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PROSPECTUS SUPPLEMENT
Up To $60,000,000
Tortoise Energy Infrastructure Corporation
Common Stock
We have entered into a Controlled Equity Offering
SMSales Agreement (as amended, the Sales Agreement) with
Cantor Fitzgerald & Co. (Cantor, or the Sales Agent) relating
to our shares of common stock offered by this prospectus supplement
and the accompanying prospectus. In accordance with the terms of
the Sales Agreement, we may offer and sell from time to time shares
of our common stock having an aggregate sales price of up to
$60,000,000 through the Sales Agent.
We seek to provide our stockholders with an efficient vehicle to
invest in a portfolio of publicly traded master limited
partnerships (MLPs) in the energy infrastructure sector. Under
normal circumstances, we invest at least 90% of our total assets
(including assets obtained through leverage) in securities of
energy infrastructure companies and invest at least 70% of our
total assets in equity securities of MLPs. We are a nondiversified,
closed-end management investment company. This prospectus
supplement, together with the accompanying prospectus dated August
21, 2015, sets forth the information that you should know before
investing.
Our currently outstanding shares of common stock are, and the
shares offered pursuant to this prospectus supplement and
accompanying prospectus will be, listed on the New York Stock
Exchange (NYSE) under the symbol TYG. The last reported sale price
of our common stock on October 21, 2015 was $31.45 per share. The
net asset value (NAV) per share of our common stock at the close of
business on October 21, 2015 was $32.71.
Sales of common stock, if any, will be made by means of ordinary
brokers transactions on the NYSE or otherwise at market prices
prevailing at the time of the sale, at prices related to the
prevailing market prices or at negotiated prices. As of October 21,
2015, we have sold in this offering an aggregate of 735,024 shares
of our common stock, representing net proceeds to us of
$31,918,044.83, after payment of commissions of $322,404.52 in the
aggregate.
Under the terms of the Sales Agreement, we will pay the Sales
Agent a total commission up to 2.0% of the gross sales price per
share for any common stock sold through the Sales Agent. If the
Sales Agent engages in special selling efforts, as that term is
used in Regulation M under the Securities Exchange Act of 1934, the
Sales Agent will receive from us a commission agreed upon at the
time of sale.
The Sales Agent is not required to sell any specific number or
dollar amount of common shares, but will use its commercially
reasonable efforts to sell the common shares offered by this
prospectus supplement and the accompanying prospectus. There is no
arrangement for common shares to be received in an escrow, trust or
similar arrangement.
Investing in our common stock involves risks that are described
in the
Risk Factorssection beginning on
page 35 of the accompanying prospectus.
The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy of this
prospectus supplement or the accompanying prospectus. Any
representation to the contrary is a criminal offense.
Cantor Fitzgerald & Co.
The date of this prospectus supplement is October 23, 2015.
TABLE OF CONTENTS
Prospectus Supplement
You should rely only on the information contained or
incorporated by reference in this prospectus supplement, the
accompanying prospectus and the statement of additional
information. We have not, and the Sales Agent has not, authorized
anyone to provide you with different information. We are not making
an offer of these securities where the offer is not permitted. The
information appearing in this prospectus supplement, the
accompanying prospectus and the statement of additional information
is accurate only as of the dates on their respective covers. Our
business, financial condition and prospects may have changed since
such dates. We will advise investors of any material changes to the
extent required by applicable law.
s-i
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the
statement of additional information contain forward-looking
statements. Forward-looking statements can be identified by the
words may, will, intend, expect, estimate, continue, plan,
anticipate, and similar terms and the negative of such terms. Such
forward-looking statements may be contained in this prospectus
supplement as well as in the accompanying prospectus. By their
nature, all forward-looking statements involve risks and
uncertainties, and actual results could differ materially from
those contemplated by the forward-looking statements. Several
factors that could materially affect our actual results are the
performance of the portfolio of securities we hold, the conditions
in the U.S. and international financial, petroleum and other
markets, the price at which our shares will trade in the public
markets and other factors discussed in our periodic filings with
the Securities and Exchange Commission (SEC).
Although we believe that the expectations expressed in our
forward-looking statements are reasonable, actual results could
differ materially from those projected or assumed in our
forward-looking statements. Our future financial condition and
results of operations, as well as any forward-looking statements,
are subject to change and are subject to inherent risks and
uncertainties, such as those disclosed in the Risk Factors section
of the prospectus accompanying this prospectus supplement. All
forward-looking statements contained or incorporated by reference
in this prospectus supplement or the accompanying prospectus are
made as of the date of this prospectus supplement or the
accompanying prospectus, as the case may be. Except for our ongoing
obligations under the federal securities laws, we do not intend,
and we undertake no obligation, to update any forward-looking
statement. The forward-looking statements contained in this
prospectus supplement and the accompanying prospectus are excluded
from the safe harbor protection provided by Section 27A of the
Securities Act of 1933 (the 1933 Act).
Currently known risk factors that could cause actual results to
differ materially from our expectations include, but are not
limited to, the factors described in the Risk Factors section of
the prospectus accompanying this prospectus supplement. We urge you
to review carefully these sections for a more complete discussion
of the risks of an investment in our common stock.
s-ii
PROSPECTUS SUPPLEMENT SUMMARY
This summary contains basic information about us and the
offering but does not contain all of the information that is
important to your investment decision. You should read this summary
together with the more detailed information contained elsewhere in
this prospectus supplement and accompanying prospectus and in the
statement of additional information, especially the information set
forth under the heading Risk Factors beginning on page 35 of the
accompanying prospectus. When used in this prospectus supplement,
the terms we, us, and our refer to Tortoise Energy Infrastructure
Corporation, unless specified otherwise.
The Company
We seek to provide our stockholders with an efficient vehicle to
invest in a portfolio of publicly traded MLPs in the energy
infrastructure sector. Our investment objective is to seek a high
level of total return with an emphasis on current distributions
paid to stockholders. For purposes of our investment objective,
total return includes capital appreciation of, and all
distributions received from, securities in which we invest
regardless of the tax character of the distributions.
