TULSA , OK, Feb. 1, 2012 /CNW/ – American Natural Energy Corporation (“ANEC”) (TSX Venture: ANR.U) announced that it intends to seek to raise additional capital, subject to TSX Venture Exchange approval. The terms of such transaction will involve the sale of up to 10 million Units consisting of 1 share of ANEC’s Common Stock at a price of USD$0.10 per share and 1 warrant for the purchase of 1 share of ANEC’s common stock exercisable at USD $0.20 per share for total proceeds of up to $1.0 million . If completed, such a transaction will result in dilution to the present holders of ANEC’s Common Stock. The offer and sale of such securities by ANEC to the subscribers has not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Act”), and such securities may not be offered or sold in the United States absent registration under the Act or an available exemption from the registration requirements. Such offer and sale of its securities is intended to be made pursuant to the exemption from the registration requirements of the U.S. Securities Act afforded by Regulation D and in reliance upon Regulation S under that Act and will result in the issuance of “restricted securities” as defined in Rule 144 under the Act. There can be no assurance that ANEC will be successful in raising the additional capital through the sale of its Common Stock.
The additional capital will supplement the first tranche of $1 million provided for under the terms of the previously announced drilling fund term sheet. The first tranche of $1 million available under that financing closed and was funded today. The capital raise and drilling financing are for the development of ANEC’s proven oil reserves. In connection with the transaction, ANEC issued 1.76 million shares of common stock of the Corporation to the investor in respect of investment banking services. The shares of common stock were acquired relying on the prospectus exemption under British Columbia securities laws contained in BC Instrument 72-503. As a result of the acquisition of shares, the investor owns and controls common stock of ANEC, representing approximately 11% of the issued and outstanding shares of common stock of ANEC. The shares of common stock were acquired for investment purposes in connection with the debenture transaction and the investor has no present intention to acquire ownership of or control over additional securities of ANEC. ANEC was represented by Crucible Capital Group, Inc., Member FINRA/SIPC, in the transaction.
ANEC is a Tulsa , Oklahoma based independent exploration and production company with operations in St. Charles Parish , Louisiana. For further information please contact Michael Paulk , CEO at 918-481-1440 or Steven P. Ensz, CFO at 281-367-5588.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This Press Release may contain statements which constitute forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995, including statements regarding the plans, intentions, beliefs and current expectations of ANEC, its directors, or its officers with respect to the future business, well drilling and operating activities and performance of ANEC. Forward-looking statements also include the plans and intentions of ANEC to offer and sell shares of its Common Stock and its ability to complete such a transaction. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. The actual results and outcome of events may differ materially from those in the forward-looking statements as a result of various factors. The levels of and fluctuations in the prices for natural gas and oil and the demand for those commodities, the outcome of ANEC’s development and exploration activities, including the success of its current and proposed well drilling activities and the availability of capital to pursue those activities could affect ANEC and its future prospects. ANEC’s inability to raise additional capital would adversely affect its ability to pursue its drilling program and its liquidity. Important additional factors that could cause such differences are described in ANEC’s periodic reports and other filings made with the Securities and Exchange Commission and may be viewed at the Commission’s Website at http://www.sec.gov/.
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2012年2月1日星期三
United Silver Corp. and Hale Capital Partners Complete Financing
VANCOUVER, BRITISH COLUMBIA–(Marketwire -02/01/12)- United Silver Corp. (“USC” or the “Company”) (TSX: USC.TO – News)(OTCQX: USCZF.PK – News) and Hale Capital Partners (“Hale” or the “Lender”) are pleased to announce that, subject to final approval from the Toronto Stock Exchange (the “TSX”), they have successfully closed their previously announced financing transaction. USC is now in a position to begin its four-year exploration and development plan to test the mineralization of the South Vein and Alhambra Vein at depth and along the east/west strike extensions of the veins.
