FSK Completes Public Offering of $600 million 6.125% Unsecured Notes Due 2030

Rhea-AI Summary

FS KKR Capital Corp. (NYSE: FSK) has successfully completed its previously announced offering of $600 million in aggregate principal amount of 6.125% unsecured notes due 2030. The offering involved multiple financial institutions as joint book-running managers, joint lead managers, and co-managers. FSK plans to use the net proceeds for general corporate purposes, including potential repayment of outstanding indebtedness under credit facilities and certain notes.

Positive

• Successfully raised $600 million through note offering
• Strong syndicate of major financial institutions supporting the offering
• Potential debt reduction through refinancing of existing obligations

Negative

• Increased debt burden with 6.125% interest rate
• Additional interest expense will impact future cash flows

Insights

Fixed Income Analyst

This $600 million notes offering at 6.125% until 2030 represents a significant debt financing move for FSK. The interest rate is competitive in the current market environment, particularly for a business development company (BDC). The broad syndicate of major financial institutions underwriting this deal adds credibility and suggests strong market confidence.

The planned use of proceeds for general corporate purposes and debt refinancing indicates prudent liability management. This could potentially lower FSK's overall cost of capital if used to refinance higher-cost debt. With a market cap of about $6 billion, this offering represents roughly 10% of the company's market value, a manageable level of additional leverage that shouldn't significantly impact the balance sheet strength.

The unsecured nature of these notes provides FSK with greater operational flexibility compared to secured debt, though at a potentially higher cost. The 2030 maturity extends FSK's debt profile, reducing near-term refinancing pressures.

PHILADELPHIA and NEW YORK, Nov. 20, 2024 /PRNewswire/ -- FS KKR Capital Corp. (NYSE: FSK) today announced that it has completed its previously announced offering of $600 million in aggregate principal amount of its 6.125% unsecured notes due 2030 (the "Notes"). BofA Securities, Inc., BMO Capital Markets Corp., J.P. Morgan Securities LLC, KKR Capital Markets LLC, SMBC Nikko Securities America, Inc., Truist Securities, Inc., HSBC Securities (USA) Inc., ING Financial Markets LLC, Mizuho Securities USA LLC, MUFG Securities Americas Inc., RBC Capital Markets, LLC and TD Securities (USA) LLC are acting as joint book-running managers for this offering. Barclays Capital Inc., BNP Paribas Securities Corp., Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC and SG Americas Securities, LLC are acting as joint lead managers for this offering. B. Riley Securities, Inc., Compass Point Research & Trading, LLC, ICBC Standard Bank Plc, Keefe, Bruyette & Woods, Inc., R. Seelaus & Co., LLC and U.S. Bancorp Investments, Inc. are acting as co-managers for this offering.

FSK intends to use the net proceeds of this offering for general corporate purposes, including potentially repaying outstanding indebtedness under credit facilities and certain notes.

This announcement does not constitute an offer to sell or a solicitation of an offer to buy any of the Notes, nor shall there be any offer, solicitation or sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.

About FS KKR Capital Corp.

FSK is a leading publicly traded business development company (BDC) focused on providing customized credit solutions to private middle market U.S. companies. FSK seeks to invest primarily in the senior secured debt and, to a lesser extent, the subordinated debt of private middle market companies. FSK is advised by FS/KKR Advisor, LLC.

About FS/KKR Advisor, LLC

FS/KKR Advisor, LLC (FS/KKR) is a partnership between FS Investments and KKR Credit that serves as the investment adviser to FSK and other business development companies.

FS Investments is a global alternative asset manager dedicated to delivering superior performance and innovative investment and capital solutions. The firm manages over $82 billion in assets for a wide range of clients, including institutional investors, financial professionals and individual investors. FS Investments provides access to a broad suite of alternative asset classes and strategies through its best-in-class investment teams and partners. With its diversified platform and flexible capital solutions, the firm is a valued partner to general partners, asset owners and portfolio companies. FS Investments is grounded in its high-performance culture and guided by its commitment to building value for its clients, investing in its colleagues and giving back to its communities. The firm has more than 500 employees across offices in the U.S., Europe and Asia and is headquartered in Philadelphia.

KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR's insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR's investments may include the activities of its sponsored funds and insurance subsidiaries.

Forward-Looking Statements and Important Disclosure Notice 

This announcement may contain certain forward-looking statements, including statements with regard to future events or future performance or operations of FSK. Words such as "believes," "expects," "projects," and "future" or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements. Factors that could cause actual results to differ materially include changes in the economy, risks associated with possible disruption in FSK's operations or the economy generally due to terrorism, geo-political risks, natural disasters or pandemics such as COVID-19, future changes in laws or regulations and conditions in FSK's operating area and the price at which shares of FSK's common stock trade on the New York Stock Exchange. Some of these factors are enumerated in the filings FSK makes with the SEC. FSK undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact Information:

Investor Relations Contact

Anna Kleinhenn
Anna.Kleinhenn@fsinvestments.com 

FS Investments Media Team

Melanie Hemmert
Melanie.Hemmert@fsinvestments.com 

 

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SOURCE FS Investments

FAQ

What is the interest rate and maturity of FSK's new notes offering?

FSK's new notes offering has an interest rate of 6.125% and matures in 2030.

How much did FSK raise in their 2030 notes offering?

FSK raised $600 million through their unsecured notes offering.

What will FSK use the proceeds from the 2030 notes offering for?

FSK intends to use the proceeds for general corporate purposes, including potentially repaying outstanding indebtedness under credit facilities and certain notes.

Who were the main underwriters for FSK's 2030 notes offering?

The main joint book-running managers included BofA Securities, BMO Capital Markets, J.P. Morgan Securities, KKR Capital Markets, SMBC Nikko Securities, and Truist Securities, among others.