Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
On December 17, 2019, FS KKR Capital Corp. (the "Company") issued an additional
$45 million aggregate principal amount of its 4.125% notes due 2025 (the "Add-On
Notes"). The Add-On Notes were issued as additional notes under the Fifth
Supplemental Indenture, dated November 20, 2019 (the "Fifth Supplemental
Indenture"), between the Company and U.S. Bank National Association (the
"Trustee"), to the Base Indenture, dated July 14, 2014, between the Company and
the Trustee (the "Base Indenture," and together with the Fifth Supplemental
Indenture, the "Indenture"), pursuant to which the Company issued $425 million
aggregate principal amount of its 4.125% notes due 2025 on November 20, 2019
(the "Existing Notes," and together with the Add-On Notes, the "Notes"). The
Add-OnNotes are being treated as a single series with the Existing Notes under
the Indenture and for U.S. federal income tax purposes. The Add-On Notes have
identical terms as the Existing Notes, other than the issue date and offering
price. The Add-On Notes have the same CUSIP number and are fungible and rank
equally with the Existing Notes.
The Add-On Notes will mature on February 1, 2025 and may be redeemed in whole or
in part at the Company's option at any time or from time to time at the
redemption prices set forth in the Indenture. The Add-On Notes bear interest at
a rate of 4.125% per year. Interest on the Add-On Notes will accrue from
November 20, 2019. Interest will be payable semi-annually in arrears on February
1st and August 1st of each year, commencing on August 1, 2020. The Add-On Notes
are general unsecured obligations of the Company that rank senior in right of
payment to all of the Company's existing and future indebtedness that is
expressly subordinated in right of payment to the Add-On Notes, rank pari passu
with all existing and future unsecured unsubordinated indebtedness issued by the
Company, rank effectively junior to any of the Company's secured indebtedness
(including unsecured indebtedness that the Company later secures) to the extent
of the value of the assets securing such indebtedness, and rank structurally
junior to all existing and future indebtedness (including trade payables)
incurred by the Company's subsidiaries, financing vehicles or similar
facilities.
The Indenture contains certain covenants, including covenants requiring the
Company to comply with the asset coverage requirements of Section 18(a)(1)(A) as
modified by Section 61(a)(1) and (2) of the Investment Company Act of 1940, as
amended, whether or not it is subject to those requirements, and to provide
financial information to the holders of the Notes and the Trustee if the Company
is no longer subject to the reporting requirements under the Securities Exchange
Act of 1934, as amended. These covenants are subject to important limitations
and exceptions that are described in the Indenture.
In addition, on the occurrence of a "change of control repurchase event," as
defined in the Indenture, the Company will generally be required to make an
offer to purchase the outstanding Notes at a price equal to 100% of the
principal amount of such Notes plus accrued and unpaid interest to the
repurchase date.
The Add-On Notes were offered and sold in an offering registered under the
Securities Act of 1933, as amended, pursuant to the Registration Statement on
Form N-2 (File No. 333-231221), the prospectus supplement dated December 10,
2019 and the pricing term sheet filed with the U.S. Securities and Exchange
Commission on December 10, 2019. The transaction closed on December 17, 2019.
The net proceeds to the Company were approximately $44.2 million, after
deducting the underwriting discounts of approximately $360,000 payable by the
Company and estimated offering expenses of approximately $300,000 payable by the
Company. The Company intends to use the net proceeds to repay outstanding
indebtedness under its financing arrangements.
The foregoing descriptions of the Fifth Supplemental Indenture and the Add-On
Notes do not purport to be complete and are qualified in their entirety by
reference to the full text of the Fifth Supplemental Indenture and the Form of
4.125% Notes due 2025, respectively, filed as Exhibits 4.1 and 4.2 to the
Company's Current Report on Form 8-K filed with the SEC on November 20, 2019 and
incorporated herein by reference.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
EXHIBIT
NUMBER DESCRIPTION
4.1 Fifth Supplemental Indenture, dated as of November 20, 2019,
relating to the 4.125% Notes due 2025, by and between the Company and
U.S. Bank National Association, as trustee. (Incorporated by
reference to Exhibit 4.1 of the Company's Current Report on Form 8-K
filed November 20, 2019)
4.2 Form of 4.125% Notes due 2025. (Incorporated by reference to
Exhibit 4.2 of the Company's Current Report on Form 8-K filed
November 20, 2019)
5.1 Opinion of Dechert LLP.
5.2 Opinion of Miles & Stockbridge P.C.
23.1 Consent of Dechert LLP (included in Exhibit 5.1).
23.2 Consent of Miles & Stockbridge P.C. (included in Exhibit 5.2).
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