Center Coast MLP & Infrastructure Fund (CEN) Statement on Hurricane Harvey

HOUSTON, Aug. 30, 2017 /PRNewswire/ -- Our thoughts and prayers are with all of those impacted by Hurricane and Tropical Storm Harvey.  We are fortunate to report that all Center Coast employees are safe and sound, and we have been operating at full capacity ever since Harvey hit the U.S. Gulf Coast and continue to do so.  If you need immediate assistance, please contact us at 713-759-1400 or refer to our website, http://www.centercoastcap.com, for more information.

Critically, not all residents in the Gulf Coast and Houston area have been as fortunate as Center Coast employees; the losses are devastating.  Thus, we encourage everyone to do their part by donating time, goods, services, and/or money to any of the Harvey donation banks set up online and around town, for example: text HARVEY to 90999 to donate $10 to American Red Cross; donate to the Houston SPCA at www.houstonspca.org; help bring volunteers to Texas by visiting https://teamrubiconusa.org; or donate to JJ Watt's Flood Relief Fund at https://www.youcaring.com/victimsofhurricaneharvey-915053.   

Harvey's Impact on Fund Constituents  

At present we have not heard of any permanent or long-term damage to the assets of any Fund constituents, but we continue to monitor the situation and expect more detailed assessments from the companies over the next few weeks.  Enterprise Products Partners L.P. (NYSE: EPD), one of our top holdings with significant assets on the Gulf Coast, reported a couple days ago that "[a]t this time none of the facilities have incurred any significant damage."  Similarly, Targa Resources Corp. (NYSE: TRGP), another top holding of the Fund with important assets on the Gulf Coast, reported yesterday that "damage to date to Targa facilities has been minimal…disruptions to operations are expected to be limited…normal operations will resume shortly after flood waters recede."

We do expect temporary outages and downtime for assets positioned in or connected to the affected regions of the Gulf Coast (see list below).  The magnitude of the impact will depend on the length of the downtime and the contractual arrangement behind the cash flows generated by each impacted asset.  To date, the impact of Hurricane Harvey and the related flooding appears to be transitory in nature and limited to asset downtime, with little or no impact to the long-term investment thesis of midstream infrastructure.  For example, Genesis Energy, L.P. (NYSE: GEL), a midstream provider focused on the Gulf of Mexico and the Gulf Coast, indicated that operational impacts may impact quarterly results by less than 2% with no lasting impacts.  We anticipate similar types of impacts to those midstream names with significant infrastructure on the coast and we believe that disclosures regarding any material cash flow impacts or downtime would need to be made within the week.

Assets with known downtime:

• Upstream
• • Certain producing Eagle Ford assets
  • Select offshore platforms
• Downstream
• • Refineries around Houston, Beaumont, Galveston, Port Arthur, and Lake Charles
  • Petchem facilities, including a significant amount of ethylene capacity
• Midstream
• • Assets associated with impacted upstream and downstream assets listed above
  • Some offshore pipelines
  • Onshore pipelines closer to demand centers
  • Some Mont Belvieu fractionation
  • Export facilities from Corpus Christi all the way to Louisiana

Importantly, it appears that a large portion of the Fund's constituents should see limited or no impact from Harvey.  Nevertheless, we are staying abreast of the situation and will pass along material information as necessary. 

Best,

The Center Coast team

Top 10 Public Holdings as of 6/30/17

CEN Quarter Report Notes & Disclosure
This letter does not constitute an offer of any securities or investment advisory services, or a recommendation with respect to any of the securities discussed herein.

The investment ideas summarized above represent Center Coast Capital's current views and are subject to change depending on events with respect to particular companies and conditions and trends in the securities markets and the economy in general. The foregoing discussion includes and is based upon numerous assumptions and opinions of Center Coast concerning particular MLPs, companies, financial markets and other matters, the accuracy of which cannot be assured. There can be no assurance that the Fund's investment strategy will achieve a profitable result.

Performance data reflects fees and expenses of the Fund, but does not reflect sales charges or fees that may be incurred. All performance data is unaudited and assumes reinvestment of all distributions. Current performance may be lower or higher than that shown based on market fluctuations from the end of the reported period.  Before making an investment in the Fund, you should consider the investment objective, risks, charges and expenses of the fund which, together with and other important information are included in the fund's most recent prospectus and other filings with the SEC.  There can be no assurance that the Fund's investment objectives will be attained.  Shares of closed-end funds frequently trade at a market price that is below their net asset value.  The Fund uses leverage with creates risks that may adversely affect return, including the likelihood of greater volatility of net asset value and the market price of common shares.

Distribution rate is calculated as distribution per share annualized and divided by the current share price. The total return sought by the Fund includes appreciation in the net asset value of the Fund's common shares and all distributions made by the Fund to its common shareholders, regardless of the tax characterization of such distributions, including distributions characterized as return of capital.
The Fund expects to distribute cash in excess of its earnings and profits to its common shareholders which may be treated as a return of capital to the extent of the common shareholders' bases in the Common Shares. As a result, common shareholders may receive distributions that represent a return of capital although no assurance can be given in this regard. The portion of any distribution treated as return of capital will not be subject to tax currently, but will result in a reduction in basis in their Common Shares. Such a reduction in basis will result in the shareholder's recognizing more gain or less loss (that is, will result in an increase of a shareholder's tax liability) when the shareholder later sells Common Shares, even if such Common Shares have not increased in value or have, in fact, lost value.  For the year ended November 30, 2016, 100% of the fund¹s distributions were treated as return of capital.