In the financing transaction, USC issued to Hale a convertible note (the “Convertible Note”) in the principal amount of USD$6,300,000 (being the Canadian equivalent of $6,332,760.00, based on the Bank of Canada noon rate on January 31, 2012) evidencing a loan the proceeds of which were advanced by Hale pursuant to the Convertible Note and a securities purchase agreement (the “Securities Purchase Agreement”) entered into among a wholly owned subsidiary of Hale, as agent and initial purchaser, and USC. USC also issued to Hale 5,040,000 common share purchase warrants (the “Warrants”). Hale will have the right at any time to convert any or all of the principal owing under the Convertible Note into common shares (“USC Common Shares”) of USC at a conversion price of USD$0.50 (being the Canadian equivalent of $0.50, based on the Bank of Canada noon rate on January 31, 2012) per USC Common Share. In addition, Hale will have the right at any time to convert any or all of the accrued and unpaid interest that USC has elected (provided that USC has satisfied certain conditions set out in the Convertible Note) to add to the principal amount of the Convertible Note (“PIK Interest”). The conversion price with respect to PIK Interest will be an amount equal to the “market price” (as defined in the Toronto Stock Exchange Manual) on the applicable interest payment date, subject to the approval of the TSX in each instance. Each whole Warrant will entitle the holder to acquire one USC Common Share at an exercise price of US$0.42 (being the Canadian equivalent of $0.42, based on the Bank of Canada noon rate on January 31, 2012) per USC Common Share for a period of four years from the date of issuance.
If the principal amount of the Convertible Note is fully converted, Hale would hold 12,600,000 or 14.4% of the total number of issued and outstanding USC Common Shares. In the event that all of the Warrants are also exercised, Hale’s holdings would increase to 17,640,000 or 19% of the total number of issued and outstanding USC Common Shares. As the number of USC Common Shares issuable to Hale in respect of PIK Interest, if any, is contingent, in part, upon future values and share prices, the number of USC Common Shares which Hale may acquire should it exercise its conversion rights in respect thereof cannot be determined at this time.
None of the Convertible Note, the Warrants or the USC Common Shares that may be issued upon conversion or exercise, respectively, of these securities, have been registered under the United States Securities Act of 1933, as amended (the “1933 Act”), or the securities laws of any state of the United States, and may not be offered or sold in the United States absent registration or an applicable exemption therefrom under the 1933 Act and the securities laws of all applicable states.
Under the terms of the Securities Purchase Agreement, USC is required to appoint to its board a person mutually agreed upon with Hale and to permit an observer from Hale to attend its Board meetings, subject to conditions.
Hale has filed an early warning acquisition report on SEDAR. A copy of the report may be obtained by contacting Martin Hale at (212) 751-8228.
USC intends to use the net proceeds from the financing for exploration and development and working capital purposes. The loan proceeds will allow USC to continue its exploration and development drifting, bulk sampling and test mining on the South Vein. USC proposes to mill ore from the bulk sampling and test mining under a milling JV agreement with New Jersey Mining Company and to refine it under a contract with Formation Metals at its refinery located less than three miles from the mill. USC intends to use cash generated from operations, including the bulk sampling and test mining activities, to fund an extensive surface and underground drilling program to test the mineralization of the entire Crescent property and develop a property-wide mine plan without further equity raises and dilution.
Hale may or may not purchase or sell securities of the Company in the future on the open market or in private transactions, depending on market conditions and other factors material to Hale’s investment decisions and reserves the right to dispose of any or all of its securities in the open market or otherwise, at any time and from time to time and to engage in hedging or similar transactions with respect to the securities.
ABOUT UNITED SILVER CORP.
USC is a vertically integrated mining company with operations in Idaho, USA. It has earned, through development and operations, an 80% interest in the Crescent Silver Mine project in Idaho’s prolific Silver Belt – directly between two of the world’s historically largest silver producing properties, the Sunshine and Bunker Hill mines. USC also offers a full suite of mining services including contract mining and mine machine repair and fabrication services to silver miners in the district. USC’s common shares trade on the Toronto Stock Exchange under the symbol “USC”. For more information about USC, please visit: www.unitedsilvercorp.com.
