FS KKR Capital Corp. Closes $150 Million Convertible Preferred Stock Issuance in Connection with Strategic Value Enhancement Actions

Rhea-AI Summary

FS KKR Capital (NYSE: FSK) closed a $150 million private issuance of cumulative convertible perpetual preferred stock to KKR Alternative Assets.

Proceeds may fund common stock repurchases or debt repayment. The preferred pays 5.00% cash or 7.00% PIK, with annual 1.00% step-ups after 5.5 years, and converts at an initial $18.83 price, equal to FSK’s March 31, 2026 NAV per share.

Positive

• Raises $150 million in new capital from KKR Alternative Assets
• Proceeds can support common stock buybacks or debt reduction
• Convertible preferred ranks senior to common stock, potentially strengthening capital structure
• Ability to pay PIK dividends at 7.00% offers cash flow flexibility

Negative

• Convertible preferred can convert into common shares, creating potential dilution for existing shareholders
• Dividend obligation of 5.00%–7.00%+ plus step-ups increases fixed capital costs over time
• Preferred holders can elect two board members, reducing relative influence of common shareholders
• Majority of preferred can force redemption upon certain changes of control, adding redemption risk

News Market Reaction – FSK

-1.04%

-1.04% Session close to close

In the Jun 30 session, FSK declined 1.04%, reflecting a mild negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

Market Context

This announcement finalizes a $150 million convertible preferred deal with KKR, adding capital that ...

Analysis

This announcement finalizes a $150 million convertible preferred deal with KKR, adding capital that can fund buybacks or debt repayment. Investors should watch conversion activity around the $18.83 price and the impact of future dividend step-ups.

Key Figures

Convertible preferred issuance: $150 million Cash dividend rate: 5.00% per annum PIK dividend rate: 7.00% per annum +5 more

8 metrics

Convertible preferred issuance $150 million Cumulative convertible perpetual preferred stock proceeds

Cash dividend rate 5.00% per annum Dividend on convertible preferred stock paid in cash

PIK dividend rate 7.00% per annum Optional PIK dividends on convertible preferred stock

Step-up trigger 5.5 years Anniversary after which dividend rate increases annually

Annual step-up 1.00% per annum Yearly increase in dividend rate after 5.5 years

Initial conversion price $18.83 per share Set at NAV per share as of March 31, 2026

Holder conversion start 6 months Earliest date holders may convert into common stock

Cash redemption eligibility 6 years Point at which preferred may become redeemable in cash

Historical Context

5 past events · Latest: Jun 08 (Neutral)

Pattern 5 events

Date	Event	Sentiment	24h Move	Catalyst
Jun 08	Debt offering closed	Neutral	+0.8%	Completion of $900 million 7.500% unsecured notes due 2031 for general purposes.
Jun 02	Notes rating assigned	Neutral	+0.0%	KBRA assigned BBB- with Stable Outlook to new 7.50% senior unsecured notes.
Jun 02	Debt offering priced	Neutral	+0.0%	Pricing of $900 million 7.500% notes due 2031 for general corporate purposes.
May 11	Earnings and actions	Neutral	-0.7%	Q1 2026 results plus strategic actions, including buybacks and fee waiver, with stock down.
May 11	KKR tender and pref	Positive	-0.7%	Announcement of KKR cash tender and $150 million convertible preferred commitment.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Pattern Detected

FSK has generally traded in line with recent financing activity, but prior KKR-related strategic actions saw modest share price weakness.

Key Terms

cumulative convertible perpetual preferred stock, pik dividends, 30-day vwap, anti-dilution protections, +1 more

5 terms

cumulative convertible perpetual preferred stock financial

"closed its previously announced $150 million issuance of cumulative convertible perpetual preferred stock"

A cumulative convertible perpetual preferred stock is a hybrid investment that behaves like a long‑term share paying regular fixed payouts, where any missed payments pile up and must be paid later (cumulative), can be switched into common shares under set rules (convertible), and has no fixed maturity date (perpetual). It matters to investors because it offers steadier income and higher payout priority than common stock while preserving the potential upside of converting to ordinary shares, though conversion can dilute existing owners—think of it as a mix between a bond’s steady coupons and a stock’s growth option.

pik dividends financial

"pay dividends of 5.00% per annum in cash, or, at the Company's option, 7.00% per annum in PIK dividends"

Pik dividends are dividend payments made not in cash but in additional shares or by increasing the amount owed to the investor, like getting extra slices of the same pie instead of money. They matter because they let a company conserve cash for operations or growth, while investors receive value that may dilute existing ownership or increase credit risk, so they affect future share count, earnings per share and the investor’s true cash return.