We are a nondiversified, closed-end management investment
company registered under the Investment Company Act of 1940, as
amended (the 1940 Act). We were organized as a corporation on
October 30, 2003, pursuant to a charter (the Charter) governed by
the laws of the State of Maryland. Our fiscal year ends on November
30. We commenced operations in February 2004 following our initial
public offering. Our common stock is listed on the NYSE under the
symbol TYG. As of August 31, 2015, we had net assets of
approximately $1,754.9 million attributable to our common stock. As
of October 21, 2015, we had outstanding $295 million of our
Mandatory Redeemable Preferred Stock and $545 million of our
privately placed Senior Notes.
We have established an unsecured credit facility with U.S. Bank
N.A. serving as a lender and the lending syndicate agent on behalf
of other lenders participating in the credit facility, which
currently allows us to borrow up to $157.5 million. Outstanding
balances under the credit facility generally accrue interest at a
variable annual rate equal to the one-month LIBOR rate plus 1.20%,
with a fee of 0.15% on any unused balance of the credit facility.
As of October 21, 2015, the effective rate was 1.39%. The credit
facility remains in effect through June 13, 2017. We may draw on
the facility from time to time to fund investments in accordance
with our investment policies and for general corporate purposes. As
of October 21, 2015, we had outstanding $31.1 million under the
credit facility.
We have also established an unsecured credit facility with
Scotia Bank, N.A. which currently allows us to borrow up to $100.0
million. Outstanding balances under the credit facility generally
accrue interest at a variable annual rate equal to the one-month
LIBOR rate plus 1.20%, with a fee of 0.15% on any unused balance of
the credit facility if the amount borrowed under the facility is
less than $60.0 million. As of October 21, 2015, the effective rate
was 1.39%. The credit facility remains in effect through June 23,
2016. We may draw on the facility from time to time to fund
investments in accordance with our investment policies and for
general corporate purposes. As of October 21, 2015, we had
outstanding $60.0 million under the credit facility.
Investment Adviser
Tortoise Capital Advisors, L.L.C., a registered investment
adviser specializing in managing portfolios of investments in MLPs
and other energy companies (the Adviser), serves as our investment
adviser. As of September 30, 2015, the Adviser managed assets of
approximately $13.2 billion in the energy sector, including the
assets of publicly traded closed-end management investment
companies, open-end funds and other accounts. The Advisers
investment committee is comprised of eight portfolio managers. See
Management of the Company in the accompanying prospectus.
The principal business address of the Adviser is 11550 Ash
Street, Suite 300, Leawood, Kansas 66211.
S-1
The Offering
The example should not be considered a representation of future
expenses. Actual expenses may be greater or less than those
assumed. Moreover, our actual rate of return may be greater or less
than the hypothetical 5% return assumed in the example.
S-2
USE O F PROCEEDS
We intend to use the net proceeds of this offering primarily to
repay short-term debt outstanding under our credit facility and to
invest in energy infrastructure companies in accordance with our
investment objective and policies or for working capital
purposes.
S-3
CAPI TALIZATION
The following table sets forth our capitalization: (i) as of
August 31, 2015, (ii) pro forma to reflect the subsequent borrowing
under our credit facilities through October 21, 2015, and (iii) pro
forma as adjusted to reflect the issuance of shares offered hereby
(assuming the sale of 882,656 common shares at a price of $31.45
per share (the last reported sale price of our common shares on the
New York Stock Exchange on October 21, 2015)). Actual sales, if
any, of our common shares, and the actual application of the
proceeds thereof, under this prospectus supplement and the
accompanying prospectus may be different than as set forth in the
table below. In addition, the price per share of any such sale may
be greater or less than $31.45, depending on the market price of
our common stock at the time of any such sale. As indicated below,
common stockholders will bear the offering costs associated with
this offering.
S-4
FINANC IAL HIGHLIGHTS
Information contained in the table below under the heading Per
Common Share Data and Supplemental Data and Ratios shows our per
common share operating performance. Except where noted, the
information in this table is derived from our financial statements
audited by Ernst & Young LLP, whose report on such financial
statements is contained in our 2014 Annual Report and is
incorporated by reference into the statement of additional
information, both of which are available from us upon request. The
information as of August 31, 2015, and for the period from December
1, 2014 through August 31, 2015, appears in our unaudited interim
financial statements as filed with the SEC in our most recent
stockholder report for the period ended August 31, 2015, which
report is incorporated by reference into the statement of
additional information, and both of which are available from us
upon request. See Where You Can Find More Information in this
prospectus supplement.
S-5
S-6
PLAN OF DISTRIBUTION
We have entered into a Sales Agreement under which we may issue
and sell from time to time shares of our common stock having an
aggregate sales price of up to $60,000,000 through the Sales Agent
as our agent or as principal. Sales of the shares of common stock,
if any, will be made by means of ordinary brokers transactions on
the NYSE or otherwise at market prices prevailing at the time of
sale, at prices related to prevailing market prices or at
negotiated prices. As agent, the Sales Agent will not engage in any
transactions that stabilize our common stock.
The Sales Agent will offer the common stock subject to the terms
and conditions of the Sales Agreement on a daily basis or as
otherwise agreed upon by us and the Sales Agent. We will designate
the maximum amount of common stock to be sold through the Sales
Agent on a daily basis or otherwise determine such maximum amount
together with the Sales Agent. Subject to the terms and conditions
of the Sales Agreement, the Sales Agent will use its commercially
reasonable efforts to sell on our behalf all of the designated
common stock. We may instruct the Sales Agent not to sell common
stock if the sales cannot be effected at or above the price
designated by us in any such instruction. We or the Sales Agent may
suspend the offering of the common stock being made through the
Sales Agent under the Sales Agreement upon proper notice to the
other party.
Under the terms of the Sales Agreement, the Sales Agent will
receive from us a total commission up to 2.0% of the gross sales
price per share of common stock for any shares sold through the
Sales Agent. The actual commission will be agreed upon at the time
of sale by us and the Sales Agent. The remaining sales proceeds,
after deducting any expenses payable by us and any transaction fees
imposed by any governmental, regulatory, or self-regulatory
organization in connection with the sales, will equal our net
proceeds for the sale of such common stock. If the Sales Agent
engages in special selling efforts, as that term is used in
Regulation M under the Securities Exchange Act of 1934, as amended
(the 1934 Act), the Sales Agent will receive from us a commission
agreed upon at the time of sale.
