FS KKR Capital (NYSE: FSK) posts Q1 2026 loss, sells $150,000,000 preferred
Rhea-AI Filing Summary
FS KKR Capital Corp. agreed to sell $150,000,000 of newly issued cumulative convertible perpetual preferred stock to KKR Alternative Assets L.P., an affiliate of its adviser. The preferred carries a $25.00 per share liquidation preference and an initial 5.00% cash dividend, or 7.00% if paid in additional preferred shares, with step-ups after 5.5 years.
After six months, the preferred becomes convertible into common stock at an initial conversion price of $18.83 per share, subject to an NYSE-based minimum price, and features multiple redemption options for both the company and purchaser over time, including change-of-control protection. Holders vote on an as-converted basis and elect two directors while the company remains a BDC.
The investment is conditioned on the expiration of a concurrently announced third-party tender offer for up to $150 million of common stock and other customary conditions. For the quarter ended March 31, 2026, FS KKR reported total investment income of $304 million, net investment income of $117 million, a net loss of $441 million, and a decline in net asset value per share from $20.89 to $18.83. The board declared a second quarter 2026 cash distribution of $0.42 per share, payable on or about July 2, 2026 to stockholders of record on June 17, 2026.
Positive
- None.
Negative
- Net asset value decline and large losses: Net realized and unrealized losses of $558 million led to a $441 million net loss for the quarter ended March 31, 2026, with net asset value per share decreasing from $20.89 to $18.83 and non-accrual investments rising to 4.2% of the portfolio by fair value.
Insights
Large preferred deal adds capital but highlights portfolio pressure.
FS KKR Capital Corp. arranged a $150,000,000 private issuance of cumulative convertible perpetual preferred stock to a KKR affiliate. The security pays a 5.00% cash dividend (or 7.00% in additional preferred shares) on a $25.00 liquidation preference and can convert into common at an initial $18.83 price, with NYSE-linked protections.
The quarter ended March 31, 2026 showed stress: total investment income was $304 million versus higher levels a year earlier, while net investment income was $117 million and total net realized and unrealized losses reached $558 million, driving a $441 million net loss. Net asset value per share fell from $20.89 to $18.83 and non-accrual investments increased to 4.2% of the portfolio by fair value.
The company amended its senior secured revolving credit facility, reducing total commitments from $4,700.0 million to approximately $4,051.7 million, increasing margins modestly, and resetting the minimum shareholders’ equity floor to $3,750.0 million. The board declared a $0.42 per share second quarter 2026 distribution. Actual future impact will depend on portfolio performance, conversion dynamics of the preferred, and outcomes of the $150 million common stock tender offer described in the materials.
8-K Event Classification
Key Figures
Key Terms
cumulative convertible perpetual preferred stock financial
Liquidation Preference financial
Hart-Scott-Rodino Antitrust Improvements Act of 1976 regulatory
non-accrual assets financial
net investment income financial
tender offer financial
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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| Item 1.01. | Entry into a Material Definitive Agreement. |
Purchase Agreement
On May 10, 2026, FS KKR Capital Corp. (the “Company”) entered into a purchase agreement (the “Purchase Agreement”) with KKR Alternative Assets L.P., a Delaware limited partnership (the “Purchaser”), pursuant to which the Purchaser has agreed to purchase $150,000,000 in newly issued shares of the Company’s cumulative convertible perpetual preferred stock (the “Convertible Preferred Stock”). The Convertible Preferred Stock will be a series of the Company’s preferred stock, par value $0.001 per share. The Purchaser is an affiliate of KKR & Co. Inc. (“KKR”). The Company’s investment adviser, FS/KKR Advisor, LLC (the “Adviser”), is jointly operated by KKR Credit Advisors (US) LLC (“KKR Credit”), which is also an affiliate of KKR, and FSJV Holdco, LLC, an affiliate of Franklin Square Holdings L.P. (which does business as Future Standard).
The closing of the purchase is subject to the expiration of the Purchaser’s concurrently announced third-party tender offer (the “Tender Offer”) for up to $150 million in aggregate amount of shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), and other customary closing conditions and the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and is expected to occur on the 11th business day following the expiration of the Tender Offer.
