717 Texas Avenue, Suite 3100, Houston, Texas | 77002 | |
(Address of principal executive offices) | (Zip code) |
Item 1: Scheduled Investments | ||||||||
Item 2: Controls and Procedures | ||||||||
Item 3: Exhibits | ||||||||
SIGNATURES | ||||||||
EX-99.CERT |
No. of |
||||||||
Description
|
Shares/Units | Value | ||||||
Long-Term Investments 132.8%
|
||||||||
Equity
Investments(1)
108.8%
|
||||||||
United States 108.8%
|
||||||||
Private
MLP(2)(3)
68.7%
|
||||||||
Direct Fuels Partners, L.P. Class A Common
Units(4)
|
2,500 | $ | 25,000 | |||||
Direct Fuels Partners, L.P. Convertible Preferred
Units(4)(5)
|
143 | 2,715 | ||||||
Direct Fuels Partners, L.P. Class D Preferred
Units(4)(6)
|
324 | 6,723 | ||||||
International Resource Partners LP
|
1,500 | 94,500 | ||||||
Plains All American GP LLC
|
3 | 5,302 | ||||||
VantaCore Partners LP(4)
|
1,465 | 19,773 | ||||||
VantaCore Partners LP Preferred
Units(7)
|
36 | 564 | ||||||
154,577 | ||||||||
Publicly Traded MLP and MLP Affiliate 40.1%
|
||||||||
Buckeye Partners, L.P.
|
83 | 5,366 | ||||||
Capital Product Partners L.P.
|
228 | 2,218 | ||||||
Chesapeake Midstream Partners, L.P.
|
40 | 1,042 | ||||||
Copano Energy, L.L.C.
|
265 | 9,604 | ||||||
Crestwood Midstream Partners LP
|
77 | 2,321 | ||||||
DCP Midstream Partners, LP
|
109 | 4,594 | ||||||
Eagle Rock Energy Partners, L.P.
|
432 | 4,204 | ||||||
Eagle Rock Energy Partners, L.P.
Warrants(8)(9)
|
370 | 1,363 | ||||||
Enbridge Energy Management,
L.L.C.(4)
|
65 | 4,370 | ||||||
Enbridge Energy Partners, L.P.
|
58 | 3,880 | ||||||
Energy Transfer Partners, L.P.
|
112 | 6,113 | ||||||
Enterprise Products Partners L.P.
|
153 | 6,660 | ||||||
Exterran Partners, L.P.
|
82 | 2,443 | ||||||
Global Partners LP
|
142 | 3,871 | ||||||
Holly Energy Partners, L.P.
|
16 | 966 | ||||||
Inergy, L.P.
|
96 | 3,974 | ||||||
Kinder Morgan Management,
LLC(4)
|
9 | 602 | ||||||
MarkWest Energy Partners, L.P.
|
55 | 2,465 | ||||||
Martin Midstream Partners L.P.
|
45 | 1,799 | ||||||
ONEOK Partners, L.P.
|
76 | 6,357 | ||||||
Penn Virginia GP Holdings, L.P.
|
31 | 819 | ||||||
Plains All American Pipeline,
L.P.(3)
|
103 | 6,728 | ||||||
Targa Resources Partners LP
|
30 | 1,038 | ||||||
Teekay LNG Partners L.P.
|
51 | 1,946 | ||||||
Teekay Offshore Partners L.P.
|
23 | 664 | ||||||
Teekay Tankers Ltd.
|
73 | 785 | ||||||
TransMontaigne Partners L.P.
|
61 | 2,445 | ||||||
Western Gas Partners, LP
|
44 | 1,602 | ||||||
90,239 | ||||||||
Total Equity Investments (Cost $156,769)
|
244,816 | |||||||
Interest |
Maturity |
Principal |
||||||||||||||
Description
|
Rate | Date | Amount | Value | ||||||||||||
Debt Investments 24.0%
|
||||||||||||||||
Upstream 14.1%
|
||||||||||||||||
Antero Resources LLC
|
9.375 | % | 12/1/17 | $ | 9,500 | $ | 10,260 | |||||||||
BreitBurn Energy Partners L.P.
|
8.625 | 10/15/20 | 2,000 | 2,102 | ||||||||||||
Carrizo Oil & Gas, Inc.
|
8.625 | 10/15/18 | 5,875 | 6,242 | ||||||||||||
Comstock Resources, Inc.
|
7.750 | 4/1/19 | 2,000 | 2,010 | ||||||||||||
Laredo Petroleum, Inc.
