Business Context and Reporting Period
This Form 8-K filing by KKR & Co. L.P. (the "Partnership") reports on events occurring on March 23, 2018. The filing details the completion of a significant debt offering by KKR Group Finance Co. IV LLC, an indirect subsidiary of the Partnership.
Key Financial Metrics and Debt Issuance
The Issuer completed an offering of Japanese Yen (JPY) denominated Senior Notes with an aggregate principal amount of JPY 40,300,000,000. The issuance consists of three tranches:
- 2023 Notes: JPY 25,000,000,000 principal; 0.509% annual interest rate; matures March 23, 2023.
- 2025 Notes: JPY 5,000,000,000 principal; 0.764% annual interest rate; matures March 21, 2025.
- 2038 Notes: JPY 10,300,000,000 principal; 1.595% annual interest rate; matures March 23, 2038.
Interest accrues from March 23, 2018, and is payable semiannually in arrears on March 23 and September 23. The Notes are unsecured and unsubordinated obligations of the Issuer, fully and unconditionally guaranteed by the Partnership and its indirect subsidiaries (collectively, the "Guarantors").
Material Changes and Covenants
The filing represents a material increase in the registrant's direct financial obligations. The Indenture governing the Notes includes specific covenants limiting the Issuer's and Guarantors' ability to:
- Incur indebtedness secured by liens on voting stock or profit-participating equity interests of subsidiaries (subject to exceptions).
- Consolidate, merge, or sell, transfer, or lease assets (subject to exceptions).
Events of default include bankruptcy, insolvency, receivership, or reorganization, which would cause the Notes to become immediately due and payable. The Issuer retains the option to redeem the Notes in whole (but not in part) at 100% of the principal amount plus accrued interest in the event of certain tax changes.
Guidance, Outlook, and Risks
The filing does not provide forward-looking guidance, management commentary on future performance, or specific risk factors beyond the standard covenants and default provisions outlined in the Indenture. The primary risk disclosed relates to the obligations created by the new debt and the restrictions on future financial flexibility imposed by the Indenture.
Investor Verification Checklist
- Verify the exchange rate impact of the JPY 40.3 billion principal amount on the company's consolidated balance sheet.
- Review the full text of the Base Indenture (Exhibit 4.1) and First Supplemental Indenture (Exhibit 4.2) for specific exceptions to the negative covenants.
- Confirm the use of proceeds from this offering, as the filing text does not explicitly state how the funds will be utilized.
- Assess the impact of the new interest obligations on the company's overall cost of debt and liquidity position.