The Sales Agent will provide written confirmation to us before
the opening of trading on the NYSE on the day immediately following
each day on which shares of common stock are sold under the Sales
Agreement. Each confirmation will include the number of shares of
common stock sold on that day, the net proceeds to us and the
compensation payable by us to the Sales Agent.
Settlement for sales of common stock will occur, unless the
parties agree otherwise, on the third business day that is also a
trading day following the date on which any sales were made in
return for payment of the net proceeds to us. There is no
arrangement for funds to be received in escrow, trust or similar
arrangement.
We will report at least quarterly the number of shares of common
stock sold through the Sales Agent in connection with the sales of
common stock.
In connection with the sales of the common stock on our behalf,
the Sales Agent may be deemed to be an underwriter within the
meaning of the 1933 Act, and the compensation paid to the Sales
Agent may be deemed to be underwriting commissions or discounts. We
have agreed in the Sales Agreement to provide indemnification and
contribution to the Sales Agent against certain liabilities,
including liabilities under the 1933 Act.
In the ordinary course of their business, the Sales Agent and/or
its affiliates have in the past performed, and may continue to
perform, investment banking, broker dealer, lending, financial
advisory, or other services for us for which they have received, or
may receive, separate fees.
If the Sales Agent or we have reason to believe that the
exemptive provisions set forth in Rule 101(c)(1) of Regulation M
under the 1934 Act are not satisfied, that party will promptly
notify the others and sales of common stock under the Sales
Agreement will be suspended until that or other exemptive
provisions have been satisfied in the judgment of the Sales Agent
and us.
We estimate that the total expenses of the offering payable by
us, excluding commissions payable to the Sales Agent under the
Sales Agreement, will be approximately $94,000.
S-7
The offering of shares of common stock pursuant to the Sales
Agreement will terminate upon the earlier of (1) the sale of shares
of our common stock having an aggregate sales price of $60,000,000
and (2) the termination of the Sales Agreement by the Sales Agent
or us.
As of October 21, 2015, we have sold in this offering an
aggregate of 735,024 shares of our common stock, representing net
proceeds to us of $31,918,044.83, after payment of commissions of
$322,404.52 in the aggregate.
LEGAL MATTERS
Certain legal matters in connection with the securities offered
hereby will be passed upon for us by Husch Blackwell LLP, Kansas
City, Missouri (Husch Blackwell). Certain legal matters in
connection with the securities offered hereby will be passed upon
for the Sales Agent by Andrews Kurth LLP, New York, New York
(Andrews Kurth). Husch Blackwell and Andrews Kurth may rely on the
opinion of Venable LLP, Baltimore, Maryland, on certain matters of
Maryland law.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the 1934
Act, and the 1940 Act and are required to file reports, including
annual and semi-annual reports, proxy statements and other
information with the SEC. We voluntarily file quarterly shareholder
reports.
Our 2014 annual shareholder report, as filed with the SEC and
which contains our audited financial statements as of November 30,
2014 and for the year then ended, notes thereto, and other
information about us is incorporated by reference into our
statement of additional information. Our 2015 third quarter report,
as filed with the SEC and containing our unaudited financial
statements as of August 31, 2015, notes thereto, and other
information about us is incorporated by reference into our
statement of additional information. These documents are available
on the SECs EDGAR system and can be inspected and copied for a fee
at the SECs public reference room, 100 F Street, N.E., Room 1580,
Washington, D.C. 20549. Additional information about the operation
of the public reference room facilities may be obtained by calling
the SEC at (202) 551-5850.
This prospectus supplement and the accompanying prospectus do
not contain all of the information in our registration statement,
including amendments, exhibits, and schedules. Statements in this
prospectus supplement and the accompanying prospectus about the
contents of any contract or other document are not necessarily
complete and in each instance reference is made to the copy of the
contract or other document filed as an exhibit to the registration
statement, each such statement being qualified in all respects by
this reference.
Additional information about us can be found on our Advisers
website at
www.tortoiseadvisors.comand in our registration
statement (including amendments, exhibits, and schedules) on Form
N-2 filed with the SEC. Information included on our Advisers
website does not form part of this prospectus supplement. The SEC
maintains a web site (http://www.sec.gov) that contains our
registration statement, other documents incorporated by reference,
and other information we have filed electronically with the SEC,
including proxy statements and other reports we have filed with the
SEC.
S-8
$375,000,000
Tortoise Energy Infrastructure Corporation
Common Stock
Preferred Stock
Debt Securities
Tortoise Energy Infrastructure Corporation (the Company, we or
our) is a nondiversified, closed-end management investment company.
Our investment objective is to seek a high level of total return
with an emphasis on current distributions paid to stockholders. We
seek to provide our stockholders with an efficient vehicle to
invest in a portfolio of publicly traded master limited
partnerships (MLPs) in the energy infrastructure sector. Under
normal circumstances, we invest at least 90% of our total assets
(including assets obtained through leverage) in securities of
energy infrastructure companies and invest at least 70% of our
total assets in equity securities of MLPs. We cannot assure you
that we will achieve our investment objective. Unlike most
investment companies, we have not elected to be treated as a
regulated investment company under the Internal Revenue Code.
We may offer, on an immediate, continuous or delayed basis,
including through a rights offering to existing stockholders, up to
$375,000,000 aggregate initial offering price of our common stock
($0.001 par value per share), preferred stock ($0.001 par value per
share) or debt securities, which we refer to in this prospectus
collectively as our securities, in one or more offerings. We may
offer our common stock, preferred stock or debt securities
separately or in concurrent separate offerings, in amounts, at
prices and on terms set forth in a prospectus supplement to this
prospectus. In addition, from time to time, certain of our
stockholders may offer our common stock in one or more offerings.
The sale of such stock by certain of our stockholders may involve
shares of common stock that were issued to the stockholders in one
or more private transactions and will be registered by us for
resale. The identity of any selling stockholder, the number of
shares of our common stock to be offered by such selling
stockholder, the price and terms upon which our shares of common
stock are to be sold from time to time by such selling stockholder,
and the percentage of common stock held by any selling stockholder
after the offering, will be set forth in a prospectus supplement to
this prospectus. You should read this prospectus and the related
prospectus supplement carefully before you decide to invest in any
of our securities. We will not receive any of the proceeds from
common stock sold by any selling stockholder.
