8-K: FS KKR Capital Corp. Announces Equity Distribution Agreements to Sell Up to $750 Million in Common Stock

FS KKR Capital Corp. has entered into equity distribution agreements to potentially sell up to $750 million in shares of its common stock through various sales agents.

Summary

• FS KKR Capital Corp. (FSK) has entered into equity distribution agreements with Truist Securities, RBC Capital Markets, KKR Capital Markets LLC, and SMBC Nikko Securities America, Inc.
• These agreements allow the Company to issue and sell shares of its common stock, with a par value of $0.001 per share, up to an aggregate offering price of $750,000,000.
• Sales of shares, if any, may occur through negotiated transactions or at market prices on the New York Stock Exchange or similar exchanges.
• The Sales Agents will receive a commission of up to 1.5% of the gross sales price for any shares sold.
• The offering price per share will not be less than the net asset value per share at the time of sale, with the investment adviser potentially supplementing payments to ensure this.
• The Company is not obligated to sell any shares and may suspend the offering at any time.
• Actual sales will depend on market conditions, the trading price of the shares, and the Company's need for additional capital.

Sentiment

Score: 7

Explanation: The sentiment is neutral to slightly positive. The announcement provides flexibility for capital raising, but the actual impact depends on market conditions and the company's needs.

Positives

• The equity distribution agreements provide FS KKR Capital Corp. with flexibility in raising capital.
• The Company has the option to suspend the offering based on market conditions.
• The investment adviser may supplement payments to ensure the sales price is not less than the net asset value per share.

Negatives

• The Company is not obligated to sell any shares, so there is no guarantee that the full $750 million will be raised.
• Sales Agents will receive a commission of up to 1.5% of the gross sales price, reducing the net proceeds to the Company.

Risks

• Actual sales depend on market conditions and the trading price of the shares, which are subject to change.
• The Company's need for additional capital may change, affecting the timing and amount of sales.
• There is a risk that the offering price could fall below the net asset value per share if the investment adviser does not supplement payments.

Future Outlook

The Company may issue and sell shares of its common stock from time to time, depending on market conditions, the trading price of the shares, and the Company's need for additional capital. The Company has no obligation to sell any shares under the Equity Distribution Agreements, and may at any time suspend the offering of Shares under the Equity Distribution Agreements.

Industry Context

At-the-market (ATM) offerings are a common method for business development companies (BDCs) like FS KKR Capital Corp. to raise capital. This approach provides flexibility and allows the company to take advantage of favorable market conditions.

Comparison to Industry Standards

• Other BDCs, such as Ares Capital Corporation (ARCC) and Prospect Capital Corporation (PSEC), have also utilized ATM offerings to raise capital.
• The commission rate of up to 1.5% is within the typical range for ATM offerings in the BDC sector.
• The condition that the offering price per share will not be less than the net asset value per share is a common practice among BDCs to protect existing shareholders from dilution.

Stakeholder Impact

• Shareholders may experience dilution if a significant number of shares are sold.
• The Company may use the proceeds from the sale of shares to fund investments and operations, potentially benefiting stakeholders.
• The offering price will not be less than the net asset value per share, protecting existing shareholders from significant dilution.

Next Steps

• The Company may, from time to time, issue and sell shares of its common stock through the Sales Agents.
• The Company will determine the timing and amount of sales based on market conditions and its need for additional capital.

Key Dates

Keywords

equity distribution agreement, common stock, FS KKR Capital Corp, capital raise, shares, sales agents, offering