|
9.500 | 2/15/19 | 3,000 | 3,143 | ||||||||||||
Petroleum Development Corporation
|
12.000 | 2/15/18 | 2,000 | 2,260 | ||||||||||||
Rosetta Resources Inc.
|
9.500 | 4/15/18 | 5,005 | 5,543 | ||||||||||||
31,560 | ||||||||||||||||
Midstream and Other 6.8%
|
||||||||||||||||
Crestwood Holdings Partners, LLC
|
(10) | 10/1/16 | 7,135 | 7,385 | ||||||||||||
Foresight Energy LLC
|
9.625 | 8/15/17 | 5,000 | 5,375 | ||||||||||||
Genesis Energy, L.P.
|
7.875 | 12/15/18 | 2,500 | 2,563 | ||||||||||||
15,323 | ||||||||||||||||
Oilfield Services 3.1%
|
||||||||||||||||
ProPetro Services,
Inc.(2)(3)(8)(11)
|
(12) | 2/15/12 | 10,500 | 7,000 | ||||||||||||
Total Debt Investments (Cost $79,962)
|
53,883 | |||||||||||||||
Total Long-Term Investments (Cost $236,731)
|
298,699 | |||||||||||||||
No. of |
||||||||||||||||
Shares/Units | ||||||||||||||||
Short-Term Investments 1.7%
|
||||||||||||||||
Money Market Fund 1.3%
|
||||||||||||||||
J.P. Morgan U.S. Treasury Plus Money Market Fund (Cost $2,963)
|
2,963 | 2,963 | ||||||||||||||
Repurchase Agreement 0.4%
|
||||||||||||||||
J.P. Morgan Securities Inc. (Agreement dated 2/28/2011 to be
repurchased at $1,000), collateralized by $1,020 in U.S.
Treasury securities (Cost $1,000)
|
0.050 | 3/1/11 | 1,000 | |||||||||||||
Total Short-Term Investments (Cost $3,963)
|
3,963 | |||||||||||||||
Total Investments 134.5% (Cost $240,694)
|
302,662 | |||||||||||||||
Senior Secured Revolving Credit Facility Borrowings
|
(56,000 | ) | ||||||||||||||
Total Liabilities in Excess of Other Assets
|
(21,661 | ) | ||||||||||||||
Net Assets
|
$ | 225,001 | ||||||||||||||
(1) | Unless otherwise noted, equity investments are common units/common shares. | |
(2) | Fair valued and restricted security. | |
(3) | Kayne Anderson Energy Development Company (the Company) believes that it may be an affiliate of Direct Fuels Partners, L.P. (Direct Fuels), International Resource Partners LP (IRP) and VantaCore Partners LP (VantaCore) and that it is an affiliate of Plains All American GP LLC, Plains All American Pipeline, L.P. and ProPetro Services, Inc. (ProPetro). |
(4) | All or a portion of distributions are paid-in-kind. | |
(5) | The Convertible Preferred Units consist of three classes Class A, B and C. Each class has a liquidation preference of $20.00 per unit and is convertible into Class A Common Units. | |
(6) | The Class D Preferred Units are senior to Direct Fuels Convertible Preferred Units and Class A Common Units. The Class D Preferred Units have a liquidation preference of $20.00 per unit and were issued by Direct Fuels to holders of common units and preferred units in lieu of cash distributions. | |
(7) | The Preferred Units have a liquidation preference of $17.50 per unit and were issued on February 15, 2011 by VantaCore to holders of the common units in lieu of a full cash distribution for the quarter. The Preferred Units are senior to VantaCores Common Units. | |
(8) | Security is non-income producing. | |
(9) | The Company holds 370 warrants of Eagle Rock Energy Partners, L.P. (Eagle Rock). Each warrant entitles the holder to purchase one Eagle Rock common unit for $6.00 on the specified days of March 15, May 15, August 15 and November 15 through the expiration date of May 15, 2012. | |
(10) | Floating rate first lien senior secured term loan. Security pays interest at a rate of LIBOR + 850 basis points, with a 2% LIBOR floor (10.50% as of February 28, 2011). | |
(11) | The Company also holds 184,890 common shares, which represents 23.5% of the total shares outstanding, of ProPetro Services, Inc. The Company assigned no value to these shares as of February 28, 2011. | |
(12) | Floating rate senior secured first lien term loan facility. The Company is not accruing interest income on this security. |
Number of |
||||||||||||||||||||||||||||||
Units, |
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Warrants, or |
Fair Value |
Percent |
Percent |
|||||||||||||||||||||||||||
Acquisition |
Type of |
Principal ($) |
Cost |
Fair |
per Unit/ |
of Net |
of Total |
|||||||||||||||||||||||
Investment | Security | Date | Restriction | (in 000s) | Basis | Value | Warrant | Assets | Assets | |||||||||||||||||||||
Level 3
Investments(1)
|
||||||||||||||||||||||||||||||
Direct Fuels Partners,
L.P.(2)
|
Class A Common Units | 6/11/07 | (3) | 2,500 | $ | 41,359 | $ | 25,000 | $ | 10.00 | 11.1 | % | 8.2 | % | ||||||||||||||||
Direct Fuels Partners, L.P.
