization of the purchase price discounts/premiums through the expected maturity.
(5) The amount invested includes the Company’s $12.4 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 $1.55 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 $81 million borrowed under the Company’s 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 $0.435 to $0.445 in the second quarter of fiscal 2012.

DISTRIBUTION

On March 29, 2012, the Company declared a distribution of $0.39 per share for the quarter ended February 29, 2012 that is payable on April 26, 2012 to stockholders of record on April 20, 2012.

CONFERENCE CALL

The Company will host a conference call at 4 p.m. Central time, on April 25, 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 #70808162". For the convenience of the Company’s stockholders, an archived replay of the call will be available on the Company’s website ( www.kaynefunds.com/ked/webcasts-and-presentations/).

AVAILABLE INFORMATION

The Company’s filings with the Securities and Exchange Commission, press releases and other financial information are available on the Company’s website at www.kaynefunds.com.
KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 2012
(amounts in 000’s, except share and per share amounts)
(UNAUDITED)
   
ASSETS
Investments, at fair value:
Non-affiliated (Cost — $195,413) $ 236,589
Affiliated (Cost — $112,307)   109,331
Total investments (Cost — $307,720) 345,920
Cash 3,189
Income tax receivable 332
Receivable for securities sold 1,339
Interest, dividends and distributions receivable 733
Other receivable 5,030
Debt issuance costs, prepaid expenses and other assets   1,185
Total Assets   357,728
LIABILITIES
Senior secured revolving credit facility 77,000
Deferred income tax liability 24,304
Payable for securities purchased 108
Investment management fee payable 1,489
Accrued directors’ fees and expenses 70
Accrued expenses and other liabilities   555
Total Liabilities   103,526
NET ASSETS $ 254,202
NET ASSETS CONSIST OF
Common stock, $0.001 par value (200,000,000 shares authorized; 10,358,335 shares issued and outstanding) $ 10
Paid-in capital 199,786
Accumulated net investment loss, net of income taxes, less dividends (24,850)
Accumulated net realized gains on investments, net of income taxes 55,543
Net unrealized gains on investments, net of income taxes   23,713
NET ASSETS $ 254,202
NET ASSET VALUE PER SHARE $ 24.54
 
 

KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY

STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED FEBRUARY 29, 2012

(amounts in 000’s)

(UNAUDITED)
   
INVESTMENT INCOME
Income
Dividends and Distributions:
Non-affiliated investments $ 2,901
Affiliated investments   1,929
Total dividends and distributions 4,830
Return of capital   (2,977)
Net dividends and distributions 1,853
Interest and other income — non-affiliated investments 1,015
Interest — affiliated investments   438
Total investment income   3,306
Expenses
Investment management fees 1,489
Professional fees 136
Directors’ fees and expenses 76
Insurance 27
Administration fees 25
Custodian fees 14
Other expenses   93
Total expenses — before interest expense 1,860
Interest expense   569
Total expenses   2,429
Net Investment Income — Before Income Taxes 877
Deferred income tax expense   (324)
Net Investment Income   553
REALIZED AND UNREALIZED GAINS (LOSSES)
Net Realized Gains
Investments — non-affiliated 2,948
Investments — affiliated
Deferred income tax expense   (1,091)
Net Realized Gains   1,857
Net Change in Unrealized Gains (Losses)
Investments — non-affiliated 20,609
Investments — affiliated 7,093
Deferred income tax expense   (10,247)
Net Change in Unrealized Gains   17,455
Net Realized and Unrealized Gains   19,312
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 19,865
 
 

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.

Copyright Business Wire 2010

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