(NYSE:KED) Kayne Anderson Energy Development Company (the “Company”) today announced its financial results for the quarter ended August 31, 2012. HIGHLIGHTS
- Net asset value: $23.90 per share; up $1.22 per share for the quarter (5.4% increase)
- The Company increased its distribution to $0.43 per share (4.9% increase over prior quarter)
- Net investment loss: $0.4 million
- Net realized gains: $1.3 million
- Net unrealized gains: $16.0 million
The Company had net realized gains from investments of $1.3 million, after taking into account a deferred income tax benefit of $0.1 million and a current income tax expense of $0.7 million.
The Company had a net change in unrealized gains of $16.0 million. The net change consisted of $25.2 million of unrealized gains and a deferred income tax expense of $9.2 million. The Company had an increase in net assets resulting from operations of $16.9 million. This increase was comprised of net investment loss of $0.4 million; net realized gains of $1.3 million; and net unrealized gains of $16.0 million, as noted above. NET ASSET VALUE As of August 31, 2012, the Company’s net asset value was $248.4 million or $23.90 per share. This represents an increase of $1.22 per share or 5.4% for the quarter. PORTFOLIO As of August 31, 2012, the Company had long-term investments of $343.1 million, of which approximately 55% were public MLPs and other public equity securities, 28% were private MLPs and other private equity securities and 17% were debt securities. The Company’s long-term investments consisted of 46 portfolio companies. UPDATES ON PRIVATE PORTFOLIO COMPANIES The Company will provide updates on its private portfolio companies on its website at www.kaynefunds.com/ked/portfolio-companies/ in lieu of a quarterly earnings conference call. LIQUIDITY AND CAPITAL RESOURCES As of August 31, 2012, the Company had $77.0 million of borrowings under its credit facility (at an interest rate of 2.24%), which represented 59.6% of its borrowing base of $129.2 million (66.1% 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 423%. 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 October 25, 2012, the Company had $75.0 million borrowed under its credit facility and had $7.9 million in cash. Outstanding borrowings represented 54.3% of the borrowing base of $138.2 million (60.1% of its borrowing base attributable to quoted securities).DISTRIBUTION
On September 28, 2012, the Company declared a distribution of $0.43 per share for the quarter ended August 31, 2012, which was paid on October 26, 2012 to stockholders. This distribution represents an increase of 4.9% from the prior quarter distribution ($0.41 per share) and an increase of 13.2% from the distribution for the quarter ended August 31, 2011. GUIDANCE The Company estimates its portfolio will generate dividends, distributions, and interest income of approximately $7.1 million in the next quarter. This estimate includes cash distributions of $1.2 million per quarter for Direct Fuels, which is pro forma for the October 23, 2012 redemption of the Preferred D units. The Company has assumed that the proceeds from this redemption will be reinvested at an average yield of 8.5%. The estimate also includes distributions of $0.9 million per quarter from VantaCore, which is based on only the cash distributions the Company expects to receive, on average, over the next four quarters of $0.343 per common and preferred A unit and $0.383 per preferred B unit. The Company’s guidance does not include payment-in-kind distributions that the Company expects to receive on VantaCore’s common and preferred A units. The Company’s guidance does not reflect any changes in cash distributions made by MLPs or changes in interest rates based on the movement in LIBOR rates since August 31, 2012.Portfolio Category | Amount Invested ($ in millions) | Average Annual Yield (1)(2) | |||||||
Private MLPs (3)(4) | $ | 85 | 10.9 | % | |||||
Public MLPs and Other Public Equity | 190 | 6.7 | |||||||
Debt Investments (5)(6) | 59 | 10.5 |
(2) Average yields for Public MLPs and Other Public Equity are based on the most recently declared distributions as of August 31, 2012. Amounts invested for Private MLPs are based on August 31, 2012 valuations.
