Business Context and Reporting Period
This Form 8-K Current Report was filed by KKR & Co. Inc. on April 26, 2022. The filing reports the completion of a significant debt offering by KKR Group Finance Co. XI LLC, an indirect subsidiary of the Corporation, on the same date.
Key Financial Metrics and Debt Issuance
The Issuer completed the offering of Senior Notes with an aggregate principal amount of ¥60,500,000,000. The issuance consists of five tranches with varying maturities and interest rates:
- 2027 Notes: ¥36,400,000,000 principal; 1.054% interest rate; matures April 26, 2027.
- 2029 Notes: ¥4,900,000,000 principal; 1.244% interest rate; matures April 26, 2029.
- 2032 Notes: ¥6,200,000,000 principal; 1.437% interest rate; matures April 26, 2032.
- 2034 Notes: ¥7,500,000,000 principal; 1.553% interest rate; matures April 26, 2034.
- 2037 Notes: ¥5,500,000,000 principal; 1.795% interest rate; matures April 24, 2037.
The Notes are unsecured and unsubordinated obligations of the Issuer and are fully and unconditionally guaranteed by KKR & Co. Inc. and KKR Group Partnership L.P. Interest is payable semi-annually in arrears, commencing October 26, 2022.
Material Changes and Use of Proceeds
The primary material change is the creation of a direct financial obligation totaling ¥60.5 billion. The Corporation intends to use the net proceeds from the sale of the Notes for general corporate purposes. Specifically, the proceeds are designated to fund the pending acquisition of Mitsubishi Corp.-UBS Realty Inc., announced on March 17, 2022, as well as potential future acquisitions and investments in Japan.
Terms, Risks, and Covenants
The Indenture includes standard covenants limiting the Issuer's and Guarantors' ability to incur indebtedness secured by liens on voting stock or profit-participating equity interests of subsidiaries, and restrictions on mergers or asset sales. Events of default include bankruptcy, insolvency, or receivership, which would trigger automatic acceleration of the Notes. The Issuer may redeem the Notes at 100% of principal plus accrued interest in the event of certain tax changes. Additionally, a change of control repurchase event obligates the Issuer to repurchase the Notes at 101% of the aggregate principal amount plus accrued interest.
Investor Verification Checklist
- Verify the exact net proceeds received after deducting underwriting discounts and expenses, as the filing only states the aggregate principal amount.
- Confirm the closing status and final terms of the pending acquisition of Mitsubishi Corp.-UBS Realty Inc.
- Review the full text of the Base Indenture (Exhibit 4.1) and First Supplemental Indenture (Exhibit 4.2) for specific definitions of "Change of Control" and "Tax Change" events.
- Assess the impact of the new debt on the Corporation's overall leverage ratios and liquidity position, as this filing does not provide updated consolidated balance sheet figures.