We may offer our securities, or certain of our stockholders may
offer our common stock, directly to one or more purchasers through
agents that we or they designate from time to time, or to or
through underwriters or dealers. The prospectus supplement relating
to the particular offering will identify any agents or underwriters
involved in the sale of our securities, and will set forth any
applicable purchase price, fee, commission or discount arrangement
between us or any selling stockholder and such agents or
underwriters or among the underwriters or the basis upon which such
amount may be calculated. For more information about the manner in
which we may offer our securities, or a selling stockholder may
offer our common stock, see Plan of Distribution and Selling
Stockholders. Our securities may not be sold through agents,
underwriters or dealers without delivery of a prospectus
supplement.
Our common stock is listed on the New York Stock Exchange (NYSE)
under the symbol TYG. As of June 30, 2015, the last reported sale
price for our common stock was $36.91. As of September 28, 2015 our
net asset value per share was $28.10, which represents a decrease
of 18.6% from August 21, 2015, the date our registration statement
was most recently declared effective. The decline in our net asset
value is a result of decreases in the market values of the energy
infrastructure companies in which we have invested.
Investing in our securities involves risks. You could lose some
or all of your investment. See
Risk Factorsbeginning on page 35
of this prospectus. You should consider carefully these risks
together with all of the other information contained in this
prospectus and any prospectus supplement before making a decision
to purchase our securities.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
Prospectus dated September 30, 2015
This prospectus provides you with a general description of the
securities that we may offer. Each time we use this prospectus to
offer securities, we will provide a prospectus supplement that will
contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information
contained in this prospectus. This prospectus, together with any
prospectus supplement, sets forth concisely the information that
you should know before investing. You should read this prospectus
and any related prospectus supplement, which contain important
information, before deciding whether to invest in our securities.
You should retain this prospectus and any related prospectus
supplement for future reference. A statement of additional
information, dated September 30, 2015, as supplemented from time to
time, containing additional information, has been filed with the
Securities and Exchange Commission (SEC) and is incorporated by
reference in its entirety into this prospectus. You may request a
free copy of the statement of additional information, the table of
contents of which is on page 70 of this prospectus, request a free
copy of our annual, semi-annual and quarterly reports, request
other information or make stockholder inquiries, by calling
toll-free at 1-866-362-9331 or by writing to us at 11550 Ash
Street, Suite 300, Leawood, Kansas 66211. Our annual, semi-annual
and quarterly reports and the statement of additional information
also are available on our investment advisers website at
www.tortoiseadvisors.com. Information included on such website does
not form part of this prospectus. You can review and copy documents
we have filed at the SECs Public Reference Room in Washington, D.C.
Call 1-202-551-5850 for information. The SEC charges a fee for
copies. You can get the same information free from the SECs website
(http://www.sec.gov). You may also e-mail requests for these
documents to publicinfo@sec.gov or make a request in writing to the
SECs Public Reference Section, 100 F Street, N.E., Room 1580,
Washington, D.C. 20549.
Our securities do not represent a deposit or obligation of, and
are not guaranteed or endorsed by, any bank or other insured
depository institution and are not federally insured by the Federal
Deposit Insurance Corporation, the Federal Reserve Board or any
other government agency.
TABLE OF CONTENTS
You should rely only on the information contained or
incorporated by reference in this prospectus and any related
prospectus supplement in making your investment decisions. We have
not authorized any other person to provide you with different or
inconsistent information. If anyone provides you with different or
inconsistent information, you should not rely on it. This
prospectus and any prospectus supplement do not constitute an offer
to sell or solicitation of an offer to buy any securities in any
jurisdiction where the offer or sale is not permitted. The
information appearing in this prospectus and in any related
prospectus supplement is accurate only as of the dates on their
covers. Our business, financial condition and prospects may have
changed since such dates. We will advise investors of any material
changes to the extent required by applicable law.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, any accompanying prospectus supplement and the
statement of additional information contain forward-looking
statements. Forward-looking statements can be identified by the
words may, will, intend, expect, estimate, continue, plan,
anticipate, could, should and similar terms and the negative of
such terms. Such forward-looking statements may be contained in
this prospectus as well as in any accompanying prospectus
supplement. By their nature, all forward-looking statements involve
risks and uncertainties, and actual results could differ materially
from those contemplated by the forward-looking statements. Several
factors that could materially affect our actual results are the
performance of the portfolio of securities we hold, the conditions
in the U.S. and international financial, petroleum and other
markets, the price at which our shares will trade in the public
markets and other factors discussed in our periodic filings with
the Securities and Exchange Commission.
Although we believe that the expectations expressed in our
forward-looking statements are reasonable, actual results could
differ materially from those projected or assumed in our
forward-looking statements. Our future financial condition and
results of operations, as well as any forward-looking statements,
are subject to change and are subject to inherent risks and
uncertainties, such as those disclosed in the Risk Factors section
of this prospectus. All forward-looking statements contained or
incorporated by reference in this prospectus or any accompanying
prospectus supplement are made as of the date of this prospectus or
the accompanying prospectus supplement, as the case may be. Except
for our ongoing obligations under the federal securities laws, we
do not intend, and we undertake no obligation, to update any
forward-looking statement. The forward-looking statements contained
in this prospectus and any accompanying prospectus supplement are
excluded from the safe harbor protection provided by Section 27A of
the Securities Act of 1933, as amended (the 1933 Act).
Currently known risk factors that could cause actual results to
differ materially from our expectations include, but are not
limited to, the factors described in the Risk Factors section of
this prospectus. We urge you to review carefully that section for a
more detailed discussion of the risks of an investment in our
securities.
PROSPECTUS SUMMARY
The following summary contains basic information about us and
our securities. It is not complete and may not contain all of the
information you may want to consider before investing in our
securities. You should review the more detailed information
contained in this prospectus and in any related prospectus
supplement and in the statement of additional information,
especially the information set forth under the heading Risk Factors
beginning on page 35 of this prospectus.
The Company
We seek to provide our stockholders with an efficient vehicle to
invest in a portfolio of publicly traded master limited
partnerships (MLPs) in the energy infrastructure sector. Our
investment objective is to seek a high level of total return with
an emphasis on current distributions paid to stockholders. For
purposes of our investment objective, total return includes capital
appreciation of, and all distributions received from, securities in
which we invest regardless of the tax character of the
distributions. We consider our investment objective a
nonfundamental investment policy. We cannot assure you that we will
achieve our investment objective.
