FS KKR Capital Corp 8-K Summary
Business Context and Reporting Period
FS Investment Corporation (FS KKR Capital Corp) filed this Current Report on Form 8-K on July 14, 2014. The filing reports the entry into a material definitive agreement and the creation of a direct financial obligation through the issuance of senior notes.
Key Financial Metrics
- Debt Issuance: $400,000,000 aggregate principal amount of 4.000% Notes due 2019.
- Interest Rate: 4.000% per year, payable semi-annually starting January 15, 2015.
- Maturity Date: July 15, 2019.
- Net Proceeds: Approximately $394.0 million.
- Transaction Costs: Underwriting discounts and commissions of $3.6 million; estimated offering expenses of approximately $350,000.
- Debt Seniority: General unsecured obligations ranking pari passu with other unsecured unsubordinated indebtedness.
Material Changes
The primary material change is the closing of the $400 million note offering on July 14, 2014. The company intends to use the net proceeds to repay outstanding indebtedness under its existing financing facilities. This transaction increases the company's long-term debt obligations while potentially reducing short-term financing facility usage.
Guidance, Risks, and Covenants
- Covenants: The Indenture requires compliance with asset coverage requirements under the Investment Company Act of 1940 and mandates the provision of financial information to noteholders if the company ceases to be subject to Exchange Act reporting requirements.
- Change of Control: In the event of a "change of control repurchase event," the company must offer to repurchase the Notes at 100% of the principal amount plus accrued and unpaid interest.
- Redemption: The Notes may be redeemed in whole or in part at the company's option at any time at the redemption price set forth in the Indenture.
- Outlook: The filing does not provide specific forward-looking financial guidance beyond the stated use of proceeds.
Investor Verification Checklist
- Verify the exact amount of outstanding indebtedness under financing facilities to be repaid with the $394.0 million net proceeds.
- Review the full text of the Base Indenture and First Supplemental Indenture (Exhibits 4.1 and 4.2) for specific limitations and exceptions to covenants.
- Confirm the company's current asset coverage ratio to ensure compliance with the new Indenture requirements.
- Check for any subsequent filings regarding the actual repayment of the financing facilities.