ABOUT HALE CAPITAL PARTNERS
Based in New York City, Hale Capital Partners has established itself as a leading private equity firm focused on strategic investments in public companies and their subsidiaries. Hale Capital Partners’ team is comprised of seasoned private equity veterans and entrepreneurs, who bring not only deep domain expertise but also hands-on operating experience to help build highly successful companies. Hale Capital Partners’ mining portfolio spans all stages of mine development from exploration to commercial production.
Hale’s contact information is as follows:
Graham Clark, Chairman and Interim CEO
FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements, which address future events and conditions, which are subject to various risks and uncertainties. Forward-looking statements in this press release include statements about USC’s intended use of the net proceeds and that they will enable USC to continue its exploration and development activities, its proposal to mill ore under a milling agreement with New Jersey Mining Company and refine it under a contract with Formation Metals, its intent to use cash from operations to fund an extensive surface and underground drilling program and that it can develop a property-wide mine plan without further equity raises and dilution. These forward-looking statements are based on the expectations and opinions of the Company’s management on the date the statements are made. The assumptions used in the preparation of such statements, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. These assumptions include management’s assumption that the net proceeds of the financing, together with revenue from operations, will generate sufficient cash flow to fund the budget and that the price for metals will continue to make the Company’s activities economically feasible. Actual results may differ materially from those currently anticipated due to a number of factors beyond the Company’s control. These risks and uncertainties include the risks inherent in the Company’s activities and the risks identified in the Company’s periodic disclosure filings on the SEDAR website maintained by the Canadian Securities Administrators. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
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In the financing transaction, USC issued to Hale a convertible note (the “Convertible Note”) in the principal amount of USD$6,300,000 (being the Canadian equivalent of $6,332,760.00, based on the Bank of Canada noon rate on January 31, 2012) evidencing a loan the proceeds of which were advanced by Hale pursuant to the Convertible Note and a securities purchase agreement (the “Securities Purchase Agreement”) entered into among a wholly owned subsidiary of Hale, as agent and initial purchaser, and USC. USC also issued to Hale 5,040,000 common share purchase warrants (the “Warrants”). Hale will have the right at any time to convert any or all of the principal owing under the Convertible Note into common shares (“USC Common Shares”) of USC at a conversion price of USD$0.50 (being the Canadian equivalent of $0.50, based on the Bank of Canada noon rate on January 31, 2012) per USC Common Share. In addition, Hale will have the right at any time to convert any or all of the accrued and unpaid interest that USC has elected (provided that USC has satisfied certain conditions set out in the Convertible Note) to add to the principal amount of the Convertible Note (“PIK Interest”). The conversion price with respect to PIK Interest will be an amount equal to the “market price” (as defined in the Toronto Stock Exchange Manual) on the applicable interest payment date, subject to the approval of the TSX in each instance. Each whole Warrant will entitle the holder to acquire one USC Common Share at an exercise price of US$0.42 (being the Canadian equivalent of $0.42, based on the Bank of Canada noon rate on January 31, 2012) per USC Common Share for a period of four years from the date of issuance.
If the principal amount of the Convertible Note is fully converted, Hale would hold 12,600,000 or 14.4% of the total number of issued and outstanding USC Common Shares. In the event that all of the Warrants are also exercised, Hale’s holdings would increase to 17,640,000 or 19% of the total number of issued and outstanding USC Common Shares. As the number of USC Common Shares issuable to Hale in respect of PIK Interest, if any, is contingent, in part, upon future values and share prices, the number of USC Common Shares which Hale may acquire should it exercise its conversion rights in respect thereof cannot be determined at this time.
None of the Convertible Note, the Warrants or the USC Common Shares that may be issued upon conversion or exercise, respectively, of these securities, have been registered under the United States Securities Act of 1933, as amended (the “1933 Act”), or the securities laws of any state of the United States, and may not be offered or sold in the United States absent registration or an applicable exemption therefrom under the 1933 Act and the securities laws of all applicable states.
