FS KKR Capital Corp. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by FS KKR Capital Corp. on December 17, 2019. The filing reports the creation of a direct financial obligation through the issuance of additional senior notes.
Key Financial Metrics and Transaction Details
- Debt Issuance: The Company issued an additional $45 million aggregate principal amount of 4.125% notes due 2025 (the "Add-On Notes").
- Net Proceeds: Approximately $44.2 million.
- Transaction Costs: Underwriting discounts of approximately $360,000 and estimated offering expenses of approximately $300,000.
- Interest Rate: 4.125% per year, accruing from November 20, 2019.
- Maturity Date: February 1, 2025.
- Payment Schedule: Interest payable semi-annually in arrears on February 1st and August 1st, commencing August 1, 2020.
- Use of Proceeds: Repayment of outstanding indebtedness under financing arrangements.
Material Changes and Debt Structure
The Add-On Notes are treated as a single series with the $425 million of Existing Notes issued on November 20, 2019, under the Fifth Supplemental Indenture. The Notes are general unsecured obligations that rank:
- Senior to all existing and future indebtedness expressly subordinated.
- Pari passu with all existing and future unsecured unsubordinated indebtedness.
- Effectively junior to secured indebtedness to the extent of the value of securing assets.
- Structurally junior to all indebtedness incurred by subsidiaries or financing vehicles.
Management Commentary, Risks, and Covenants
The Indenture includes covenants requiring compliance with asset coverage requirements under the Investment Company Act of 1940. A "change of control repurchase event" generally requires the Company to offer to purchase the Notes at 100% of the principal amount plus accrued and unpaid interest. The filing does not provide specific revenue, profit, or cash flow metrics for the period, as it focuses solely on the debt issuance event.
Investor Verification Checklist
- Verify the total outstanding principal of the 4.125% Notes due 2025 (Existing Notes + Add-On Notes) now totals $470 million.
- Confirm the Company's current asset coverage ratio to ensure compliance with Investment Company Act covenants.
- Review the specific financing arrangements being repaid with the $44.2 million in net proceeds.
- Examine the full text of the Fifth Supplemental Indenture (Exhibit 4.1) for detailed limitations and exceptions to covenants.