FS KKR Closes $150M Convertible Preferred Stock Deal with 5% Cash, 7% PIK Dividends
FSK•FS KKR Capital Corp. has closed a $150 million issuance of cumulative convertible perpetual preferred stock to KKR Alternative Assets with 5.00% cash or 7.00% PIK dividends, convertible at $18.83 per share. Proceeds will fund its common stock repurchase program or repay debt, with dividends rising 1.00% annually after 5.5 years.
1. Convertible Preferred Stock Issuance Details
FS KKR Capital Corp. completed a $150 million issuance of cumulative convertible perpetual preferred stock purchased by KKR Alternative Assets L.P. The initial conversion price is set at $18.83 per share, with customary anti-dilution adjustments.
2. Use of Proceeds and Financial Impact
Proceeds from the issuance will support the company’s common stock repurchase program or be used for debt repayment, strengthening the balance sheet and potentially reducing leverage.
3. Dividend Terms and Conversion Features
The preferred stock pays a 5.00% annual cash dividend or a 7.00% PIK dividend, with the dividend rate increasing by 1.00% per annum after 5.5 years. Holders may convert into common shares after six months and face mandatory conversion or redemption under specified conditions.
4. Governance and Redemption Rights
Holders vote on an as-converted basis on all shareholder matters and elect two board members as a separate class. They also have the option to require full redemption upon certain change-of-control events.
