FS KKR Capital Corp. Form 8-K Summary
Business Context and Reporting Period
Company: FS KKR Capital Corp.
Filing Date: December 20, 2018
Event: Entry into a Material Definitive Agreement following the consummation of the merger of Corporate Capital Trust, Inc. ("CCT") with and into FS KKR Capital Corp.
Key Financial Metrics
This filing is a Current Report (Form 8-K) regarding a contractual agreement and does not contain financial statements, revenue, profit, cash flow, margin, debt, or liquidity data. The filing text does not provide a clear value for these metrics.
Material Changes
The primary material change is the execution of a new Investment Advisory Agreement (the "Amended Advisory Agreement") with FS/KKR Advisor, LLC, replacing the agreement dated April 9, 2018. Key amendments include:
- Management Fee Base: Cash and cash equivalents are now excluded from the gross assets used to calculate the annual base management fee.
- Incentive Fee on Income: The cap calculation was revised to account for the historic per share pre-incentive fee return and historic per share incentive fees of both the Company and CCT.
- Incentive Fee on Capital Gains: The calculation now includes historical net realized losses and unrealized depreciation of both the Company and CCT.
Guidance, Outlook, and Agreement Terms
Term and Renewal: The Amended Advisory Agreement is effective for an initial period of two years. It will automatically continue for successive annual periods subject to annual approval by the Board of Directors (or a majority of voting securities) and a majority of disinterested directors.
Termination: The agreement may be terminated at any time without penalty upon 60 days' written notice by the Company (via Board or stockholder vote) or by the Advisor. It also terminates automatically upon "assignment" as defined under the Investment Company Act of 1940.
Approvals: The agreement was approved by the Board on July 19, 2018, and by stockholders on December 3, 2018.
Investor Verification Checklist
- Verify the full text of the Amended Advisory Agreement filed as Exhibit 10.1 to confirm specific fee calculation formulas.
- Confirm the impact of excluding cash equivalents on the Company's future management fee expenses.
- Review the historical performance data of both FS KKR Capital Corp. and CCT to understand the baseline for the revised incentive fee caps.
- Monitor upcoming Board and stockholder votes required for the annual renewal of the agreement.