The Company intends to use the proceeds from the sale of Convertible Preferred Stock for general corporate purposes including, without limitation, funding any Common Stock repurchase program or debt repayment. The Convertible Preferred Stock will rank senior to the Common Stock with respect to all liquidation, winding up, dissolution, dividend and distribution rights. The Convertible Preferred Stock will have a liquidation preference equal to $25.00 per share (the “Liquidation Preference”), plus an amount equal to all accrued but unpaid dividends, if any, accumulated to (but excluding) the date fixed for distribution or payment, whether or not earned or declared by the Company, but excluding interest on any such distribution or payment. Dividends on the Convertible Preferred Stock will be payable on a quarterly basis in an initial amount equal to 5.00% per annum of the Liquidation Preference per share, payable in cash or, at the Company's option, 7.00% per annum of the Liquidation Preference per share payable in additional shares of Convertible Preferred Stock; provided that the Company shall be prohibited from paying dividends in additional shares of Convertible Preferred Stock if the conversion feature at the time of issuance of such additional shares is equal to or greater than 10.00% of the value of the Convertible Preferred Stock. After the 5.5-year anniversary of the issue date, the dividend rate will increase annually by 1.00% per annum.
After the 6-month anniversary of the issue date, the Convertible Preferred Stock will be convertible into (i) the number of shares of Common Stock equal to the quotient of (a) the Liquidation Preference, plus an amount equal to accumulated but unpaid dividends, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends) to, but excluding, the date fixed for such conversion and (b) the conversion price as of the applicable conversion date (which shall not be less than the NYSE Minimum Price (as defined below)), plus (ii) cash in lieu of fractional shares. The initial conversion price will equal $18.83; provided, however, that in no event shall the conversion price be less than the NYSE Minimum Price.
At any time, upon approval by the Company’s board of directors (the “Board”), including a majority of the independent directors, the Company may, at its election, redeem all or any part of the then-outstanding shares of Convertible Preferred Stock in cash at a price per share equal to the Liquidation Preference, plus an amount equal to all accumulated but unpaid dividends, if any, accumulated to (but excluding) the date fixed for redemption, whether or not earned or declared by the Company, but excluding interest on any such distribution or payment. The Purchaser will have the right to convert any shares of the Convertible Preferred Stock prior to the date fixed for such redemption. At any time on or after the thirty-six month anniversary of the issue date, upon approval by the Board, including a majority of the independent directors, so long as the volume weighted average price of the Company’s Shares on the NYSE for the 30 consecutive trading days ending on (and including) the trading day immediately preceding the date on which the Company delivers notice of redemption equals or exceeds the conversion price then in effect, the Company may, at its election, may redeem all or any part of the then-outstanding shares of Convertible Preferred Stock by delivering Shares in lieu of cash, at a redemption price equal to the Liquidation Preference, plus an amount equal to all accumulated but unpaid dividends, if any, accumulated to (but excluding) the date fixed for redemption, whether or not earned or declared by the Company, but excluding interest on any such distribution or payment. The Purchaser will have the right to convert any shares of the Convertible Preferred Stock prior to the date fixed for such redemption.
At any time after the 6-year anniversary of the issue date, upon 90 days’ notice, the Purchaser will have the option, at its election, to require the Company to redeem any or all of the then-outstanding shares of Convertible Preferred Stock for cash consideration equal to the Liquidation Preference of the shares of Convertible Preferred Stock to be redeemed, plus an amount equal to accumulated but unpaid dividends, if any, on such shares (whether or not earned or declared, but excluding interest on such dividends) to, but excluding, the date fixed for such redemption. The Purchaser will have the right to convert any shares of Convertible Preferred Stock prior to the date fixed for any such redemption.
Upon the occurrence of a Change of Control of the Company (as defined in the articles supplementary that will establish the Convertible Preferred Stock), the Purchaser will have the option to require the Company to immediately redeem all then-outstanding shares of Convertible Preferred Stock for cash consideration equal to the Liquidation Preference thereof, plus an amount equal to all accumulated but unpaid dividends thereon to, but excluding, the redemption date (whether or not earned or declared, but excluding interest). The Purchaser will have the right to convert any shares of Convertible Preferred Stock prior to the date fixed for such Change of Control redemption.
Pursuant to the Purchase Agreement, the Purchaser has agreed that, for a period of one year following the issuance of the Convertible Preferred Stock (the “Restriction Date”), it will not, directly or indirectly, sell, pledge, transfer, dispose of, or enter into any swap or other arrangement that transfers any of the economic consequences of ownership of the Convertible Preferred Stock or the shares of Common Stock into which it is convertible, subject to exceptions for (i) redemption of Convertible Preferred Stock by the Company and (ii) the Purchaser’s exercise of its conversion right. Following the Restriction Date, the Purchaser will be required to notify the Board of any transfer substantially concurrently therewith.