We are a nondiversified, closed-end management investment
company registered under the Investment Company Act of 1940, as
amended (the 1940 Act). We were organized as a corporation on
October 30, 2003, pursuant to a charter (the Charter) governed by
the laws of the State of Maryland. Our fiscal year ends on November
30. We commenced operations in February 2004 following our initial
public offering. Our common stock is listed on the New York Stock
Exchange (NYSE) under the symbol TYG. On June 23, 2014 we acquired
the assets and liabilities of Tortoise Energy Capital Corporation
and Tortoise North American Energy Corporation via merger. As of
June 30, 2015, we had net assets of approximately $1,980.5 million
attributable to our common stock. As of June 30, 2015, we had
outstanding $295 million of our Mandatory Redeemable Preferred
Stock (the Tortoise Preferred Shares) and $545 million of our
privately placed Senior Notes (the Tortoise Notes).
We have established an unsecured credit facility with U.S. Bank
N.A. serving as a lender and the lending syndicate agent on behalf
of other lenders participating in the credit facility, which
currently allows us to borrow up to $157.5 million. Outstanding
balances under the credit facility generally accrue interest at a
variable annual rate equal to the one-month LIBOR rate plus 1.20%,
with a fee of 0.15% on any unused balance of the credit facility.
As of June 30, 2015, the effective rate was 1.39%. The credit
facility remains in effect through June 13, 2017. We currently
expect to seek to renew the credit facility at an amount sufficient
to meet our operating needs. We may draw on the facility from time
to time to fund investments in accordance with our investment
policies and for general corporate purposes. As of June 30, 2015,
we had outstanding approximately $109.8 million under the credit
facility.
We have also established an unsecured credit facility with
Scotia Bank, N.A. which currently allows us to borrow up to $100.0
million. Outstanding balances under the credit facility generally
accrue interest at a variable annual rate equal to the one-month
LIBOR rate plus 1.20%, with a fee of 0.15% on any unused balance of
the credit facility if the amount borrowed under the facility is
less than $60.0 million. As of June 30, 2015, the effective rate
was 1.39%. The credit facility remains in effect through June 23,
2016. We may draw on the facility from time to time to fund
investments in accordance with our investment policies and for
general corporate purposes. As of June 30, 2015, we had outstanding
approximately $60.0 million under the credit facility.
Investment Adviser
Tortoise Capital Advisors, L.L.C., a registered investment
adviser specializing in managing portfolios of investments in MLPs
and other energy companies (the Adviser), serves as our investment
adviser. As of June 30, 2015, the Adviser managed assets of
approximately $17.0 billion in the energy sector, including the
assets of publicly traded closed-end management investment
companies, open-end funds and other accounts. The Advisers
investment committee is comprised of eight portfolio managers. See
Management of the Company.
The principal business address of the Adviser is 11550 Ash
Street, Suite 300, Leawood, Kansas 66211.
The Offering
We may offer, on an immediate, continuous or delayed basis, up
to $375,000,000 of our securities, including common stock pursuant
to a rights offering, or certain of our stockholders who purchased
shares from us in private placement transactions may offer our
common stock, on terms to be determined at the time of the
offering.
Our securities will be offered at prices and on terms to be set
forth in one or more prospectus supplements to this prospectus.
Subject to certain conditions, we may offer our common stock at
prices below our net asset value (NAV). We will provide information
in the prospectus supplement for the expected trading market, if
any, for our preferred stock or debt securities.
While the number and amount of securities we may issue pursuant
to this registration statement is limited to $375,000,000 of
securities, our board of directors (the Board of Directors or the
Board) may, without any action by the stockholders, amend our
Charter from time to time to increase or decrease the aggregate
number of shares of stock or the number of shares of stock of any
class or series that we have authority to issue under our Charter
or the 1940 Act.
We may offer our securities, or certain of our stockholders may
offer our common stock, directly to one or more purchasers through
agents that we or they designate from time to time, or to or
through underwriters or dealers. The prospectus supplement relating
to the offering will identify any agents or underwriters involved
in the sale of our securities, and will set forth any applicable
purchase price, fee, commission or discount arrangement between us
or any selling stockholder and such agents or underwriters or among
underwriters or the basis upon which such amount may be calculated.
See Plan of Distribution and Selling Stockholders. Our securities
may not be sold through agents, underwriters or dealers without
delivery of a prospectus supplement describing the method and terms
of the offering of our securities.
Use of Proceeds
Unless otherwise specified in a prospectus supplement, we intend
to use the net proceeds of any sale of our securities primarily to
invest in energy infrastructure companies in accordance with our
investment objective and policies as described under Investment
Objective and Principal Investment Strategies within approximately
three months of receipt of such proceeds. We may also use proceeds
from the sale of our securities to retire all or a portion of any
debt we incur, to redeem preferred stock or for working capital
purposes, including the payment of distributions, interest and
operating expenses, although there is currently no intent to issue
securities primarily for this purpose. We will not receive any of
the proceeds from a sale of our common stock by any selling
stockholder.
Federal Income Tax Status of Company
Unlike most investment companies, we have not elected to be
treated as a regulated investment company under the U.S. Internal
Revenue Code of 1986, as amended (the Internal Revenue Code).
Therefore, we are obligated to pay federal and applicable state
corporate taxes on our taxable income. On the other hand, we are
not subject to the Internal Revenue Codes diversification rules
limiting the assets in which regulated investment companies can
invest. Under current federal income tax law, these rules limit the
amount that regulated investment companies may invest directly in
the securities of certain MLPs to 25% of the value of their total
assets. We invest a substantial portion of our assets in MLPs.
Although MLPs generate taxable income to us, we expect the MLPs to
pay cash distributions in excess of the taxable income reportable
by us. Similarly, we expect to distribute substantially all of our
distributable cash flow (DCF) to our common stockholders. DCF is
the amount we receive as cash or paid-in-kind distributions from
MLPs or affiliates of MLPs in which we invest, and interest
payments received on debt securities owned by us, less current or
anticipated operating expenses, taxes on our taxable income, and
leverage costs paid by us (including leverage costs of preferred
stock, debt securities and borrowings under our unsecured credit
facility). However, unlike regulated investment companies, we are
not effectively required by the Internal Revenue Code to distribute
substantially all of our income and capital gains. We may be
subject to a 20 percent federal alternative minimum tax on our
alternative minimum taxable income to the extent that the
alternative minimum tax exceeds our regular federal income tax. The
extent to which we are required to pay corporate income tax or
alternative minimum tax could materially reduce our cash available
to make distributions to our common stockholders. See Certain
Federal Income Tax Matters.