Under the terms of the Securities Purchase Agreement, USC is required to appoint to its board a person mutually agreed upon with Hale and to permit an observer from Hale to attend its Board meetings, subject to conditions.
Hale has filed an early warning acquisition report on SEDAR. A copy of the report may be obtained by contacting Martin Hale at (212) 751-8228.
USC intends to use the net proceeds from the financing for exploration and development and working capital purposes. The loan proceeds will allow USC to continue its exploration and development drifting, bulk sampling and test mining on the South Vein. USC proposes to mill ore from the bulk sampling and test mining under a milling JV agreement with New Jersey Mining Company and to refine it under a contract with Formation Metals at its refinery located less than three miles from the mill. USC intends to use cash generated from operations, including the bulk sampling and test mining activities, to fund an extensive surface and underground drilling program to test the mineralization of the entire Crescent property and develop a property-wide mine plan without further equity raises and dilution.
Hale may or may not purchase or sell securities of the Company in the future on the open market or in private transactions, depending on market conditions and other factors material to Hale’s investment decisions and reserves the right to dispose of any or all of its securities in the open market or otherwise, at any time and from time to time and to engage in hedging or similar transactions with respect to the securities.
ABOUT UNITED SILVER CORP.
USC is a vertically integrated mining company with operations in Idaho, USA. It has earned, through development and operations, an 80% interest in the Crescent Silver Mine project in Idaho’s prolific Silver Belt – directly between two of the world’s historically largest silver producing properties, the Sunshine and Bunker Hill mines. USC also offers a full suite of mining services including contract mining and mine machine repair and fabrication services to silver miners in the district. USC’s common shares trade on the Toronto Stock Exchange under the symbol “USC”. For more information about USC, please visit: www.unitedsilvercorp.com.
ABOUT HALE CAPITAL PARTNERS
Based in New York City, Hale Capital Partners has established itself as a leading private equity firm focused on strategic investments in public companies and their subsidiaries. Hale Capital Partners’ team is comprised of seasoned private equity veterans and entrepreneurs, who bring not only deep domain expertise but also hands-on operating experience to help build highly successful companies. Hale Capital Partners’ mining portfolio spans all stages of mine development from exploration to commercial production.
Hale’s contact information is as follows:
Hale Capital Partners, L.P. 570 Lexington Avenue, 49th Floor New York, NY 10022 Attn: Martin Hale, CEO and Portfolio ManagerON BEHALF OF UNITED SILVER CORP.
Graham Clark, Chairman and Interim CEO
FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements, which address future events and conditions, which are subject to various risks and uncertainties. Forward-looking statements in this press release include statements about USC’s intended use of the net proceeds and that they will enable USC to continue its exploration and development activities, its proposal to mill ore under a milling agreement with New Jersey Mining Company and refine it under a contract with Formation Metals, its intent to use cash from operations to fund an extensive surface and underground drilling program and that it can develop a property-wide mine plan without further equity raises and dilution. These forward-looking statements are based on the expectations and opinions of the Company’s management on the date the statements are made. The assumptions used in the preparation of such statements, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. These assumptions include management’s assumption that the net proceeds of the financing, together with revenue from operations, will generate sufficient cash flow to fund the budget and that the price for metals will continue to make the Company’s activities economically feasible. Actual results may differ materially from those currently anticipated due to a number of factors beyond the Company’s control. These risks and uncertainties include the risks inherent in the Company’s activities and the risks identified in the Company’s periodic disclosure filings on the SEDAR website maintained by the Canadian Securities Administrators. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
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2012年1月2日星期一
State investments continue to grow
Wyoming made $770 million from investments of its $14.4 billion in trust funds during the 2010-11 fiscal year and finished repaying losses from the 2008 economic bust.
“We’ve had two really good years,” State Treasurer Joe Meyer told the Select Committee on Capital Financing and Investments, which met in Casper earlier this month. “So we live happily ever after until the next crisis comes.”
Meyer presented his investment report to the legislators to bring them up to speed on the state’s major permanent trust funds before the budget session begins.