Each holder of Convertible Preferred Stock will be entitled to vote on an as-converted basis on each matter submitted to a vote of stockholders of the Company. In addition, for so long as the Company is subject to the Investment Company Act of 1940, as amended (the “1940 Act”), the holders of Convertible Preferred Stock, voting separately as a single class, shall have the right to elect two (2) members of the Board at all times (initially expected to be James H. Kropp and Elizabeth J. Sandler), and the balance of the directors shall be elected by the holders of shares of Common Stock and the Convertible Preferred Stock voting together; provided, however, if the Adviser is the Company’s investment adviser and the Purchaser or its affiliates beneficially own greater than 50% of the outstanding Convertible Preferred Stock, the independent directors of the Company selected by the Purchaser or its affiliates shall be eligible to serve as directors elected separately by the holders of Convertible Preferred Stock. If, at any time, accumulated dividends on the outstanding shares of Convertible Preferred Stock equal to at least two full years’ dividends shall be due and unpaid, or if holders of any other preferred stock become entitled to elect a majority of directors of the Company under the 1940 Act, then the number of directors constituting the Board shall automatically increase by the smallest number that, when added to the two directors elected exclusively by holders of the Convertible Preferred Stock, would constitute a majority of the Board. During any such period, the holders of the Convertible Preferred Stock and any other preferred stock shall have the power to elect such additional directors, voting separately as a class.
“NYSE Minimum Price” means the lower of (x) the official closing price of the shares of Common Stock on the New York Stock Exchange (“NYSE”) immediately preceding the signing of the Purchase Agreement and (y) the average official closing price of the shares of Common Stock on the NYSE for the five trading days immediately preceding the signing of the Purchase Agreement, in each case, as adjusted pursuant to certain anti-dilution adjustments.
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.
Registration Rights Agreement
Concurrently with the issuance of the Convertible Preferred Stock, the Company and the Purchaser expect to enter into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which the Purchaser (and certain permitted transferees) will have the right to require the Company to register for resale under the Securities Act shares of Common Stock issued upon conversion of the Convertible Preferred Stock and certain other shares of Common Stock held by the Purchaser and its affiliates as of the closing date of the Convertible Preferred Stock offering (collectively, the “Registrable Securities”). The Purchaser will have demand registration rights (not to exceed three Demand Requests (as defined in the Registration Rights Agreement) in any 365-day period), customary piggyback registration rights in connection with Company-initiated registrations, and the right to require the Company to use commercially reasonable efforts to maintain a continuously effective shelf registration statement on Form N-2 covering the Registrable Securities from and after the Registration Date until the Purchaser has sold all Registrable Securities. The Company Registration Rights Agreement will include customary indemnification and contribution provisions, which survive termination of the Registration Rights Agreement.
The descriptions above are only summaries of the material provisions of the Purchase Agreement and the Registration Rights Agreement and are qualified in their entirety by reference to the copies of the Purchase Agreement and the form of Registration Rights Agreement, which are filed as Exhibit 10.1 and included in Exhibit 10.1, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
The Purchase Agreement and Registration Rights Agreement contain representations, warranties and covenants made by the respective parties to each other as of specified dates. The representations and warranties in such agreements were made solely for the benefit of the other parties thereto and may be subject to limitations agreed upon by the contracting parties. Investors should not rely on such representations, warranties and covenants as characterizations of the actual state of facts or circumstances at the time they were made or at any other time.
| Item 2.02. | Results of Operations and Financial Condition. |
On May 11, 2026, the Company issued a press release (the “Press Release”) providing an overview of its results for the quarter ended March 31, 2026, recently implemented or approved stockholder support measures, and related matters. A copy of the Press Release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing under the Securities Act or the Exchange Act, unless it is specifically incorporated by reference therein.
| Item 7.01. | Regulation FD Disclosure. |
In the Press Release, the Company announced a cash distribution on the Common Stock totaling $0.42 per share, which will be paid on or about July 2, 2026 to stockholders of record as of the close of business on June 17, 2026.
The Company will make available under the “Events & Presentations” page within the “For Investors” section of the Company’s website (www.fskkrcapitalcorp.com) a presentation containing financial and operating information in advance of its previously announced May 11, 2026 conference call.
The information furnished in this Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing under the Securities Act or the Exchange Act.