|
Class A Convertible Preferred Units(4) | 5/14/09 | (3) | 96 | 1,952 | 1,808 | 18.75 | 0.8 | 0.6 | |||||||||||||||||||||
Direct Fuels Partners, L.P.
|
Class B Convertible Preferred Units(4) | 8/25/09 | (3) | 27 | 538 | 511 | 19.00 | 0.2 | 0.2 | |||||||||||||||||||||
Direct Fuels Partners, L.P.
|
Class C Convertible Preferred Units(4) | 11/20/09 | (3) | 20 | 408 | 396 | 19.50 | 0.2 | 0.1 | |||||||||||||||||||||
Direct Fuels Partners, L.P.
|
Class D Preferred Units | (5) | (3) | 324 | 5 | 6,723 | 20.75 | 3.0 | 2.2 | |||||||||||||||||||||
International Resource Partners
LP(6)
|
Class A Units | 6/12/07 | (3) | 1,500 | 26,276 | 94,500 | 63.00 | 42.0 | 30.9 | |||||||||||||||||||||
Plains All American GP LLC
|
Class A Common Units | 12/23/10, | (3) | |||||||||||||||||||||||||||
12/31/10 | 3 | 5,008 | 5,302 | 1,522 | 2.4 | 1.7 | ||||||||||||||||||||||||
ProPetro Services, Inc.
|
Common Shares | 2/15/07 | (3) | 184,890 | | | | | | |||||||||||||||||||||
ProPetro Services, Inc.
|
Secured Term Loan | 2/15/07 | (3) | $ | 10,500 | 35,789 | 7,000 | n/a | 3.1 | 2.3 | ||||||||||||||||||||
VantaCore Partners
LP(7)
|
Class A Common Units | 5/21/07, | (3) | |||||||||||||||||||||||||||
8/04/08 | 1,465 | 21,663 | 19,773 | 13.50 | 8.8 | 6.5 | ||||||||||||||||||||||||
VantaCore Partners LP
|
Preferred Units(8) | 2/24/11 | (3) | 36 | | 564 | 15.50 | 0.2 | 0.2 | |||||||||||||||||||||
Total
|
$ | 132,998 | $ | 161,577 | 71.8 | % | 52.9 | % | ||||||||||||||||||||||
Level 2
Investments(9)
|
||||||||||||||||||||||||||||||
BreitBurn Energy Partners L.P.
|
Senior Notes | (10) | (11) | $ | 2,000 | $ | 2,050 | $ | 2,102 | n/a | 0.9 | % | 0.7 | % | ||||||||||||||||
Carrizo Oil & Gas, Inc.
|
Senior Notes | (10) | (11) | $ | 5,875 | 6,030 | 6,242 | n/a | 2.8 | 2.0 | ||||||||||||||||||||
Crestwood Holdings Partners, LLC
|
Senior Notes | (10) | (3) | $ | 7,135 | 7,030 | 7,385 | n/a | 3.3 | 2.4 | ||||||||||||||||||||
Foresight Energy LLC
|
Senior Notes | 8/6/10 | (3) | $ | 5,000 | 4,970 | 5,375 | n/a | 2.4 | 1.8 | ||||||||||||||||||||
Genesis Energy, L.P.
|
Senior Notes | 11/12/10 | (11) | $ | 2,500 | 2,500 | 2,563 | n/a | 1.1 | 0.9 | ||||||||||||||||||||
Laredo Petroleum, Inc.
