Kayne Anderson Energy Infrastructure Fund Prices Private Placement of $70 Million of Notes and $30 Million of Mandatory Redeemable Preferred Shares

Rhea-AI Summary

Kayne Anderson Energy Infrastructure Fund, Inc. (NYSE: KYN) has announced a private placement of $100 million in financial instruments. This consists of $70 million in senior unsecured notes and $30 million in mandatory redeemable preferred shares (MRP Shares). The deal, expected to close around September 18, 2024, will be used to refinance existing leverage and for general corporate purposes.

The notes are divided into two series: Series YY ($30 million at 5.19% interest, maturing September 2031) and Series ZZ ($40 million at 5.45% interest, maturing September 2036). The MRP Shares (Series X) amount to $30 million with a 5.49% dividend rate and mandatory redemption in September 2029.

Positive

• Secured $100 million in new financing
• Diversified funding sources with notes and preferred shares
• Extended debt maturity profile with notes due in 2031 and 2036
• Potential for improved financial flexibility through refinancing

Negative

• Increased leverage and interest expenses
• Potential dilution for existing shareholders due to preferred shares issuance

Insights

Financial Analyst

Kayne Anderson Energy Infrastructure Fund's private placement of $100 million in notes and preferred shares is a strategic move to refinance existing leverage. The fixed interest rates ranging from 5.19% to 5.49% seem competitive in the current market environment. This refinancing could potentially lower the fund's overall cost of capital, which is positive for shareholders.

However, investors should note that this additional leverage increases the fund's financial risk. The mandatory redemption dates extending to 2036 provide long-term stability but also lock in these obligations for an extended period. The impact on the fund's net asset value (NAV) and distribution capacity will depend on how effectively management deploys this capital in the energy infrastructure sector.

Energy Sector Analyst

This financing move by Kayne Anderson reflects a cautiously optimistic outlook on the energy infrastructure sector. By securing long-term funding, the fund is positioning itself to capitalize on potential opportunities in the evolving energy landscape. The focus on energy infrastructure companies aligns with the ongoing transition towards cleaner energy sources and the need for updated infrastructure.

Investors should monitor how this additional capital is deployed, particularly in areas like:

• Renewable energy integration projects
• Natural gas infrastructure upgrades
• Carbon capture and storage initiatives

The success of these investments will be important in determining the long-term value creation for shareholders and the fund's ability to maintain its distribution policy.

HOUSTON, Aug. 13, 2024 (GLOBE NEWSWIRE) -- Kayne Anderson Energy Infrastructure Fund, Inc. (the “Company”) (NYSE: KYN) announced today that it reached an agreement with institutional investors relating to a private placement of $70 million of senior unsecured notes (“Notes”) and $30 million of mandatory redeemable preferred shares (“MRP Shares”). The private placement is expected to close on or about September 18, 2024.

Net proceeds will be used to refinance existing leverage and for general corporate purposes. The table below sets forth the key terms of the Notes and MRP Shares to be issued.

Notes / MRP Shares	Series	Amount ($ in millions)		Fixed Interest / Dividend Rate	Maturity / Mandatory Redemption Date
Notes	Series YY	$30		5.19%	September 2031
Notes	Series ZZ	$40		5.45%	September 2036
MRP Shares	Series X	$30		5.49%	September 2029
TOTAL		$100

Closing of this transaction is subject to investor due diligence, legal documentation, and other standard closing conditions. The Notes and MRP Shares 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 80% of its total assets in securities of Energy Infrastructure Companies. See Glossary of Key Terms in the Company’s most recent quarterly report for a description of these investment categories and the meaning of capitalized terms.

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

What is the total value of Kayne Anderson Energy Infrastructure Fund's (KYN) new private placement?

Kayne Anderson Energy Infrastructure Fund (KYN) has announced a private placement totaling $100 million, consisting of $70 million in senior unsecured notes and $30 million in mandatory redeemable preferred shares.

When is the expected closing date for KYN's private placement?

The private placement is expected to close on or about September 18, 2024.

What are the interest rates for KYN's new senior unsecured notes?

The Series YY notes have a 5.19% interest rate, while the Series ZZ notes have a 5.45% interest rate.

What is the dividend rate for KYN's new mandatory redeemable preferred shares?

The Series X mandatory redeemable preferred shares have a 5.49% dividend rate.

How does KYN plan to use the proceeds from this private placement?

KYN plans to use the net proceeds to refinance existing leverage and for general corporate purposes.