FS KKR Capital Corp (FS Investment Corporation) - 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by FS Investment Corporation (the "Company") on December 8, 2016. The filing reports the creation of a direct financial obligation through the issuance of additional debt securities.
Key Financial Metrics and Transaction Details
- Debt Issuance: The Company issued an additional $80 million aggregate principal amount of 4.250% notes due 2020 (the "Add-On Notes").
- Net Proceeds: Approximately $79.4 million.
- Transaction Costs: Underwriting discounts and commissions of approximately $720,000 and estimated offering expenses of approximately $350,000.
- Interest Rate: 4.250% per annum.
- Maturity Date: January 15, 2020.
- Interest Payment Schedule: Semi-annually in arrears on January 15 and July 15, commencing January 15, 2017. Interest accrues from July 15, 2016.
- Use of Proceeds: Repayment of outstanding indebtedness under financing arrangements.
Material Changes and Debt Structure
The Add-On Notes are treated as a single series with the existing $325 million of 4.250% notes due 2020, bringing the total principal amount of this series to $405 million. The Add-On Notes are general unsecured obligations that rank:
- Senior to all existing and future indebtedness expressly subordinated to them.
- Pari passu with all existing and future unsecured unsubordinated indebtedness.
- Effectively junior to secured indebtedness to the extent of the value of securing assets.
- Structurally junior to all indebtedness incurred by the Company's subsidiaries.
Management Commentary, Risks, and Covenants
The Indenture requires the Company to comply with asset coverage requirements under Section 18(a)(1)(A) of the Investment Company Act of 1940. Additionally, the notes contain a "change of control repurchase event" provision, requiring the Company to offer to purchase outstanding notes at 100% of the principal amount plus accrued and unpaid interest if such an event occurs. The filing does not provide specific revenue, profit, or cash flow metrics for the period, as the report focuses solely on the debt issuance.
Key Facts for Investor Verification
- Verify the total outstanding principal of the 4.250% notes due 2020 is now $405 million ($325 million existing + $80 million new).
- Confirm the Company's current asset coverage ratio to ensure compliance with the Investment Company Act of 1940 covenants.
- Review the specific financing arrangements being repaid with the $79.4 million in net proceeds to assess the impact on the Company's overall leverage and liquidity.
- Monitor the interest payment schedule starting January 15, 2017, noting that interest accrues retroactively from July 15, 2016.