Kayne Anderson Energy Infrastructure Fund Completes Private Placement of $75 Million of Notes
Kayne Anderson Energy Infrastructure Fund (NYSE: KYN) announced the completion of a private placement of $75 million in senior unsecured notes. Proceeds will be used to refinance existing leverage and for general corporate purposes.
The notes are divided into two series: $35 million at a fixed rate of 5.65%, maturing on May 22, 2031, and $40 million at a fixed rate of 5.79%, maturing on May 22, 2034. These notes will not be registered under the Securities Act of 1933 and cannot be sold in the U.S. without proper registration or an exemption.
KYN aims to provide high after-tax returns and cash distributions, investing at least 80% of its assets in Energy Infrastructure Companies. Distribution amounts may vary due to portfolio changes and market conditions.
- Completion of $75 million private placement enhances liquidity.
- Refinancing existing leverage could improve financial stability.
- Notes offer fixed rates of 5.65% and 5.79%, providing predictable interest costs.
- Notes will not be registered under the Securities Act, limiting potential resale options.
- Future distribution amounts are not guaranteed and may be adjusted.
Insights
The completion of a $75 million private placement is a significant financial event for Kayne Anderson Energy Infrastructure Fund. These senior unsecured notes carry fixed rates of 5.65% and 5.79% with maturities in 2031 and 2034, respectively. This refinancing could indicate the company's intent to manage its debt more effectively, possibly securing lower interest rates compared to its existing leverage.
From a financial perspective, this strategic move could improve the company's cash flow stability due to predictable interest payments over the long term. The use of proceeds for general corporate purposes also provides flexibility for future investments or operational needs, which could enhance shareholder value.
However, investors should consider the interest rate environment and economic conditions, as higher-than-expected interest rates in the future might affect the company's ability to refinance at favorable rates. Additionally, the relatively long maturity periods (2031 and 2034) suggest the company is locking in these rates for an extended time, which could be beneficial if interest rates rise but disadvantageous if they drop.
Furthermore, this transaction being a private placement means it doesn't require registration under the Securities Act of 1933. This can expedite the process but makes the notes less liquid, possibly influencing the company's ability to raise funds in the future through public markets.
The focus on energy infrastructure positions Kayne Anderson Energy Infrastructure Fund well within a sector that is essential but also subject to fluctuating market conditions. The demand for energy infrastructure investments is influenced by broader economic factors, regulatory changes and shifts in energy consumption patterns.
Investors should note that while the company's strategy to invest at least 80% of its assets in energy infrastructure securities aims to provide a high after-tax return, it also exposes the fund to sector-specific risks. These include regulatory changes, technological advancements and shifts toward renewable energy sources, which may impact the traditional energy infrastructure market.
The emphasis on cash distributions could make it attractive to income-seeking investors, but the variability in distribution amounts due to factors like portfolio changes and market conditions should be kept in mind. This variability can affect the predictability of returns, which is a critical aspect for retail investors looking for steady income streams.
HOUSTON, May 20, 2024 (GLOBE NEWSWIRE) -- Kayne Anderson Energy Infrastructure Fund, Inc. (the “Company”) (NYSE: KYN) announced today that it completed a private placement of
Net proceeds from the issuance will be used to refinance existing leverage and for general corporate purposes. The table below sets forth the key terms of the Notes issued:
| Notes Series | Amount ($ in millions) | Fixed Rate | Maturity |
| WW | May 22, 2031 | ||
| XX | May 22, 2034 | ||
The Notes issued in connection with this private placement will not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration.
Kayne Anderson Energy Infrastructure Fund, Inc. (NYSE: KYN) is a non-diversified, closed-end management investment company registered under the Investment Company Act of 1940, as amended, whose common stock is traded on the NYSE. The Company’s investment objective is to provide a high after-tax total return with an emphasis on making cash distributions to stockholders. KYN intends to achieve this objective by investing at least
The Company pays cash distributions to common stockholders at a rate that may be adjusted from time to time. Distribution amounts are not guaranteed and may vary depending on a number of factors, including changes in portfolio holdings and market conditions.
This press release shall not constitute an offer to sell or a solicitation to buy, nor shall there be any sale of any securities in any jurisdiction in which such offer or sale is not permitted. Nothing contained in this press release is intended to recommend any investment policy or investment strategy or consider any investor’s specific objectives or circumstances. Before investing, please consult with your investment, tax, or legal adviser regarding your individual circumstances.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This communication contains statements reflecting assumptions, expectations, projections, intentions, or beliefs about future events. These and other statements not relating strictly to historical or current facts constitute forward-looking statements as defined under the U.S. federal securities laws. Forward-looking statements involve a variety of risks and uncertainties. These risks include but are not limited to changes in economic and political conditions; regulatory and legal changes; energy industry risk; leverage risk; valuation risk; interest rate risk; tax risk; and other risks discussed in detail in the Company’s filings with the SEC, available at www.kaynefunds.com or www.sec.gov. Actual events could differ materially from these statements or our present expectations or projections. You should not place undue reliance on these forward-looking statements, which speak only as of the date they are made. Kayne Anderson undertakes no obligation to publicly update or revise any forward-looking statements made herein. There is no assurance that the Company’s investment objectives will be attained.
Contact investor relations at 877-657-3863 or cef@kayneanderson.com.
FAQ
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