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. (FSK) on November 7, 2019, with the earliest event reported on that same date. The filing primarily addresses the entry into a material definitive agreement regarding debt financing and announces a subsequent tender offer for outstanding notes.
Key Financial Metrics and Debt Structure
The filing details the amendment and restatement of the Company's senior secured revolving credit facility. Key terms include:
- Total Facility Amount: Initial aggregate amount of up to $3,890,000,000.
- Accordion Feature: Option to increase commitments by up to $1,945,000,000.
- Letters of Credit: Initial aggregate face amount of up to $400,000,000.
- Maturity Dates: Availability terminates on November 7, 2023; outstanding loans mature on November 7, 2024.
- Interest Rates: Variable rates based on Base Rate or LIBOR plus a margin ranging from 0.75% to 2.00%, dependent on the borrowing base coverage ratio.
- Commitment Fee: 0.375% to 0.50% per annum on the unused portion of the sublimit.
The filing does not provide specific revenue, profit, cash flow, or margin figures for the period.
Material Changes and Covenants
The new facility amends the agreement originally entered into on August 9, 2018. The Company must comply with specific financial covenants, including:
- Maintaining a minimum shareholders' equity as of each fiscal quarter end.
- Maintaining a 150% asset coverage ratio (or higher if required by statute).
- Mandatory prepayment of interest and principal if the adjusted asset coverage ratio falls below 185% during the term-out period.
Outlook, Risks, and Unusual Items
Tender Offer and Redemption: On November 13, 2019, the Company announced a cash tender offer for all outstanding 4.250% Notes due 2020 and issued a notice of redemption for these notes in full.
Risks and Contingencies: The filing includes standard forward-looking statement disclaimers. Risks cited include economic changes, operational disruptions due to terrorism or natural disasters, regulatory changes, and stock price volatility. The obligations under the credit facility are secured by a first priority security interest in substantially all assets of the Company and certain subsidiaries.
Investor Verification Checklist
- Verify the status and acceptance rate of the cash tender offer for the 4.250% Notes due 2020.
- Confirm the Company's current adjusted asset coverage ratio to ensure compliance with the 185% threshold for mandatory prepayments.
- Review the full text of the Amended and Restated Senior Secured Revolving Credit Agreement (Exhibit 10.1) for detailed covenant definitions.
- Monitor the Company's quarterly reports for compliance with the minimum shareholders' equity covenant.