Comparison to any market or MLP Index is for illustrative purposes only, and the volatility of these may be materially different from the volatility of the Fund due to a variety of factors. 

The Fund's investments are concentrated in the energy infrastructure industry with an emphasis on securities issued by MLPs, which may increase price fluctuation. The value of commodity-linked investments such as the MLPs and energy infrastructure companies (including Midstream MLPs and energy infrastructure companies) in which the Fund invests are subject to risks specific to the industry they serve, such as fluctuations in commodity prices, reduced volumes of available natural gas or other energy commodities, slowdowns in new construction and acquisitions, a sustained reduced demand for crude oil, natural gas and refined petroleum products, depletion of the natural gas reserves or other commodities, changes in the macroeconomic or regulatory environment, environmental hazards, rising interest rates and threats of attack by terrorists on energy assets, each of which could affect the Fund's profitability.

MLPs are subject to significant regulation and may be adversely affected by changes in the regulatory environment including the risk that an MLP could lose its tax status as a partnership. If an MLP were to be obligated to pay federal income tax on its income at the corporate tax rate, the amount of cash available for distribution would be reduced and such distributions received by the Fund would be taxed under federal income tax laws applicable to corporate dividends received (as dividend income, return of capital, or capital gain).

In addition, investing in MLPs involves additional risks as compared to the risks of investing in common stock, including risks related to cash flow, dilution and voting rights. Such companies may trade less frequently than larger companies due to their smaller capitalizations which may result in erratic price movement or difficulty in buying or selling.

The information contained herein has been prepared by Center Coast Capital Advisors, LP and is current as of the date hereof.  Such information is subject to change. 

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.  AN INVESTMENT IN THE FUND COULD SUFFER LOSS.

The Fund seeks to achieve its investment objective by investing primarily in a portfolio of master limited partnerships ("MLPs") and energy infrastructure companies. Under normal market conditions, the Fund will invest at least 80% of its Managed Assets in securities of MLPs and energy infrastructure companies. The Fund may invest up to 20% of its Managed Assets in unregistered or restricted securities, including securities issued by private companies. The Fund utilizes leverage as part of its investment strategy. There is no assurance that the Fund will achieve its investment objectives.

The Fund is a non-diversified closed-end investment company. Shares of closed-end investment companies, such as the Fund, frequently trade at a discount to their net asset value, which may increase investors' risk of loss.

Investors should consider the Fund's investment objective, risks, charges and expenses carefully before investing.

This document is not an offer to sell securities or the solicitation of an offer to buy securities, nor shall there be any sale or offer of these securities, in any jurisdiction where such sale or offer is not permitted.

Investing in the Fund involves risk, including possible loss of principal invested. The Fund is not a complete investment program and you may lose money investing in the Fund.
Because of the Fund's concentration in MLP investments, the Fund is not eligible to be treated as a "regulated investment company" under the Internal Revenue Code of 1986, as amended (the "Code"). Instead, the Fund will be treated as a regular corporation for U.S. federal income tax purposes and, as a result, unlike most investment companies, will be subject to corporate income tax to the extent the Fund recognizes taxable income.

The Fund is a non-diversified investment company under the Investment Company Act of 1940, as amended, and will not elect to be treated as a regulated investment company under the Code. Accordingly, the Fund may concentrate its investments in a limited number of companies. As a result, the Fund's returns may fluctuate as a result of any single economic, political or regulatory occurrence affecting, or in the market's assessment of, such portfolio companies to a greater    extent than those of a diversified investment company.

An investment in MLP units involves risks that differ from a similar investment in equity securities, such as common stock, of a corporation. Holders of MLP units have the rights typically afforded to limited partners in a limited partnership. As compared to common shareholders of a corporation, holders of MLP units have    more limited control and limited rights to vote on matters affecting the partnership. There are certain tax risks associated with an investment in MLP units. Additionally, conflicts of interest may exist between common unit holders, subordinated unit holders and the general partner of an MLP; for example, a conflict may arise as a result of incentive distribution payments, as such an incentive structure may result in divergent and potentially conflicting interests between common unitholders and the general partner, which may have more motivation to pursue projects with high risk and high potential reward.

Because the Fund is focused in MLP and infrastructure companies operating in the industry or group of industries that make up the energy sector of the economy, the Fund may be more susceptible to risks associated with such sector. A downturn in such sector could have a larger impact on the Fund than on an investment company that does not concentrate in such sector. At times, the performance of securities of companies in the energy sector may lag the performance of other sectors or the broader market as a whole.

The Fund currently seeks to enhance the level of its current distributions by utilizing financial leverage. The Fund may utilize financial leverage up to the limits imposed by the Investment Company Act of 1940, as amended. The costs associated with the issuance and use of financial leverage will be borne by the holders of the common shares. Financial leverage is a speculative technique and investors should note that there are special risks and costs associated with financial leverage. There can be no assurance that a financial leverage strategy will be successful during any period in which it is employed. On June 30, 2017, the Fund's outstanding borrowings were $76.0 million under its credit facility (20% of Managed Assets) and $50.0 million of Mandatory Redeemable Preferred Stock (12% of Managed Assets), resulting in a total leverage percentage of 33.8%. As of June 30, 2017, the Credit Facility had an interest rate of 2.17% and the Preferred Stock has a 4.29% annual coupon.

Information is as of the date indicated and subject to change.

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SOURCE Center Coast MLP & Infrastructure Fund