Business Context and Reporting Period
This Form 8-K Current Report was filed by KKR & Co. L.P. on February 1, 2013. The filing discloses the entry into a material definitive agreement and the creation of a direct financial obligation involving the issuance of senior notes by an indirect subsidiary of the Partnership.
Key Financial Metrics and Debt Obligations
The filing details the issuance of debt securities with the following terms:
- Issuer: KKR Group Finance Co. II LLC (an indirect subsidiary of KKR & Co. L.P.).
- Principal Amount: $500,000,000.
- Instrument: 5.500% Senior Notes due 2043.
- Interest Rate: 5.500% per annum.
- Interest Payment Dates: Semiannually in arrears on February 1 and August 1, commencing August 1, 2013.
- Maturity Date: February 1, 2043.
- Guarantees: The Notes are fully and unconditionally guaranteed, jointly and severally, by KKR & Co. L.P., KKR Management Holdings L.P., and KKR Fund Holdings L.P.
- Security Status: Unsecured and unsubordinated obligations.
The filing text does not provide clear values for revenue, profit, cash flow, operating margins, or existing liquidity positions, as this report focuses solely on the new debt issuance.
Material Changes and Covenants
The primary material change is the addition of $500 million in long-term debt to the capital structure. The Indenture 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. Additionally, holders of at least 25% of the outstanding Notes may declare the Notes due upon an event of default after any applicable grace period.
Outlook, Redemption, and Repurchase Provisions
Management commentary regarding future financial performance or outlook is not included in this filing. However, the following provisions regarding the Notes are noted:
- Redemption: The Issuer may redeem the Notes in whole or in part prior to maturity at redemption prices set forth in the Notes.
- Change of Control: If a change of control repurchase event occurs, the Issuer must repurchase the Notes at 101% of the aggregate principal amount plus accrued and unpaid interest.
Key Facts for Investor Verification
- Verify the total outstanding debt load of KKR & Co. L.P. and its subsidiaries post-issuance to assess leverage ratios.
- Review the specific "exceptions" to the covenants regarding liens and asset sales to understand operational flexibility.
- Confirm the use of proceeds for the $500 million issuance, which is not detailed in this specific 8-K text.
- Monitor the credit rating implications of adding $500 million in 30-year debt at a 5.500% coupon rate.