“For the fiscal year ending June 30 … we made $770 million on this $14 billion portfolio, and we distributed out $622 million [to various state agencies],” said Chief Investment Officer Michael Walden-Newman, from the treasurer’s office.
The treasurer also put $91 million back into the permanent trust funds, completing repayment of some $200 million that was lost through unfavorable business decisions in the 2008 economic downturn ($110 million was repaid in 2010).
“This past year we paid off the remaining $91 million, so that came out of the $770 million,” Walden-Newman said. “We also had some losses that we carried on the books from the crisis … they were about $35 million that we paid off and then we paid the investment managers [$42.4 million]. So what we distributed was $620 million for the fiscal year, which was actually very good considering how horrible it had been a couple of years prior.”
Meyer, meanwhile, was still mad at the losses from the downturn, which he attributed largely to decisions by some of the private investment managers who no longer work for the state.
“I can accept an investment manager losing money with their style, that’s to be expected; you can’t tell markets that much,” Meyer said. “But when they get stupid enough to sell at the bottom of the market, without telling us, I lose my temper and I get mad. They have since apologized to us; I said well it’s a little bit late to apologize to us now.”
The treasurer’s office, in conjunction with the State Land and Investment Board (composed of the state’s top five elected officials, including Meyer), oversee management of the state’s $14.4 billion in established funds, which include the Permanent Wyoming Mineral Trust Fund ($5.3 billion); Hathaway Scholarship Fund ($502.8 million); Higher Education Endowment Fund ($111.5 million); Workers’ Compensation Fund ($1.36 billion); and the Tobacco Settlement Fund ($67.5 million). There’s also the Permanent Land Fund, which is actually three separate funds: the Common School Land Fund ($2.24 billion); University Permanent Land Fund ($18 million); and the Remaining Permanent Land Funds ($122.8 million). In addition, there are a myriad of smaller funding sources in the state (such as the Wildlife Trust Fund) which are combined into what’s called the State Agency Pool, and totals some $4.7 billion.
Some of the funds, such as the Permanent Mineral Trust Fund, the Hathaway Scholarship Fund and the Higher Education Endowment Fund, are “inviolate,” which means once the money is in, it can never come out, the fund, or corpus, can never be allocated. The interest from investment of that money, however, can be spent and pays for programs tied specifically to the fund, such as Hathaway scholarships.
To ensure their inviolability, there are specific guidelines and risk limits for these permanent funds, with the primary objective being to protect the money.
“We just don’t have that many risky investments,” Meyer told the committee. “Actually, when the bottom dropped out in 2007-2008, this very, very conservative portfolio … dropped 11 percent in value. Our retirement system lost 35 percent, and most state and public funds across the United States lost in excess of 30 percent in value. That doesn’t mean that we’re geniuses, it means the type of portfolio that we built has been stretched … I prefer a diversified portfolio.”
Meyer said while there’s caution, there’s also alertness to the market.
“We’ve got some flexibility in there to see what’s really happening in the real world,” Meyer said. “That’s when Mike [Walden-Newman] and R.V. Kuhns [the state’s private investment management firm] get their heads together, and they call the managers, and they say, ‘What do you think is going on?’ It’s a very interactive, very alive process. You know we’re damn fortunate to have money …”
“We’re very conscious in the treasurer’s office that the primary investment portfolio is the protection of the corpus of the funds,” Walden-Newman said. “And secondly, to provide liquidity to meet the state’s needs. And then after those is to provide the highest possible rate of return within the risk parameters … And the risk parameters are set in the asset allocation, and for us the risk parameters are mostly set by the cap placed on equity exposure of 55 percent of the permanent funds, so that we have less volatility in the stock market, and a more reliable and predictable income in the bond market.”
