Business Context and Reporting Period
This Form 8-K filing by KKR & Co. L.P. (the "Partnership") is dated June 20, 2016. The report details the completion of an underwritten public offering and the associated amendments to the Partnership's governing agreements.
Key Financial Metrics and Capital Structure
- Issuance: 6,200,000 6.50% Series B Preferred Units were issued.
- Distribution Rate: 6.50% per annum, payable quarterly (non-cumulative).
- First Payment Date: September 15, 2016.
- Redemption Price: $25.00 per unit (at Partnership's option on or after September 15, 2021).
- Change of Control Redemption: $25.25 per unit if redeemed within 60 days of a Change of Control Event prior to September 15, 2021.
Note: This filing does not provide data on revenue, profit, cash flow, operating margins, total debt, or liquidity positions.
Material Changes
The Partnership amended its Amended and Restated Limited Partnership Agreement (the "Third Amended and Restated Limited Partnership Agreement") to create the Series B Preferred Units. Additionally, the limited partnership agreements of KKR Management Holdings L.P., KKR Fund Holdings L.P., and KKR International Holdings L.P. were amended to provide for preferred units with economic terms mirroring the Series B Preferred Units.
Terms, Restrictions, and Contingencies
- Distribution Restrictions: Unless distributions are declared and paid (or set apart) on the Series B Preferred Units for a quarterly period, the Partnership cannot declare or pay distributions on any Junior Units, nor repurchase Junior Units, for the remainder of that period. This restriction does not apply during the initial period from June 20, 2016, to September 15, 2016.
- Change of Control Penalty: If a Change of Control Event occurs and the Partnership fails to redeem all outstanding Series B Preferred Units within 31 days, the distribution rate increases by 5.00% per annum starting on the 31st day following the event.
- Redemption Rights: Holders have no right to require redemption; redemption is at the Partnership's option.
Investor Verification Checklist
- Verify the total capital raised by multiplying the 6,200,000 units by the $25.00 liquidation preference.
- Review the "Third Amended and Restated Limited Partnership Agreement" (Exhibit 3.1) for the full definition of "Junior Units" and "Change of Control Event."
- Confirm the impact of the new preferred units on the Partnership's ability to pay distributions to common unitholders during the initial quarter.
- Examine the tax opinion (Exhibit 8.1) regarding the treatment of the Series B Preferred Units.