KKR Injects $600 Million Into $12.3 Billion Credit Fund After $560 Million Loss
Updated
Updated · The Wall Street Journal · May 11
KKR Injects $600 Million Into $12.3 Billion Credit Fund After $560 Million Loss
15 articles · Updated · The Wall Street Journal · May 11
$560 million in first-quarter losses wiped about 10% off FS KKR Capital’s net asset value, prompting KKR to shore up the $12.3 billion fund with fresh support.
KKR will buy $150 million of new convertible preferred shares, launch a $150 million tender offer at $11 a share, and the fund itself will repurchase another $300 million of stock.
Defaults in the portfolio climbed to 8.1% from 5.5% in December as loans to Medallia, Affordable Care, Cubic and Peraton deteriorated, adding to pressure on the business-development company.
The damage has spilled into funding: the stock has nearly halved over the past year, two ratings firms cut its bonds to junk, and it had to renegotiate a large JPMorgan-led loan.
KKR said the selloff overstates the problem, noted its institutional private-credit portfolios have held up better, and will waive half its quarterly incentive fees for a year—about $50 million at the current pace.
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