Distributions
Our Board of Directors has adopted a policy of declaring what it
believes to be sustainable distributions. In determining
distributions, our Board of Directors considers a number of current
and anticipated factors, including, among others: DCF; realized and
unrealized gains; leverage amounts and rates; current and deferred
taxes payable; and potential volatility in returns from our
investments and the overall market. Over the long term, we expect
to distribute substantially all of our DCF to holders of our common
stock. As of the date of this prospectus, we have paid
distributions every quarter since the completion of our first full
fiscal quarter ended on May 31, 2004. There is no assurance that we
will continue to make regular distributions. If distributions paid
to holders of our common and
preferred stock exceed the current and accumulated earnings and
profit allocated to the particular shares held by a stockholder,
the excess of such distribution will constitute, for federal income
tax purposes, a tax-free return of capital to the extent of the
stockholders basis in the shares and capital gain thereafter. A
return of capital, which represents a return of a stockholders
original investment in the Company, reduces the basis of the shares
held by a stockholder, which may increase the amount of gain
recognized upon the sale of such shares. Our preferred stock and
debt securities will pay distributions and interest, respectively,
in accordance with their terms. So long as we have preferred stock
and debt securities outstanding, we may not declare distributions
on common or preferred stock unless we meet applicable asset
coverage tests.
Principal Investment Policies
Under normal circumstances, we invest at least 90% of our total
assets (including assets we obtain through leverage) in securities
of energy infrastructure companies and invest at least 70% of our
total assets in equity securities of MLPs. Energy infrastructure
companies engage in the business of transporting, processing,
storing, distributing or marketing natural gas, natural gas liquids
(primarily propane), coal, crude oil or refined petroleum products,
or exploring, developing, managing or producing such commodities.
We invest primarily in energy infrastructure companies organized in
the United States. It is anticipated that all of the publicly
traded MLPs in which we will invest will have a market
capitalization greater than $100 million at the time of
investment.
We also may invest in equity and debt securities of energy
infrastructure companies that are organized and/or taxed as
corporations to the extent consistent with our investment
objective. We also may invest in securities of general partners or
other affiliates of MLPs and private companies operating energy
infrastructure assets.
We have adopted the following additional nonfundamental
investment policies:
We may change our nonfundamental investment policies without
stockholder approval and will provide notice to stockholders of
material changes (including notice through stockholder reports);
provided, however, that a change in the policy of investing at
least 90% of our total assets in energy infrastructure companies
requires at least 60 days prior written notice to stockholders.
Unless otherwise stated, these investment restrictions apply at the
time of purchase and we will not be required to reduce a position
due solely to market value fluctuations. The term total assets
includes assets obtained through leverage for the purpose of each
investment restriction.
Under adverse market or economic conditions, we may invest up to
100% of our total assets in securities issued or guaranteed by the
U.S. Government or its instrumentalities or agencies, short-term
debt securities, certificates of deposit, bankers acceptances and
other bank obligations, commercial paper rated in the highest
category by a rating agency or other liquid fixed income securities
deemed by the Adviser to be consistent with a defensive posture
(collectively, short-term securities), or we may hold cash. To the
extent we invest in short-term securities or cash for defensive
purposes, such investments are inconsistent with, and may result in
us not achieving, our investment objective.
We also may invest in short-term securities or cash pending
investment of offering proceeds to meet working capital needs
including, but not limited to, for collateral in connection with
certain investment techniques, to hold a reserve pending payment of
distributions, and to facilitate the payment of expenses and
settlement of trades. The yield on such securities may be lower
than the returns on MLPs or yields on lower rated fixed income
securities.
Use of Leverage by the Company
The borrowing of money and the issuance of preferred stock and
debt securities represents the leveraging of our common stock. The
issuance of additional common stock may enable us to increase the
aggregate amount of our leverage. We reserve the right at any time
to use financial leverage to the extent permitted by the 1940 Act
(50% of total assets for preferred stock and 331/3% of total assets
for debt securities) or we may elect to reduce the use of leverage
or use no leverage at all. Our Board of Directors has approved a
leverage target of up to 25% of our total assets at the time of
incurrence and has also approved a policy permitting temporary
increases in the amount of leverage we may use from 25% of our
total assets to up to 30% of our total assets at the time of
incurrence, provided that (i) such leverage is consistent with the
limits set forth in the 1940 Act and (ii) that we expect to reduce
such increased leverage over time in an orderly fashion. The timing
and terms of any leverage transactions will be determined by our
Board of Directors. Additionally, the percentage of our assets
attributable to leverage may vary significantly during periods of
extreme market volatility and will increase during periods of
declining market prices of our portfolio holdings.
The use of leverage creates an opportunity for increased income
and capital appreciation for common stockholders, but at the same
time, it creates special risks that may adversely affect common
stockholders. Our Advisers fee is based upon a percentage of our
Managed Assets (defined as our total assets (including any assets
attributable to any leverage that may be outstanding but excluding
any net deferred tax assets) minus the sum of accrued liabilities
other than (1) net deferred tax liabilities, (2) debt entered into
for purposes of leverage and (3) the aggregate liquidation
preference of any outstanding preferred stock). Our Adviser does
not charge any advisory fee based on net deferred tax assets. Our
Advisers fee is higher when we are leveraged. Therefore, the
Adviser has a financial incentive to use leverage, which will
create a conflict of interest between the Adviser and our common
stockholders, who will bear the costs of our leverage. There can be
no assurance that a leveraging strategy will be successful during
any period in which it is used. The use of leverage involves risks,
which can be significant. See Leverage and Risk Factors Additional
Risks to Common Stockholders Leverage Risk.
