Kayne Anderson Energy Development Company Announces Distribution of $0.48 per Share for Q4 2015; Announces Investment in Closed-End Funds by Kayne Anderson
Kayne Anderson Energy Development Company (the “Company”) (NYSE:KED)
announced today its quarterly distribution of $0.48 per share for the
quarter ended November 30, 2015. The distribution will be payable on
January 15, 2016 to common stockholders of record on January 8, 2016,
with an ex-dividend date of January 6, 2016.
“The board has elected to reduce the quarterly distribution from $0.53
per share to $0.48 per share, a reduction of $0.05 per share, in light
of the weak conditions in the energy and MLP markets,” said Kevin
McCarthy, CEO of the Company. “Our net distributable income has declined
over the past twelve months due to a variety of factors, including
merger activity (where the acquirer has a lower yield) and the dividend
cut by Kinder Morgan, Inc. Further, we’ve become more convinced that MLP
management teams will slow their distribution growth rates in 2016, and
many MLPs will opt to build coverage instead and keep distribution
levels flat. As a result of these factors, we’ve reduced the Company’s
dividend to a level that we believe is sustainable, given current market
conditions, and can grow over time as the market recovers.”
Separately, the advisor to the Company, KA Fund Advisors (or “KAFA”),
and its principals have agreed to purchase newly issued shares of KED,
KYN, KYE and KMF, funded in part with 100% of the after-tax management
fees received during the quarter. These purchases total $14 million
across all the four closed-end funds managed by KAFA, and of this
amount, $0.7 million will be invested in KED. The purchases will be made
at the greater of market price or net asset value as of the close of
business on Friday, December 18. As of Wednesday, December 16, the
purchase price for KED would have represented a premium of 12.7% to the
closing market price. Bob Sinnott, President and CEO of Kayne Anderson
Capital Advisors commented, “Kayne Anderson continues to believe in the
long-term prospects of the Company as well as the sustainability of the
MLP market. Because Kayne Anderson is purchasing primary shares, this
transaction at the same time strengthens the Company’s balance sheet.”
The transaction is expected to close on December 23, 2015.
The Company estimates that none of its distribution for the quarter
ended November 30, 2015 will be treated as a return of capital for tax
purposes. This estimate is based on the Company’s anticipated earnings
and profits for fiscal 2016 and its accumulated earnings and profits as
of November 30, 2015. The final determination of the tax character of
the distribution will be made in early 2017 when the Company can
determine its actual earnings and profits for the full year (including
gains and losses on the sale of securities during fiscal 2016) and may
differ substantially from this preliminary information.
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 differ from
the Company's historical experience and its present expectations or
projections indicated in any forward-looking statements. These risks
include, but are not limited to, changes in economic and political
conditions; regulatory and legal changes; MLP industry risk; leverage
risk; valuation 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.
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