The investment income isn’t only interest or revenues, but also the value of the asset itself, i.e., capital gains (or losses). Meyer said that while the value of many of the stocks, bonds and other assets went up substantially this year, he cautioned that the values go can go down as quickly as they go up. Because of the volatility, “You’ll see a $450 million shift in market value in just one month,” Meyer said as an example. “September was a miserable month, October was a really hot month, so if you ask how much capital gains we can get, I would never expect $450 million in one month, and capital appreciation, but that’s what happened.”
Meyer said they only count capital gains as income in July at the end of the fiscal year, if they cash in. Capital gains also aren’t counted as income for budgeting purposes in the important Consensus Revenue Estimating Group (CREG) report, which is the main benchmark used in developing the state budget.
“Those capital gains haven’t ever been, and won’t be, profiled in the CREG report, but they’ll come to the state …” Meyer said, noting the current policy of the treasurer’s office.
State budgeters, however, are aware it might be there at the end of the fiscal year ($275 million of the $622 million that was distributed to the agencies this past fiscal year came from capital gains).
“Now that can become a serious sum of money come July,” noted Rep. Steve Harshman, R-Natrona, who’s a member of the legislature’s Joint Appropriations Committee.
Another issue that arose in the meeting concerned what are called “reserve accounts,” which are less restricted than the fixed funds, but designated for the same purpose. For instance, if investments from the Hathaway Scholarship Fund come up short to finance all the qualifying students, the reserve account is there to make up the difference.
The reserve accounts generate investment interest as well, which in recent years has gone directly into the state’s General Fund. The committee, however, voted to introduce bills that would have that interest stay with the reserve account in the case of the Hathaway Fund and the Common School Fund.
While the state apparently isn’t projecting a significant increase in investment income this current fiscal year, the funds are still expected to grow.
“I tell people it took Wyoming 113 years to get its first $5 billion in this portfolio,” Walden-Newman said, commenting that was around 2003. “It took five years to get the next $5 billion, so in 2008 we were at $10 billion. And we’re going to be at $15 billion in this portfolio, based on our projections, about this time next year … and on out.”
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“We’ve had two really good years,” State Treasurer Joe Meyer told the Select Committee on Capital Financing and Investments, which met in Casper earlier this month. “So we live happily ever after until the next crisis comes.”
Meyer presented his investment report to the legislators to bring them up to speed on the state’s major permanent trust funds before the budget session begins.
“For the fiscal year ending June 30 … we made $770 million on this $14 billion portfolio, and we distributed out $622 million [to various state agencies],” said Chief Investment Officer Michael Walden-Newman, from the treasurer’s office.
The treasurer also put $91 million back into the permanent trust funds, completing repayment of some $200 million that was lost through unfavorable business decisions in the 2008 economic downturn ($110 million was repaid in 2010).
“This past year we paid off the remaining $91 million, so that came out of the $770 million,” Walden-Newman said. “We also had some losses that we carried on the books from the crisis … they were about $35 million that we paid off and then we paid the investment managers [$42.4 million]. So what we distributed was $620 million for the fiscal year, which was actually very good considering how horrible it had been a couple of years prior.”
Meyer, meanwhile, was still mad at the losses from the downturn, which he attributed largely to decisions by some of the private investment managers who no longer work for the state.
“I can accept an investment manager losing money with their style, that’s to be expected; you can’t tell markets that much,” Meyer said. “But when they get stupid enough to sell at the bottom of the market, without telling us, I lose my temper and I get mad. They have since apologized to us; I said well it’s a little bit late to apologize to us now.”
The treasurer’s office, in conjunction with the State Land and Investment Board (composed of the state’s top five elected officials, including Meyer), oversee management of the state’s $14.4 billion in established funds, which include the Permanent Wyoming Mineral Trust Fund ($5.3 billion); Hathaway Scholarship Fund ($502.8 million); Higher Education Endowment Fund ($111.5 million); Workers’ Compensation Fund ($1.36 billion); and the Tobacco Settlement Fund ($67.5 million). There’s also the Permanent Land Fund, which is actually three separate funds: the Common School Land Fund ($2.24 billion); University Permanent Land Fund ($18 million); and the Remaining Permanent Land Funds ($122.8 million). In addition, there are a myriad of smaller funding sources in the state (such as the Wildlife Trust Fund) which are combined into what’s called the State Agency Pool, and totals some $4.7 billion.