We may use interest rate transactions for hedging purposes only,
in an attempt to reduce the interest rate risk arising from our
leveraged capital structure. We do not intend to hedge the interest
rate risk of our portfolio holdings. Accordingly, if no leverage is
outstanding, we currently do not expect to engage in interest rate
transactions. Interest rate transactions that we may use for
hedging purposes may expose us to certain risks that differ from
the risks associated with our portfolio holdings. See Leverage
Hedging Transactions and Risk Factors Company Risks Hedging
Strategy Risk.
Conflicts of Interest
Conflicts of interest may arise from the fact that the Adviser
and its affiliates carry on substantial investment activities for
other clients, in which we have no interest. The Adviser or its
affiliates may have financial incentives to favor certain of these
accounts over us. Any of the Advisers or its affiliates proprietary
accounts and other customer accounts may compete with us for
specific trades. The Adviser or its affiliates may give advice and
recommend securities to, or buy or sell securities for, other
accounts and customers, which advice or securities recommended may
differ from advice given to, or securities recommended or bought or
sold for, us, even though their investment objectives may be the
same as, or similar to, our objectives.
Our Adviser has written allocation policies and procedures that
it will follow in addressing any conflicts. When two or more
clients advised by our Adviser or its affiliates seek to purchase
or sell the same securities, the securities actually purchased or
sold will be allocated among the clients on a good faith equitable
basis by our Adviser in its discretion and in accordance with each
clients investment objectives and our Advisers procedures.
From time to time, our Adviser may seed proprietary accounts for
the purpose of evaluating a new investment strategy that eventually
may be available to clients through one or more product structures.
Such accounts also may serve the purpose of establishing a
performance record for the strategy. Our Advisers management of
accounts with proprietary interests and nonproprietary client
accounts may create an incentive to favor the proprietary accounts
in the allocation of investment opportunities, and the timing and
aggregation of investments. Our Advisers proprietary seed accounts
may include long-short strategies, and certain client strategies
may permit short sales. A conflict of interest arises if a security
is sold short at the same time as a long position, and
continuously short selling in a security may adversely affect
the stock price of the same security held long in client accounts.
Our Adviser has adopted various policies to mitigate these
conflicts, including policies that require our Adviser to avoid
favoring any account, and that prohibit client and proprietary
accounts from engaging in short sales with respect to individual
stocks held long in client accounts. Our Advisers policies also
require transactions in proprietary accounts to be placed after
client transactions.
Situations may occur when we could be disadvantaged because of
the investment activities conducted by the Adviser and its
affiliates for their other funds or accounts. Such situations may
be based on, among other things, the following: (1) legal or
internal restrictions on the combined size of positions that may be
taken for us or the other accounts, thereby limiting the size of
our position; (2) the difficulty of liquidating an investment for
us or the other accounts where the market cannot absorb the sale of
the combined position; or (3) limits on co-investing in private
placement securities under the 1940 Act. Our investment
opportunities may be limited by affiliations of the Adviser or its
affiliates with energy infrastructure companies. See Investment
Objective and Principal Investment Strategies Conflicts of
Interest.
Company Risks
Our NAV, our ability to make distributions, our ability to
service debt securities and preferred stock, and our ability to
meet asset coverage requirements depends on the performance of our
investment portfolio. The performance of our investment portfolio
is subject to a number of risks, including the following:
Capital Markets Volatility Risk. Our capital structure and
performance may be adversely impacted by weakness in the credit
markets and stock market if such weakness results in declines in
the value of MLPs in which we invest. If the value of our
investments decline or remain volatile, there is a risk that we may
be required to reduce outstanding leverage, which could adversely
affect our stock price and ability to pay distributions at
historical levels. A sustained economic slowdown may adversely
affect the ability of MLPs to sustain their historical distribution
levels, which in turn, may adversely affect our ability to sustain
distributions at historical levels. MLPs that have historically
relied heavily on outside capital to fund their growth may be
impacted by a slowdown in the capital markets. The performance of
the MLP sector is dependent on several factors including the
condition of the financial sector, the general economy and the
commodity markets.
Concentration Risk. Under normal circumstances, we
concentrate our investments in the energy sector, with an emphasis
on securities issued by MLPs in the energy infrastructure sector, a
subset of the energy sector. The primary risks inherent in
investments in MLPs in the energy infrastructure sector include the
following: (1) the performance and level of distributions of MLPs
can be affected by direct and indirect commodity price exposure,
(2) a decrease in market demand for natural gas or other energy
commodities could adversely affect MLP revenues or cash flows, (3)
energy infrastructure assets deplete over time and must be replaced
and (4) a rising interest rate environment could increase an MLPs
cost of capital.
Industry Specific Risk. Energy infrastructure companies also
are subject to risks specific to the industry they serve. For risks
specific to the pipeline, processing, propane, coal and marine
shipping industries, see Risk Factors Company Risks Industry
Specific Risk.
MLP Risk. We invest primarily in equity securities of MLPs.
As a result, we are subject to the risks associated with an
investment in MLPs, including cash flow risk, tax risk, deferred
tax risk and capital markets risk. Cash flow risk is the risk that
MLPs will not make distributions to holders (including us) at
anticipated levels or that such distributions will not have the
expected tax character. MLPs also are subject to tax risk, which is
the risk that an MLP might lose its partnership status for tax
purposes. Deferred tax risk is the risk that we incur a current tax
liability on that portion of an MLPs income and gains that is not
offset by tax deductions and losses. Capital markets risk is the
risk that MLPs will be unable to raise capital to meet their
obligations as they come due or execute their growth strategies,
complete future acquisitions, take advantage of other business
opportunities or respond to competitive pressures.
Equity Securities Risk. MLP common units and other equity
securities can be affected by macro-economic and other factors
affecting the stock market in general, expectations of interest
rates, investor sentiment toward MLPs or the energy sector, changes
in a particular issuers financial condition, or unfavorable or
unanticipated poor performance of a particular issuer (in the case
of MLPs, generally measured in terms of DCF). Prices of common
units of individual MLPs and other equity securities also can be
affected by fundamentals unique to the partnership or company,
including size, earnings power, coverage ratios and characteristics
and features of different classes of securities.
Investing in securities of smaller companies may involve greater
risk than is associated with investing in more established
companies. Companies with smaller capitalization may have limited
product lines, markets or financial resources; may lack management
depth or experience; and may be more vulnerable to adverse general
market or economic developments than larger more established
companies. See Risk Factors Company Risks Equity Securities Risk
and Risk Factors Additional Risks to Common Stockholders Leverage
Risk.