|
Senior Notes | 1/12/11 | (3) | $ | 3,000 | 3,000 | 3,143 | n/a | 1.4 | 1.0 | ||||||||||||||||||||
Total
|
$ | 25,580 | $ | 26,810 | 11.9 | % | 8.8 | % | ||||||||||||||||||||||
Total of all restricted securities
|
$ | 158,578 | $ | 188,387 | 83.7 | % | 61.7 | % | ||||||||||||||||||||||
(1) | Securities are valued using inputs reflecting the Companys own assumptions. | |
(2) | The Companys investment in Direct Fuels includes 200 incentive distribution rights (20% of total outstanding incentive distribution rights) for which the Company does not assign a value. | |
(3) | Unregistered security of a private company. | |
(4) | The Direct Fuels Convertible Preferred Units consist of three classes Class A, B and C. Each class has a liquidation preference of $20.00 per unit and is convertible into Class A Common Units. The Class A Preferred Units are convertible into Class A Common Units at a price of $20.00 per unit. The Class B Preferred Units are convertible into Class A Common Units at a price of $18.50 per unit. The Class C Preferred Units are convertible into Class A Common Units at a price of $15.50 per unit. | |
(5) | The Direct Fuels Class D Preferred Units are senior to Direct Fuels Convertible Preferred Units and Class A Common Units. The Class D Preferred Units are being issued by Direct Fuels to the holders of common units and preferred units in lieu of cash distributions. During the three months ended February 28, 2011, we received Class D Preferred Units on February 15. | |
(6) | The Companys investment in IRP includes 10 incentive distribution rights (10% of total outstanding incentive distribution rights) for which the Company does not assign a value. |
(7) | The Companys investment in VantaCore includes 1,823 incentive distribution rights (18% of total outstanding incentive distribution rights) for which the Company does not assign a value. | |
(8) | The VantaCore Preferred Units are senior to the VantaCore Common Units. The Preferred Units have a liquidation preference of $17.50 per unit and were issued on February 15, 2011 by VantaCore to holders of the Common Units in lieu of a full cash distribution for the quarter. | |
(9) | These securities have a fair market value determined by the mean of the bid and ask prices provided by a syndicate bank, principal market maker or an independent pricing service. These securities have limited trading volume and are not listed on a national exchange. | |
(10) | These securities were acquired at various dates throughout the three months ended February 28, 2011 and in prior years. | |
(11) | Unregistered security of a public company. |
Gross unrealized appreciation of investments |
$ | 117,906 | ||
Gross unrealized depreciation of investments |
(45,329 | ) | ||
Net unrealized appreciation |
$ | 72,577 | ||
| Level 1 Quoted unadjusted prices for identical instruments in active markets traded on a national exchange to which the Company has access at the date of measurement. | ||
| Level 2 Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists or instances where prices vary substantially over time or among brokered market makers. | ||
| Level 3 Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are those inputs that reflect the Companys own assumptions that market participants would use to price the asset or liability based on the best available information. |
Quoted | Prices | One or | ||||||||||||||
Prices in | with Other | More | ||||||||||||||
Active | Observable | Unobservable | ||||||||||||||
Markets | Inputs | Inputs | ||||||||||||||
Assets at Fair Value | Total | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Equity investments |
$ 244,816 | $ 90,239 | $ | $ 154,577 | ||||||||||||
Debt investments |
53,883 | | 46,883 | 7,000 | ||||||||||||
Short-term
investments |
3,963 | | 3,963 | | ||||||||||||
Total assets at fair value |
$ 302,662 | $ 90,239 | $ 50,846 | $ 161,577 | ||||||||||||
Three Months Ended February 28, 2011 | ||||||||||||
Total | Debt | Equity | ||||||||||
Balance
November 30, 2010 |
$ | 143,811 | $ | 4,500 | $ | 139,311 | ||||||
Transfers out of Level 3 |
| | | |||||||||
Realized gains (losses) |
| | | |||||||||
Unrealized gains, net |
10,807 | 2,500 | 8,307 | |||||||||
Purchases, issuances or settlements |
6,959 | | 6,959 | |||||||||
Balance
February 28, 2011 |
$ | 161,577 | $ | 7,000 | $ | 154,577 | ||||||
1. | The certifications of the registrant as required by Rule 30a-2(a) under the Act are exhibits to this report. |
KAYNE ANDERSON ENERGY DEVELOPMENT COMPANY | ||||||
/s/ Kevin S. McCarthy | ||||||
Name: | Kevin S. McCarthy | |||||
Title: | Chairman of the Board of Directors, | |||||
President and Chief Executive Officer | ||||||
Date: | April 15, 2011 |
/s/ Kevin S. McCarthy | ||||||
Name: | Kevin S. McCarthy | |||||
Title: | Chairman of the Board of Directors, President and Chief Executive Officer | |||||
Date: | April 15, 2011 | |||||
/s/ Terry A. Hart | ||||||
Name: | Terry A. Hart | |||||
Title: | Chief Financial Officer and Treasurer | |||||
Date: | April 15, 2011 |