30-day vwap financial

"if the then-current 30-day VWAP of the Company's common stock on the New York Stock Exchange"

Thirty-day VWAP is the average price at which a stock traded over the past 30 trading days, weighted by the number of shares traded at each price during that period. It matters to investors because it gives a clearer picture of the price buyers and sellers have actually paid—like a sales-weighted average for a store—and is used to judge whether current price action is fair, to benchmark trading performance, and to spot longer-term support or resistance levels.

anti-dilution protections financial

"initial conversion price is $18.83 per share ... subject to customary adjustments, including certain anti-dilution protections"

Anti-dilution protections are contract terms that adjust an investor's ownership or share price if a company later issues new shares at a lower price than the investor originally paid, so the investor doesn't lose as much value or voting power. They matter to investors because they limit downside from later, cheaper financings—like giving extra pieces to someone whose slice of pie would otherwise shrink—and influence expected returns and future ownership stakes.

section 4(a)(2) regulatory

"offered in reliance on Section 4(a)(2) of the Securities Act of 1933"

Section 4(a)(2) is a part of U.S. securities laws that allows companies to sell their stock directly to certain investors without registering the sale with regulators. This process is often used for private placements, making it easier and faster for companies to raise money from knowledgeable or institutional investors. It matters to investors because it provides an alternative way to buy shares, often with fewer disclosures and lower costs.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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PHILADELPHIA and NEW YORK, June 29, 2026 /PRNewswire/ -- FS KKR Capital Corp. (NYSE: FSK), or the Company, today announced it has closed its previously announced $150 million issuance of cumulative convertible perpetual preferred stock (the "Convertible Preferred Stock"), purchased by KKR Alternative Assets L.P., a subsidiary of KKR. The Company intends to use the proceeds from the issuance for general corporate purposes, including funding its common stock repurchase program or for debt repayment.

The Convertible Preferred Stock will pay dividends of 5.00% per annum in cash, or, at the Company's option, 7.00% per annum in PIK dividends. After the 5.5-year anniversary of the issue date, the dividend rate will increase annually by 1.00% per annum. The Convertible Preferred Stock ranks junior to all existing indebtedness of the Company and senior to the Company's common stock.

The Convertible Preferred Stock may be redeemed by the Company at any time in cash and, after three years, if the then-current 30-day VWAP of the Company's common stock on the New York Stock Exchange is equal to or above the conversion price then in effect, the Company may redeem the Convertible Preferred Stock by delivering shares of the Company's common stock in lieu of cash. The initial conversion price is $18.83 per share (the Company's net asset value per share as of March 31, 2026) and is subject to customary adjustments, including certain anti-dilution protections. At the option of the holders of the Convertible Preferred Stock, after six months, the Convertible Preferred Stock may be converted into the Company's common stock at the conversion price then in effect and, after six years or in the event of certain other events, the Convertible Preferred Stock may be redeemable in cash.

The holders of the Convertible Preferred Stock are entitled to vote on an as-converted basis on all matters submitted to a vote of the Company's stockholders and have the right, voting separately as a single class, to elect two members of the Company's board of directors. Holders of a majority of the outstanding shares of Convertible Preferred Stock have the option to require the Company to redeem all of the outstanding shares of Convertible Preferred Stock upon the occurrence of certain changes of control.

The shares of Convertible Preferred Stock were offered in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"). These securities have not and will not be registered under the Securities Act or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, as applicable.

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, subordinated loans and certain asset-based financing loans of private U.S. companies. FSK is advised by FS/KKR Advisor, LLC. For more information, please visit www.fskkrcapitalcorp.com.

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

Future Standard is a global alternative asset manager serving institutional and private wealth clients, investing across private equity, credit and real estate. With a 30+ year track record of value creation and over $94 billion in assets under management, we back the business owners and financial sponsors that drive growth and innovation across the middle market, transforming untapped potential into durable value¹.

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. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR's website at www.kkr.com. For additional information about Global Atlantic Financial Group, please visit Global Atlantic Financial Group's website at www.globalatlantic.com. 

