Tortoise Capital Advisors, LLC Responds to Recent Developments Related to SemGroup, L.P.

2008-07-24 01:33:02 -

www.tortoiseadvisors.com - Tortoise Capital Advisors, LLC, the investment adviser for Tortoise Energy Infrastructure Corp. (NYSE: TYG), Tortoise Energy Capital Corp. (NYSE: TYY) and Tortoise North American Energy Corp. (NYSE: TYN), has evaluated the impact of recent adverse developments related to SemGroup, L.P. ("Sem Parent"). Sem Parent is a private, diversified energy midstream company that transports, stores and markets multiple energy products. A subsidiary of Sem Parent is the general partner of SemGroup Energy Partners, L.P. ("SGLP"), a publicly traded master limited partnership that stores and transports crude oil and asphalt. On July 21, 2008, Manchester Securities and Alerian Capital Management assumed control of the general partner of SGLP. SGLP derives a substantial portion of its revenues from Sem Parent. On July 22, 2008, Sem Parent filed Chapter 11 bankruptcy due to claimed liquidity issues. SGLP has not filed for bankruptcy and is not included in Sem Parent's filing. As a result of these events, Sem Parent's 8.75 percent Senior Notes declined in value from approximately 96.5 percent of par on July 16, 2008 to approximately 11.5 percent of par on July 23, 2008. SGLP's common unit price traded from a close of $22.80 per unit on July 16, 2008 to a close of $8.00 per unit on July 23, 2008.

TYN owns approximately $9.3 million par value of Sem Parent's 8.75 percent Senior Notes ("Sem Parent Notes"). As of July 16, 2008, TYG, TYY and TYN owned 342,162; 436,774; and 37,000 units of SGLP, respectively. Combined, the Sem Parent Notes and SGLP units represented 0.69 percent of TYG's total assets, 1.27 percent of TYY's total assets and 4.3 percent of TYN's total assets, as of July 16, 2008.

TYN's investment in Sem Parent Notes is expected to represent an unsecured claim in the Sem Parent bankruptcy. TYN has ceased accruing interest income on the Sem Parent Notes and has reserved against its existing unpaid interest. The recovery of the par value and unpaid interest on the Sem Parent Notes is uncertain at this time. TYN reflects Sem Parent Notes on its balance sheet at fair value, as determined by TYN according to its valuation policy and procedures. TYN's July 17, 2008 net asset value of $24.82 reflected the Sem Parent Notes at 29.5 percent of par value.

SGLP's board has indicated that it is too early to determine the appropriate distribution for the quarter. SGLP operates more than 1,000 miles of pipeline, and owns or leases more than 13 million barrels of storage and other transportation assets. "Given the geographic significance of its assets, we continue to believe SGLP's fee-based energy infrastructure assets retain intrinsic value and are an important component of the midstream energy industry," said Tortoise Capital Advisors' Managing Director Zachary Hamel.

Tortoise Capital Advisors is monitoring the impact the Sem Parent bankruptcy may have on other portfolio holdings for each of the funds, and is presently unaware of any material impact or diminution in value that has occurred as a result of these events.

"We expect TYG, TYY and TYN to maintain their current distribution to stockholders and to grow those distributions over the long term, despite the Sem Parent bankruptcy," said the funds' Chief Financial Officer, Terry Matlack. "Although these investments represented 4.3 percent of TYN's total assets as of July 16, 2008, we believe TYN's 90.8 percent distributable cash flow payout ratio for the six months ended May 31, 2008 should provide cushion to maintain our distributions. In addition, we remain in compliance with all of our leverage coverage ratios."

About Tortoise Capital Advisors, LLC

Tortoise Capital Advisors, LLC is a pioneer in the capital markets for master limited partnership (MLP) investment companies and a leader in closed-end funds and separately managed accounts focused on MLPs in the energy infrastructure sector. As of June 30, 2008, the adviser had approximately $2.7 billion of assets under management.

Safe Harbor Statement

This press release shall not constitute an offer to sell or a solicitation to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer or solicitation or sale would be unlawful prior to registration or qualification under the laws of such state or jurisdiction.

Forward-Looking Statement

This press release contains certain statements that may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included herein are "forward-looking statements." Although the funds and Tortoise Capital Advisors believe that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the funds' reports that are filed with the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required by law, the funds and Tortoise Capital Advisors do not assume a duty to update these forward-looking statements.

Tortoise Capital Advisors, LLC,
Pam Kearney, 866-362-9331
Investor Relations
www.tortoiseadvisors.com