Below Investment Grade Securities Risk. Investing in below
investment grade debt instruments (commonly referred to as junk
bonds) involves additional risks than investment grade securities.
Adverse changes in economic conditions are more likely to lead to a
weakened capacity of a below investment grade issuer to make
principal payments and interest payments than an investment grade
issuer. An economic downturn could adversely affect the ability of
highly leveraged issuers to service their obligations or to repay
their obligations upon maturity. Similarly, downturns in
profitability in the energy infrastructure industry could adversely
affect the ability of below investment grade issuers in that
industry to meet their obligations. The market values of lower
quality securities tend to reflect individual developments of the
issuer to a greater extent than do higher quality securities, which
react primarily to fluctuations in the general level of interest
rates.
The secondary market for below investment grade securities may
not be as liquid as the secondary market for more highly rated
securities. There are fewer dealers in the market for below
investment grade securities than investment grade obligations. The
prices quoted by different dealers may vary significantly, and the
spread between the bid and asked price is generally much larger
than for higher quality instruments. Under adverse market or
economic conditions, the secondary market for below investment
grade securities could contract further, independent of any
specific adverse change in the condition of a particular issuer,
and these instruments may become illiquid. As a result, it may be
more difficult to sell these securities or we may be able to sell
the securities only at prices lower than if such securities were
widely traded. This may affect adversely our ability to make
required distribution or interest payments on our outstanding
senior securities. Prices realized upon the sale of such
lower-rated or unrated securities, under these circumstances, may
be less than the prices used in calculating our NAV. See Risk
Factors Company Risk Below Investment Grade Securities Risk.
Hedging Strategy Risk. We may use interest rate transactions
for hedging purposes only, in an attempt to reduce the interest
rate risk arising from our leveraged capital structure. There is no
assurance that the interest rate hedging transactions into which we
enter will be effective in reducing our exposure to interest rate
risk. Hedging transactions are subject to correlation risk, which
is the risk that payment on our hedging transactions may not
correlate exactly with our payment obligations on senior
securities. Interest rate transactions that we may use for hedging
purposes, such as swaps, caps and floors, will expose us to certain
risks that differ from the risks associated with our portfolio
holdings. See Risk Factors Company Risks Hedging Strategy Risk.
Competition Risk. At the time we completed our initial
public offering in February 2004, we were the only publicly traded
investment company offering access to a portfolio of energy
infrastructure MLPs. Since that time a number of alternative
vehicles for investment in a portfolio of energy infrastructure
MLPs, including other publicly traded investment companies and
private funds, have emerged. In addition, tax law changes have
increased the ability of regulated investment companies or other
institutions to invest in MLPs. These competitive conditions may
adversely impact our ability to meet our investment objective,
which in turn could adversely impact our ability to make interest
or distribution payments.
Restricted Security Risk. We may invest up to 30% of total
assets in restricted securities, primarily through direct
placements. Restricted securities are less liquid than securities
traded in the open market because of statutory and contractual
restrictions on resale. Such securities are, therefore, unlike
securities that are traded in the open market, which can be
expected to be sold immediately if the market is adequate. This
lack of liquidity creates special risks for us. See Risk Factors
Company Risks Restricted Security Risk.
Liquidity Risk. Certain MLP securities may trade less
frequently than those of other companies due to their smaller
capitalizations. Investments in securities that are less actively
traded or over time experience decreased trading volume may be
difficult to dispose of when we believe it is desirable to do so,
may restrict our ability to take advantage of other opportunities,
and may be more difficult to value.
Valuation Risk. We may invest up to 30% of total assets in
restricted securities, which are subject to restrictions on resale.
The value of such investments ordinarily will be based on fair
valuations determined by the Adviser pursuant to procedures adopted
by the Board of Directors. Restrictions on resale or the absence of
a liquid secondary market may affect adversely our ability to
determine NAV. The sale price of securities that are restricted or
otherwise are not readily marketable may be higher or lower than
our most recent valuations.
Nondiversification Risk. We are a nondiversified investment
company under the 1940 Act and we are not a regulated investment
company under the Internal Revenue Code. Accordingly, there are no
regulatory limits under the 1940 Act or Internal Revenue Code with
respect to the number or size of securities held by us and we may
invest more assets in fewer issuers as compared to a diversified
fund.
Tax Risk. Because we are treated as a corporation for
federal income tax purposes, our financial statements reflect
deferred tax assets or liabilities according to generally accepted
accounting principles. Deferred tax assets may constitute a
relatively high percentage of NAV. Realization of deferred tax
assets including net operating loss and capital loss carryforwards,
are dependent, in part, on generating sufficient taxable income of
the appropriate character prior to expiration of the loss
carryforwards. In addition, a substantial change in our ownership
may limit our ability to utilize our loss carryforwards. Unexpected
significant decreases in MLP cash distributions or significant
declines in the fair value of our MLP investments, among other
factors, may change our assessment regarding the recoverability of
deferred tax assets and would likely result in a valuation
allowance, or recording of a larger allowance. If a valuation
allowance is required to reduce the deferred tax asset in the
future, it could have a material impact on our NAV and results of
operations in the period it is recorded. Conversely, in periods of
generally increasing MLP prices, we will accrue a deferred tax
liability to the extent the fair value of our assets exceeds our
tax basis. We may incur significant tax liability during periods in
which gains on MLP investments are realized.
Management Risk. The Adviser was formed in October 2002 to
provide portfolio management services to institutional and high net
worth investors seeking professional management of their MLP
investments. The Adviser has been managing our portfolio since we
began operations in February 2004. As of June 30, 2015, the Adviser
had client assets under management of approximately $17.0 billion.
To the extent that the Advisers assets under management continue to
grow, the Adviser may have to hire additional personnel and, to the
extent it is unable to hire qualified individuals, its operations
may be adversely affected.
See Risk Factors Company Risks for a more detailed discussion of
these and other risks of investing in our securities.
Additional Risks to Common Stockholders
Leverage Risk. We are currently leveraged and intend to
continue to use leverage primarily for investment purposes.
Leverage, which is a speculative technique, could cause us to lose
money and can magnify the effect of any losses. Weakness in the
credit markets may cause our leverag