FS KKR Capital Corp (FS Investment Corporation) - 8-K Summary
Business Context and Reporting Period
This Form 8-K Current Report, dated April 30, 2015, details a material definitive agreement entered into by FS Investment Corporation (the "Company"). The filing reports the closing of a debt offering and the execution of a Third Supplemental Indenture with U.S. Bank National Association.
Key Financial Metrics and Transaction Details
- Debt Issuance: $275,000,000 aggregate principal amount of 4.750% Notes due 2022.
- Net Proceeds: Approximately $271.3 million.
- Transaction Costs: Underwriting discounts and commissions of approximately $2.5 million; estimated offering expenses of approximately $350,000.
- Interest Terms: 4.750% per annum, payable semi-annually on May 15 and November 15, commencing November 15, 2015.
- Maturity Date: May 15, 2022.
- Use of Proceeds: Repayment of outstanding indebtedness under existing financing arrangements.
Material Changes and Debt Structure
The Company has increased its unsecured indebtedness by $275 million. The Notes are general unsecured obligations with the following seniority:
- Rank senior to all existing and future indebtedness expressly subordinated to the Notes.
- Rank pari passu with all existing and future unsecured unsubordinated indebtedness.
- Rank effectively junior to secured indebtedness to the extent of the value of securing assets.
- Rank structurally junior to all indebtedness incurred by subsidiaries or financing vehicles.
Management Commentary, Covenants, and Risks
The Indenture includes specific covenants requiring compliance with asset coverage requirements under Section 18(a)(1)(A) of the Investment Company Act of 1940, regardless of the Company's reporting status. Additionally, the agreement contains a "change of control repurchase event" provision, requiring the Company to offer to purchase outstanding Notes at 100% of principal plus accrued interest if such an event occurs. The filing does not provide specific revenue, profit, or cash flow metrics for the period, as it focuses solely on the debt transaction.
Key Facts for Investor Verification
- Verify the specific outstanding indebtedness being repaid with the $271.3 million in net proceeds.
- Confirm the Company's current asset coverage ratio to ensure compliance with the new Indenture covenants.
- Review the full text of the Third Supplemental Indenture (Exhibit 4.1) for limitations and exceptions to covenants.
- Monitor the Company's liquidity position following the repayment of prior financing arrangements.