Forward-Looking Statements
This Current Report on Form 8-K may contain certain forward-looking statements, including statements with regard to future events or the future performance or operation of the Company. Words such as “believes,” “expects,” “projects” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results to differ materially from those projected in these forward-looking statements. Factors that could cause actual results to differ materially include changes in the economy, risks associated with possible disruption in the Company’s operations or the economy generally due to terrorism, geo-political risks, natural disasters or pandemics, future changes in laws or regulations and conditions in the Company’s operating area, and the price at which shares of Common Stock may trade on the New York Stock Exchange. Some of these factors are enumerated in the filings the Company makes with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| EXHIBIT NUMBER | DESCRIPTION |
| 10.1* | Purchase Agreement, dated as of May 10, 2026, by and between the Company and KKR Alternative Assets L.P. |
| 99.1 | Press Release, dated May 11, 2026 (furnished herewith). |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Exhibits and/or schedules to this Exhibit have been omitted in accordance with Item 601 of Regulation S-K. The registrant agrees to furnish supplementally a copy of all omitted exhibits and/or schedules to the SEC upon its request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FS KKR Capital Corp. | ||
| Date: May 11, 2026 | By: | /s/ Stephen Sypherd |
| Stephen Sypherd | ||
| General Counsel and Secretary | ||
Exhibit 99.1
FS KKR Capital Corp. Announces First Quarter 2026 Results and Strategic Value Enhancement Actions
Declares Second Quarter 2026 Distribution of $0.42 per share
PHILADELPHIA, PA AND NEW YORK, NY – May 11, 2026 – FS KKR Capital Corp. (NYSE: FSK), or the Company, today announced its financial and operating results for the quarter ended March 31, 2026 and announced certain strategic value enhancement actions, as further outlined below. Additionally, the Company announced that its board of directors has declared a second quarter 2026 distribution of $0.42 per share.
Financial and Operating Highlights for the Quarter Ended March 31, 2026(1)
| · | Net investment income of $0.42 per share, compared to $0.48 per share for the quarter ended December 31, 2025 |
| · | Adjusted net investment income(2) of $0.41 per share, compared to $0.52 per share for the quarter ended December 31, 2025 |
| · | Net asset value of $18.83 per share, compared to $20.89 per share as of December 31, 2025 |
| · | Total net realized and unrealized loss of $2.00 per share, compared to a total net realized and unrealized loss of $0.89 per share for the quarter ended December 31, 2025 |
| · | Adjusted net realized and unrealized loss(2) of $1.99 per share, compared to adjusted net realized and unrealized loss of $0.88 per share for the quarter ended December 31, 2025 |
| · | Earnings (Loss) per share of ($1.57), compared to Earnings (Loss) per share of ($0.41) for the quarter ended December 31, 2025 |
| · | Total purchases of $499 million versus $710 million of sales and repayments |
| · | Net debt to equity ratio(3) as of March 31, 2026 was 131%, compared to 122% as of December 31, 2025 |
| · | Paid distributions to stockholders totaling $0.48 per share(4) |
Strategic Value Enhancement Actions
| · | $150 million Cumulative Convertible Perpetual Preferred. A subsidiary of KKR has agreed to invest $150 million in cumulative convertible perpetual preferred stock (the “Preferred Stock”). This investment will close as soon as practicable following the consummation of the tender offer (described below), subject to regulatory approval, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). The Preferred Stock contains a current dividend rate of 5.00% per annum in cash, or, at the Company’s option, 7.00% per annum in PIK dividends. The Preferred Stock will rank junior to all existing indebtedness of the Company and senior to the Company’s common stock. The Preferred Stock may be redeemed by the Company at any time in cash and, after three years, if the Company’s common stock is trading equal to or above the conversion price, will be convertible by the Company into the Company’s common stock at the conversion price then in effect. Initially, the conversion price is $18.83 (the Company’s net asset value per share as of March 31, 2026) per share. The conversion price will be subject to customary adjustments, including certain anti-dilution protections. At the option of the holders of the Preferred Stock, after six months, the Preferred Stock may be converted into the Company’s common stock at the conversion price then in effect and, after six years, the Preferred Stock may be redeemable in cash. The proceeds of the Preferred Stock are expected to be used for general corporate purposes, including funding any Company common stock repurchase program or debt repayment. |
