Business Context and Reporting Period
Company: KKR & Co. Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: December 7, 2018
Event: Entry into a Material Definitive Agreement (Amended and Restated Credit Agreement).
Key Financial Metrics and Facility Terms
This filing details the terms of a new credit facility rather than reporting period-end financial performance metrics (e.g., revenue, profit, cash flow). The filing text does not provide a clear value for current revenue, profit, or cash flow.
- Facility Type: Senior unsecured multicurrency revolving credit facility.
- Aggregate Principal Amount: $1.00 billion (with an option to increase by up to $500 million, totaling $1.50 billion).
- Maturity Date: December 7, 2023 (five-year term), with an option to extend subject to lender consent.
- Interest Rate Margin (LIBOR): 79.5 basis points per annum (based on current corporate ratings; range is 56.5 to 110 basis points).
- Facility Fee: 8 basis points per annum on total commitments (range is 6 to 15 basis points).
- Guarantors: KKR & Co. Inc. and entities guaranteeing specific senior notes due 2020, 2023, 2025, 2038, 2043, and 2044.
Material Changes and Covenants
The Borrowers amended and restated their credit agreement dated October 22, 2014. Key financial covenants established under the new agreement include:
- Maximum Consolidated Leverage Ratio: No greater than 4.0x (defined as total indebtedness to fee and yield EBITDA, excluding specific indebtedness of KKR Financial Holdings LLC).
- Minimum Fee-Paying Assets Under Management: At least $55 billion.
- Other Covenants: Customary affirmative and negative covenants, including limitations on creating liens on certain assets.
Guidance, Outlook, and Risks
Management Commentary: Borrowings are available for general corporate purposes. The facility allows for prepayment, termination, or reduction of commitments at any time without penalty.
Risks and Contingencies:
- Events of Default: Customary events of default exist which, upon occurrence and after any grace period, allow lenders to accelerate outstanding loans and terminate commitments.
- Related Party Transactions: HSBC Bank USA, National Association (Administrative Agent) provides and may continue to provide commercial and investment banking services to KKR, receiving customary fees.
Investor Verification Checklist
- Verify the current consolidated leverage ratio to ensure compliance with the 4.0x maximum covenant.
- Confirm that fee-paying assets under management remain above the $55 billion threshold.
- Review the full text of Exhibit 10.1 (Amended and Restated Credit Agreement) for detailed negative covenants and exceptions.
- Monitor the company's credit rating, as interest margins and facility fees are tied to a ratings-based pricing grid.
- Assess the impact of the $1.00 billion facility on the company's overall liquidity and capital structure.