(3) The amount invested excludes the Company’s equity investment in ProPetro (valued at $8.9 million as of August 31, 2012), which does not pay a dividend. (4) Reflects the redemption of the Direct Fuels’ Preferred D units at the liquidation preference ($6.5 million) plus accrued dividends. Assumes the $6.5 million is reinvested at an average yield of 8.5%. (5) The average yield includes straight-line amortization of the purchase price discounts/premiums through the expected maturity. (6) The amount invested includes the Company’s $13.2 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 $1.53 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 $81.4 million borrowed under the Company’s credit facility, assuming a 30-day LIBOR rate of 0.23% and a spread of 2.00%. Based on the foregoing assumptions, the Company is expected to generate net distributable income (“NDI”) per share of $0.445 to $0.455 in the fourth quarter of fiscal 2012. 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 AUGUST 31, 2012 (amounts in 000’s, except share and per share amounts) (UNAUDITED) | |||||||||
ASSETS | |||||||||
Investments, at fair value: | |||||||||
Non-affiliated (Cost — $169,433) | $ | 201,952 | |||||||
Affiliated (Cost — $139,206) | 141,189 | ||||||||
Total investments (Cost — $308,639) | 343,141 | ||||||||
Cash | 2,220 | ||||||||
Receivable for securities sold | 27 | ||||||||
Interest, dividends and distributions receivable | 752 | ||||||||
Other receivable | 4,900 | ||||||||
Debt issuance costs, prepaid expenses and other assets | 899 | ||||||||
Total Assets | 351,939 | ||||||||
LIABILITIES | |||||||||
Credit facility | 77,000 | ||||||||
Current income tax liability | 232 | ||||||||
Deferred income tax liability | 24,206 | ||||||||
Investment management fee payable | 1,494 | ||||||||
Accrued directors’ fees and expenses | 74 | ||||||||
Accrued expenses and other liabilities | 565 | ||||||||
Total Liabilities | 103,571 | ||||||||
NET ASSETS | $ | 248,368 | |||||||
NET ASSETS CONSIST OF | |||||||||
Common stock, $0.001 par value (200,000,000 shares authorized; 10,391,595 shares issued and outstanding) | $ | 10 | |||||||
Paid-in capital | 200,552 | ||||||||
Accumulated net investment loss, net of income taxes, less dividends | (33,500 | ) | |||||||
Accumulated net realized gains on investments, net of income taxes | 59,770 | ||||||||
Net unrealized gains on investments, net of income taxes | 21,536 | ||||||||
NET ASSETS | $ | 248,368 | |||||||
NET ASSET VALUE PER SHARE | $ | 23.90 | |||||||
KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED AUGUST 31, 2012 (amounts in 000’s) (UNAUDITED) | |||||||||||
INVESTMENT INCOME | |||||||||||
Income | |||||||||||
Dividends and distributions: | |||||||||||
Non-affiliated investments | $ | 2,463 | |||||||||
Affiliated investments | 2,666 | ||||||||||
Total dividends and distributions | 5,129 | ||||||||||
Return of capital | (4,882 | ) | |||||||||
Net dividends and distributions | 247 | ||||||||||
Interest and other income — non-affiliated investments | 1,097 | ||||||||||
Interest — affiliated investments | 457 | ||||||||||
Total investment income | 1,801 | ||||||||||
Expenses | |||||||||||
Investment management fees | 1,493 | ||||||||||
Professional fees | 130 | ||||||||||
Directors’ fees and expenses | 77 | ||||||||||
Insurance | 27 | ||||||||||
Administration fees | 21 | ||||||||||
Other expenses | 123 | ||||||||||
Total expenses — before interest expense | 1,871 | ||||||||||
Interest expense | 577 | ||||||||||
Total expenses | 2,448 | ||||||||||
Net Investment Income (Loss) — Before Income Taxes | (647 | ) | |||||||||
Current income tax expense | (23 | ) | |||||||||
Deferred income tax benefit (expense) | 268 | ||||||||||
Net Investment Income (Loss) | (402 | ) | |||||||||
REALIZED AND UNREALIZED GAINS | |||||||||||
Net Realized Gains | |||||||||||
Investments — non-affiliated | 855 | ||||||||||
Investments — affiliated | 1,089 | ||||||||||
Current income tax expense | (726 | ) | |||||||||
Deferred income tax benefit | 99 | ||||||||||
Net Realized Gains | 1,317 | ||||||||||
Net Change in Unrealized Gains | |||||||||||
Investments — non-affiliated | 14,814 | ||||||||||
Investments — affiliated | 10,394 | ||||||||||
Deferred income tax expense | (9,177 | ) | |||||||||
Net Change in Unrealized Gains | 16,031 | ||||||||||
Net Realized and Unrealized Gains | 17,348 | ||||||||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 16,946 | |||||||||