| · | $150 million Tender Offer. As separately announced, a subsidiary of KKR intends to commence a fixed price tender offer for up to $150 million aggregate amount of shares of FSK’s common stock (the “Tender”). The Tender was announced at a price of $11.00 per share. The Tender will be available to all stockholders of FSK, is expected to commence on or around May 12, 2026 and is expected to remain open for 20 business days, subject to customary closing conditions and the expiration or termination of the applicable waiting period under the HSR Act. KKR believes the intrinsic value of FSK’s common stock is in excess of the Tender price of $11.00 per share. |
| 1 |
| · | $300 million Share Repurchase Program. The Company’s board of directors has authorized a $300 million stock repurchase program, which will be implemented as soon as practicable following the expiration of the Tender. The Company expects to repurchase shares of its common stock in the open market, by tender offer or in privately negotiated purchases in compliance with applicable law, while simultaneously being mindful of net repayment levels and the Company’s total leverage level. During the stock repurchase period, the Company’s new investment originations may be reduced as the Company will focus on supporting existing portfolio companies, reducing leverage, and repurchasing stock. The board-authorized stock repurchase program is scheduled to expire on June 1, 2027, unless extended, or until the aggregate repurchase amount that has been approved by the FSK board of directors has been expended. |
| · | 50% Subordinated Income Incentive Fee Waiver. Beginning with the second quarter of 2026, KKR has agreed to waive 100% of its portion of the subordinated income incentive fee (the “Incentive Fee Waiver”). The Incentive Fee Waiver applies to 50% of the total subordinated income incentive fee that would otherwise be paid by FSK. The Incentive Fee Waiver will continue for four consecutive quarters, after which time the Company’s board of directors will review the overall fee construct, consistent with its obligations under the Investment Company Act of 1940, as amended. The Incentive Fee Waiver is expected to support the Company’s level of net investment income and, accordingly, support the Company’s quarterly distribution level. |
In a joint statement, Michael C. Forman, Chief Executive Officer and Chairman, and Daniel R. Pietrzak, President and Chief Investment Officer for FSK and Partner and Global Head of Private Credit at KKR, stated, “Our first quarter decline in net asset value was driven by investments which have impacted prior quarters, certain new non-accrual assets, and the impact of market-driven spread widening in certain segments of our portfolio. As we continue to address investments that have had an outsized impact on NAV, we are taking several strategic steps in an effort to improve the financial position of FSK and to enhance shareholder value. We believe FSK’s current stock price underappreciates the long-term value associated with FSK’s investment portfolio and the KKR Credit platform. The four strategic actions announced this morning underscore our confidence in FSK and align that level of confidence with shareholders.”
Subsequent Events
On May 8, 2026, the Company entered into an amendment to its Senior Secured Revolving Credit Agreement, by and among the Company, as borrower, each of the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and ING Capital LLC, as collateral agent. The amendment provides for, among other things, (i) a reduction of the total commitments to approximately $4,051.7 million from $4,700.0 million, (ii) an increase to the applicable margin, with respect to extending lenders only, with the margin increasing to a range of 0.775% to 1.9% per annum from the existing range of 0.65% to 1.775%, depending on the type of loan and (iii) a reset of the minimum Shareholders’ Equity (as defined in the agreement) floor to $3,750.0 million from approximately $5,048.6 million.
Declaration of Distribution for Second Quarter 2026
On May 6, 2026, FSK’s board of directors declared a distribution for the second quarter of $0.42 per share, which will be paid on or about July 2, 2026 to stockholders of record as of the close of business on June 17, 2026.