Forward-Looking Statements and Important Disclosure Notice
This press release contains forward-looking statements that are not historical facts, including, without limitation, statements with regard to future events or FSK's future performance or financial condition, statements regarding share repurchase activity and FSK's intended use of proceeds from the issuance of the Convertible Preferred Stock, and the financial position, business strategy and plans and objectives of management for FSK's future operations. Words such as "anticipate," "believe," "expect," and "intend" indicate a forward-looking statement, although not all forward-looking statements include these words. These forward-looking statements are not guarantees of performance or events and are subject to risks, uncertainties and other factors, some of which are beyond FSK's control and difficult to predict and could cause actual results or future events to differ materially from those expressed or forecasted in the forward-looking statements for any reason, including those factors set forth in "Item 1A. Risk Factors" in FSK's Annual Report on Form 10-K. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results or events to differ materially from those projected in these forward-looking statements. Factors that could cause actual results or events to differ materially include, without limitation, changes in the economy, geo-political risks, risks associated with possible disruption in FSK's operations or the economy generally due to terrorism, natural disasters or pandemics, 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. In addition, the FSK board-authorized share repurchase program does not require FSK to repurchase any specific number of shares of FSK's common stock. There is no assurance that FSK or any of its affiliates will purchase shares of its common stock at any specific discount levels or in any specific amounts or that the market price of FSK's common stock, either absolutely or relative to net asset value, will increase as a result of any share repurchases, or that any repurchase plan will enhance stockholder value over the long term. These forward-looking statements included in this press release are based on information available as of the date hereof and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Except as required by the federal securities laws, FSK undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors should not place undue reliance on these forward-looking statements.

The press release above contains summaries of certain financial and statistical information about FSK. The information contained in this press release is summary information that is intended to be considered in the context of FSK's SEC filings and other public announcements that FSK may make, by press release or otherwise, from time to time. FSK undertakes no duty or obligation to update or revise the information contained in this press release. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. Investors should not view the past performance of FSK, or information about the market, as indicative of FSK's future results.

Contact Information:

Investor Relations Contact

Caitlin Welch
Caitlin.Welch@futurestandard.com

Future Standard Media Team

Marc Hazelton
Marc.Hazelton@futurestandard.com

_________________________________

1 Total AUM estimated as of March 31, 2026. References to "assets under management" or "AUM" represent the assets managed by Future Standard or its strategic partners as to which Future Standard is entitled to receive a fee or carried interest (either currently or upon deployment of capital) and general partner capital. Future Standard calculates the amount of AUM as of any date as the sum of: (i) the fair value of the investments of Future Standard's investment funds; (ii) uncalled investor capital commitments to these funds, including uncalled investor capital commitments from which Future Standard is currently not earning management fees or carried interest; (iii) the value of outstanding CLOs; (iv) the fair value of FS KKR Capital Corp. joint venture (JV) assets and (v) the fair value of other assets managed by Future Standard. Future Standard's calculation of AUM may differ from the calculations of other asset managers and, as a result, Future Standard's measurements of its AUM may not be comparable to similar measures presented by other asset managers. Future Standard's definition of AUM is not based on any definition of AUM that may be set forth in agreements governing the investment funds, vehicles or accounts that it manages and is not calculated pursuant to any regulatory definitions.

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SOURCE Future Standard

FAQ

What did FSK announce about its $150 million convertible preferred stock issuance on June 29, 2026?

FSK announced it closed a $150 million cumulative convertible perpetual preferred stock issuance to KKR Alternative Assets. According to FSK, proceeds may be used for general corporate purposes, including common stock repurchases or debt repayment, giving the company additional financial flexibility.

What are the dividend terms on FSK’s new convertible preferred stock (NYSE: FSK)?

FSK’s convertible preferred pays 5.00% in cash or, at the company’s option, 7.00% in PIK dividends. According to FSK, the dividend rate increases by 1.00% annually after the 5.5-year anniversary of the issue date, raising the security’s long‑term cost.

What is the conversion price of FSK’s convertible preferred stock and how was it set?

The initial conversion price for FSK’s convertible preferred stock is $18.83 per share. According to FSK, this equals its net asset value per share as of March 31, 2026, and is subject to customary adjustments, including certain anti‑dilution protections.

When can FSK’s new convertible preferred stock be converted into FSK common stock (FSK)?

Holders may convert FSK’s convertible preferred into common stock after six months at the then‑effective conversion price. According to FSK, after three years the company can also redeem in shares if VWAP meets or exceeds the conversion price, creating dilution potential.

How can FSK redeem the $150 million convertible preferred stock issued to KKR?

FSK may redeem the convertible preferred at any time in cash, subject to its terms. According to FSK, after three years and if VWAP meets conditions, it may deliver common shares instead of cash, shifting redemption impact toward dilution rather than cash outflow.

What governance and voting rights come with FSK’s convertible preferred stock (FSK)?

Holders of FSK’s convertible preferred vote on an as‑converted basis with common stockholders. According to FSK, they can also, voting as a separate class, elect two board members, and a majority can require redemption if certain changes of control occur.

Was FSK’s $150 million convertible preferred stock issuance registered with the SEC?

FSK’s $150 million convertible preferred issuance was conducted as a private offering under Section 4(a)(2) of the Securities Act. According to FSK, the securities are unregistered and may not be offered or sold in the United States without an applicable registration or exemption.