FS KKR Capital Corp. 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K covers events occurring on June 29, 2026. FS KKR Capital Corp. (NYSE: FSK), a closed-end management investment company, announced the closing of a previously disclosed private placement of preferred stock and related corporate actions.
Key Financial Metrics and Capital Structure
- Capital Raised: The Company issued and sold 6,000,000 shares of Cumulative Convertible Perpetual Preferred Stock, Series A to KKR Alternative Assets L.P. at $25.00 per share, generating gross proceeds of $150.0 million.
- Use of Proceeds: Funds are designated for general corporate purposes, including potential common stock repurchases or debt repayment.
- Dividend Terms: The Preferred Stock carries an initial dividend rate of 5.00% per annum (payable in cash) or 7.00% per annum (payable in additional shares, subject to restrictions). The rate increases by 1.00% annually after the 5.5-year anniversary with no cap.
- Conversion Terms: Convertible after 6 months at an initial price of $18.83 per share (subject to a floor based on the NYSE Minimum Price).
- Fee Waiver: The investment adviser agreed to waive 50% of the subordinated income incentive fee for the fiscal quarters ending June 30, 2026, through March 31, 2027.
Material Changes and Corporate Actions
- Entry into Material Definitive Agreement: Finalized the Purchase Agreement with KKR Alternative Assets L.P. and executed a Registration Rights Agreement granting the purchaser demand and piggyback registration rights for shares issued upon conversion.
- Modification of Security Holder Rights: Filed Articles Supplementary to establish the Preferred Stock, which ranks senior to Common Stock regarding liquidation and dividends. Holders of the Preferred Stock gain the right to elect two members of the Board of Directors.
- Advisory Fee Reduction: Implemented a temporary 50% waiver on the subordinated income incentive fee, reducing near-term expense obligations.
Outlook, Risks, and Management Commentary
- Redemption Features: The Company may redeem the Preferred Stock at any time with Board approval. After three years, redemption may be made in common stock if the 30-day VWAP exceeds the conversion price. Holders may require redemption after six years.
- Change of Control: In the event of a Change of Control, holders of a majority of the Preferred Stock can require a cash redemption.
- Lock-Up Period: The Purchaser is restricted from selling or hedging the Preferred Stock or underlying common shares until June 29, 2027.
- Risks: Forward-looking statements note risks related to economic conditions, geopolitical events, and the uncertainty of share repurchase programs enhancing long-term stockholder value.
Investor Verification Checklist
- Verify the impact of the $150 million capital raise on the Company's Net Asset Value (NAV) and leverage ratios.
- Confirm the specific terms of the 50% fee waiver and its effect on the Company's expense ratio for the 2026-2027 period.
- Review the Articles Supplementary (Exhibit 3.1) for detailed anti-dilution adjustments and voting rights implications.
- Monitor the Company's execution of the intended use of proceeds, specifically regarding common stock repurchases.
- Assess the potential dilution impact if the Preferred Stock is converted, given the initial conversion price of $18.83.