| 2 |
Portfolio Highlights as of March 31, 2026
| · | Total fair value of investments was $12.3 billion of which 63.7% was invested in senior secured securities. |
| · | Weighted average annual yield on accruing debt investments(5) was 9.9%, compared to 10.1% as of December 31, 2025. Excluding the impact of merger accounting, weighted average annual yield on accruing debt investments was 9.7%, compared to 10.0% as of December 31, 2025. |
| · | Weighted average annual yield on all debt investments(5) was 8.7%, compared to 9.3% as of December 31, 2025. Excluding the impact of merger accounting, weighted average annual yield on all debt investments was 8.6%, compared to 9.2% as of December 31, 2025. |
| · | Exposure to the top ten largest portfolio companies by fair value was 20%, compared to 19% as of December 31, 2025. |
| · | As of March 31, 2026, investments on non-accrual status represented 4.2% and 8.1% of the total investment portfolio at fair value and amortized cost, respectively, compared to 3.4% and 5.5% as of December 31, 2025. |
| Portfolio Data | As of March 31, 2026 | As of December 31, 2025 | ||||||
| Total fair value of investments (in millions) | $ | 12,269 | $ | 13,009 | ||||
| Asset Class (based on fair value) | ||||||||
| Senior Secured Loans — First Lien | 59.6 | % | 57.8 | % | ||||
| Senior Secured Loans — Second Lien | 3.8 | % | 4.2 | % | ||||
| Other Senior Secured Debt | 0.3 | % | 0.4 | % | ||||
| Subordinated Debt | 0.8 | % | 1.0 | % | ||||
| Asset Based Finance | 13.5 | % | 13.0 | % | ||||
| Credit Opportunities Partners JV, LLC | 13.9 | % | 15.1 | % | ||||
| Equity/Other | 8.1 | % | 8.5 | % | ||||
| Interest Rate Type (based on fair value) | ||||||||
| % Variable Rate Debt Investments | 61.2 | % | 60.9 | % | ||||
| % Fixed Rate Debt Investments | 7.9 | % | 8.2 | % | ||||
| % Other Income Producing Investments | 20.3 | % | 21.4 | % | ||||
| % Non-Income Producing Investments(7) | 6.4 | % | 6.1 | % | ||||
| % of Investments on Non-Accrual(6) | 4.2 | % | 3.4 | % | ||||
Leverage and Liquidity as of March 31, 2026
| · | Net debt to equity ratio(3) of 131%, based on $7.3 billion in total debt outstanding, $133 million of cash, cash equivalents, restricted cash(8) and foreign currency and $261 million of net receivable for investments sold and repaid and stockholders’ equity of $5.3 billion. FSK’s weighted average effective interest rate (including the effect of non-usage fees) was 5.27%. |
| · | Cash, cash equivalents, restricted cash and foreign currency of $133 million and availability under the Company’s financing arrangements of $2.6 billion, subject to borrowing base and other limitations. |
| · | As of March 31, 2026, 51% of the Company’s $7.3 billion of total debt outstanding was in unsecured debt and 49% in secured debt. |
| 3 |
This communication is neither an offer to purchase nor a solicitation of an offer to sell any shares of common stock of the Company or any other securities. On the commencement date of the Tender, KKR will file with the U.S. Securities and Exchange Commission (“SEC”) a tender offer statement on Schedule TO. The tender offer will be made only pursuant to the offer to purchase, letter of transmittal and related tender offer documents filed as part of the Schedule TO with the SEC upon commencement of the tender offer. Investors and holders of Shares are strongly advised to read the tender offer statement (including an offer to purchase, letter of transmittal and related tender offer documents) and the related solicitation/recommendation statement on Schedule 14D-9 that will be filed by the Company with the SEC, because they will contain important information. These documents will be available at no charge on the SEC’s website at www.sec.gov.
Conference Call Information
FSK will host its first quarter 2026 results conference call via live webcast on Monday, May 11, 2026 at 9:00 a.m. (Eastern Time). All interested parties are welcome to participate and can access the live webcast from the For Investors section of FSK’s website at www.fskkrcapitalcorp.com under Events & Presentations or through the following URL: https://edge.media-server.com/mmc/p/ysenbwyi.
Research analysts who wish to participate in the conference call are requested to register a day in advance or at a minimum 15 minutes before the start of the call using the following URL: https://register-conf.media-server.com/register/BI86a0953ea3aa44758a814b6928917e4c. Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique PIN number that can be used to access the call.
An investor presentation of financial information will be available by visiting the For Investors section of FSK’s website at www.fskkrcapitalcorp.com, under Events & Presentations, before the market open on Monday, May 11, 2026.
A replay of the call will be available beginning shortly after the end of the call by visiting the For Investors section of FSK’s website, under Events & Presentations.
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 $93 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 value(9).
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.
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Forward-Looking Statements and Important Disclosure Notice
This announcement and our quarterly earnings call contain certain forward-looking statements that are not historical facts, including, without limitation, statements with regard to future events or our future performance or financial condition, and statements regarding share repurchase activity, distribution levels and frequency, expectations regarding settlement of the Preferred Stock offering and FSK’s intended use of proceeds, expectations for net investment income levels in future quarters, 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 and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause our actual results 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 our 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 to differ materially from those projected in these forward-looking statements. Factors that could cause actual results 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 the FSK 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 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. FSK has based the forward-looking statements included in this press release on information available to FSK on the date of this press release. 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. You 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.