Some of the funds, such as the Permanent Mineral Trust Fund, the Hathaway Scholarship Fund and the Higher Education Endowment Fund, are “inviolate,” which means once the money is in, it can never come out, the fund, or corpus, can never be allocated. The interest from investment of that money, however, can be spent and pays for programs tied specifically to the fund, such as Hathaway scholarships.
To ensure their inviolability, there are specific guidelines and risk limits for these permanent funds, with the primary objective being to protect the money.
“We just don’t have that many risky investments,” Meyer told the committee. “Actually, when the bottom dropped out in 2007-2008, this very, very conservative portfolio … dropped 11 percent in value. Our retirement system lost 35 percent, and most state and public funds across the United States lost in excess of 30 percent in value. That doesn’t mean that we’re geniuses, it means the type of portfolio that we built has been stretched … I prefer a diversified portfolio.”
Meyer said while there’s caution, there’s also alertness to the market.
“We’ve got some flexibility in there to see what’s really happening in the real world,” Meyer said. “That’s when Mike [Walden-Newman] and R.V. Kuhns [the state’s private investment management firm] get their heads together, and they call the managers, and they say, ‘What do you think is going on?’ It’s a very interactive, very alive process. You know we’re damn fortunate to have money …”
“We’re very conscious in the treasurer’s office that the primary investment portfolio is the protection of the corpus of the funds,” Walden-Newman said. “And secondly, to provide liquidity to meet the state’s needs. And then after those is to provide the highest possible rate of return within the risk parameters … And the risk parameters are set in the asset allocation, and for us the risk parameters are mostly set by the cap placed on equity exposure of 55 percent of the permanent funds, so that we have less volatility in the stock market, and a more reliable and predictable income in the bond market.”
The investment income isn’t only interest or revenues, but also the value of the asset itself, i.e., capital gains (or losses). Meyer said that while the value of many of the stocks, bonds and other assets went up substantially this year, he cautioned that the values go can go down as quickly as they go up. Because of the volatility, “You’ll see a $450 million shift in market value in just one month,” Meyer said as an example. “September was a miserable month, October was a really hot month, so if you ask how much capital gains we can get, I would never expect $450 million in one month, and capital appreciation, but that’s what happened.”
Meyer said they only count capital gains as income in July at the end of the fiscal year, if they cash in. Capital gains also aren’t counted as income for budgeting purposes in the important Consensus Revenue Estimating Group (CREG) report, which is the main benchmark used in developing the state budget.
“Those capital gains haven’t ever been, and won’t be, profiled in the CREG report, but they’ll come to the state …” Meyer said, noting the current policy of the treasurer’s office.
State budgeters, however, are aware it might be there at the end of the fiscal year ($275 million of the $622 million that was distributed to the agencies this past fiscal year came from capital gains).
“Now that can become a serious sum of money come July,” noted Rep. Steve Harshman, R-Natrona, who’s a member of the legislature’s Joint Appropriations Committee.
Another issue that arose in the meeting concerned what are called “reserve accounts,” which are less restricted than the fixed funds, but designated for the same purpose. For instance, if investments from the Hathaway Scholarship Fund come up short to finance all the qualifying students, the reserve account is there to make up the difference.
The reserve accounts generate investment interest as well, which in recent years has gone directly into the state’s General Fund. The committee, however, voted to introduce bills that would have that interest stay with the reserve account in the case of the Hathaway Fund and the Common School Fund.
While the state apparently isn’t projecting a significant increase in investment income this current fiscal year, the funds are still expected to grow.
“I tell people it took Wyoming 113 years to get its first $5 billion in this portfolio,” Walden-Newman said, commenting that was around 2003. “It took five years to get the next $5 billion, so in 2008 we were at $10 billion. And we’re going to be at $15 billion in this portfolio, based on our projections, about this time next year … and on out.”
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