Kayne Anderson Energy Development Company Announces Impact of the IPO of Emerge Energy Services LP
HOUSTON--(BUSINESS WIRE)-- (NYS: KED) Kayne Anderson Energy Development Company (the "Company") announced that on May 28, 2013, the final distribution of proceeds from the Emerge Energy Services LP ("EMES") IPO was made to all investors. As a result, the Company received (i) $2.9 million in cash with respect to its investment in Direct Fuels Preferred Units and (ii) $20.3 million in cash and 1.684 million EMES Common Units with respect to its Direct Fuels Common Units.
Based on the IPO price of $17.00 per unit, before accounting for any illiquidity discount or price change subsequent to the IPO, the total consideration received by the Company was $51.9 million, which compares to the Company's valuation as of February 28, 2013 of $46.7 million. After taking into account a discount to reflect the 180-day lock-up period on the EMES Common Units held by the Company, as well as the change in value of EMES Common Units between IPO and May 28th, the Company estimates that the after-tax impact on its NAV is approximately $3.1 million, or $0.30 per share, compared to its NAV at February 28, 2013.
In terms of impact to NDI guidance, the Company will not re-issue guidance until the cash portion of the proceeds has been reinvested. However, assuming that (i) the proceeds are invested in public MLPs with the same average yield as the Company's current portfolio of public MLPs, (ii) there are no cash taxes due as a result of this transaction and (iii) EMES makes distributions consistent with the forecast included in the IPO prospectus, the Company's quarterly NDI will increase by approximately $0.02 per share.
The Company is a non-diversified, closed-end investment company registered 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.
KA Fund Advisors, LLC
Monique Vo, 877-657-3863
KEYWORDS: United States North America Texas
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