Other Information
The information in this press release is summary information only and should be read in conjunction with FSK’s quarterly report on Form 10-Q for the quarter ended March 31, 2026, which FSK filed with the SEC on May 11, 2026, as well as FSK’s other reports filed with the SEC. A copy of FSK’s quarterly report on Form 10-Q for the quarter ended March 31, 2026 and FSK’s other reports filed with the SEC can be found on FSK’s website at www.fskkrcapitalcorp.com and the SEC’s website at www.sec.gov.
Certain Information About Distributions
The determination of the tax attributes of FSK’s distributions is made annually as of the end of its fiscal year based upon its taxable income and distributions paid, in each case, for the full year. Therefore, a determination as to the tax attributes of the distributions made on a quarterly basis may not be representative of the actual tax attributes for a full year. FSK intends to update stockholders quarterly with an estimated percentage of its distributions that resulted from taxable ordinary income. The actual tax characteristics of distributions to stockholders will be reported to stockholders annually on Form 1099-DIV.
The timing and amount of any future distributions on FSK’s shares of common stock are subject to applicable legal restrictions and the sole discretion of its board of directors. There can be no assurance as to the amount or timing of any such future distributions.
FSK may fund its distributions to stockholders from any sources of funds legally available to it, including net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to it on account of preferred and common equity investments in portfolio companies, proceeds from the sale of shares of FSK’s common stock and borrowings. FSK has not established limits on the amount of funds it may use from available sources to make distributions. There can be no assurance that FSK will be able to pay distributions at a specific rate or at all.
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Unaudited Consolidated Statements of Operations
(dollar amounts in millions, except per share amounts, unless otherwise noted)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2026 | 2025 | |||||||
| Investment income | ||||||||
| From non-controlled/unaffiliated investments: | ||||||||
| Interest income | $ | 177 | $ | 217 | ||||
| Paid-in-kind interest income | 6 | 16 | ||||||
| Fee income | 2 | 14 | ||||||
| Dividend and other income | 9 | 12 | ||||||
| From non-controlled/affiliated investments: | ||||||||
| Interest income | 1 | 8 | ||||||
| Paid-in-kind interest income | 12 | 18 | ||||||
| Fee income | — | 3 | ||||||
| Dividend and other income | 2 | 9 | ||||||
| From controlled/affiliated investments: | ||||||||
| Interest income | 8 | 15 | ||||||
| Paid-in-kind interest income | 20 | 28 | ||||||
| Fee income | — | — | ||||||
| Dividend and other income | 67 | 60 | ||||||
| Total investment income | 304 | 400 | ||||||
| Operating expenses | ||||||||
| Management fees | 48 | 52 | ||||||
| Subordinated income incentive fees | 25 | 39 | ||||||
| Administrative services expenses | 2 | 3 | ||||||
| Accounting and administrative fees | 1 | 1 | ||||||
| Interest expense | 105 | 113 | ||||||
| Other general and administrative expenses | 6 | 5 | ||||||
| Total operating expenses | 187 | 213 | ||||||
| Net investment income | 117 | 187 | ||||||
| Realized and unrealized gain/loss | ||||||||
| Net realized gain (loss) on investments: | ||||||||
| Non-controlled/unaffiliated investments | (41 | ) | (40 | ) | ||||
| Non-controlled/affiliated investments | (98 | ) | 9 | |||||
| Controlled/affiliated investments | (56 | ) | 13 | |||||
| Net realized gain (loss) on foreign currency forward contracts | (4 | ) | 0 | |||||
| Net realized gain (loss) on foreign currency | (5 | ) | 1 | |||||
| Net change in unrealized appreciation (depreciation) on investments: | ||||||||
| Non-controlled/unaffiliated investments | (239 | ) | 58 | |||||
| Non-controlled/affiliated investments | 10 | (20 | ) | |||||
| Controlled/affiliated investments | (148 | ) | (52 | ) | ||||
| Net change in unrealized appreciation (depreciation) on foreign currency forward contracts | 9 | (10 | ) | |||||
| Net change in unrealized gain (loss) on foreign currency | 14 | (26 | ) | |||||
| Total net realized and unrealized gain (loss) | (558 | ) | (67 | ) | ||||
| Net increase (decrease) in net assets resulting from operations | $ | (441 | ) | $ | 120 | |||
| Per share information—basic and diluted | ||||||||
| Net increase (decrease) in net assets resulting from operations (Earnings (Losses) per Share) | $ | (1.57 | ) | $ | 0.43 | |||
| Weighted average shares outstanding | 280,066,433 | 280,066,433 | ||||||
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Consolidated Balance Sheets
(dollar amounts in millions, except per share amounts, unless otherwise noted)
| March 31, 2026 | ||||||||
| (Unaudited) | December 31, 2025 | |||||||
| Assets | ||||||||
| Investments, at fair value | ||||||||
| Non-controlled/unaffiliated investments (amortized cost—$8,238 and $8,406, respectively) | $ | 7,757 | $ | 8,164 | ||||
| Non-controlled/affiliated investments (amortized cost—$739 and $929, respectively) | 674 | 855 | ||||||
| Controlled/affiliated investments (amortized cost—$4,401 and $4,406, respectively) | 3,838 | 3,990 | ||||||
| Total investments, at fair value (amortized cost—$13,378 and $13,741, respectively) | 12,269 | 13,009 | ||||||
| Cash and cash equivalents | 124 | 181 | ||||||
| Restricted cash | 4 | — | ||||||
| Foreign currency, at fair value (cost—$5 and $27, respectively) | 5 | 27 | ||||||
| Receivable for investments sold and repaid | 263 | 313 | ||||||
| Income receivable | 98 | 98 | ||||||
| Unrealized appreciation on foreign currency forward contracts | 2 | — | ||||||
| Deferred financing costs | 30 | 32 | ||||||
| Prepaid expenses and other assets | 30 | 69 | ||||||
| Total assets | $ | 12,825 | $ | 13,729 | ||||
| Liabilities | ||||||||
| Payable for investments purchased | $ | 2 | $ | 8 | ||||
| Debt (net of deferred financing costs and discount of $42 and $45, respectively) | 7,271 | 7,634 | ||||||
| Unrealized depreciation on foreign currency forward contracts | 3 | 10 | ||||||
| Stockholder distributions payable | 134 | — | ||||||
| Management fees payable | 48 | 50 | ||||||
| Subordinated income incentive fees payable | 25 | 28 | ||||||
| Administrative services expense payable | 2 | 1 | ||||||
| Interest payable | 56 | 77 | ||||||
| Other accrued expenses and liabilities | 10 | 72 | ||||||
| Total liabilities | 7,551 | 7,880 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock, $0.001 par value, 50,000,000 shares authorized, none issued and outstanding | — | — | ||||||
| Common stock, $0.001 par value, 750,000,000 shares authorized, 280,066,433 and 280,066,433 shares issued and outstanding, respectively | 0 | 0 | ||||||
| Capital in excess of par value | 9,199 | 9,199 | ||||||
| Retained earnings (accumulated deficit) | (3,925 | ) | (3,350 | ) | ||||
| Total stockholders’ equity | 5,274 | 5,849 | ||||||
| Total liabilities and stockholders’ equity | $ | 12,825 | $ | 13,729 | ||||
| Net asset value per share of common stock at period end | $ | 18.83 | $ | 20.89 | ||||
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Non-GAAP Financial Measures
This press release contains certain financial measures that have not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). FSK uses these non-GAAP financial measures internally in analyzing financial results and believes that the use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing results and trends and in comparing FSK’s financial results with other BDCs.
Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures, and should be read only in conjunction with FSK’s consolidated financial statements prepared in accordance with GAAP. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures has been provided in this press release, and investors are encouraged to review the reconciliation.
Reconciliation of Non-GAAP Financial Measures(1)
| Three Months Ended | ||||||||
| March 31, 2026 | December 31, 2025 | |||||||
| GAAP net investment income per share | $ | 0.42 | $ | 0.48 | ||||
| Accretion resulting from merger accounting | $ | (0.01 | ) | $ | (0.01 | ) | ||
| Excise tax | $ | 0.00 | $ | 0.05 | ||||
| Adjusted net investment income per share(2) | $ | 0.41 | $ | 0.52 | ||||
| GAAP Net realized and unrealized gain (loss) per share | $ | (2.00 | ) | $ | (0.89 | ) | ||
| Unrealized appreciation from merger accounting | $ | 0.01 | $ | 0.01 | ||||
| Adjusted net realized and unrealized gain (loss)(2) | $ | (1.99 | ) | $ | (0.88 | ) | ||
| 1) | Per share data was derived by using the weighted average shares of FSK’s common stock outstanding during the applicable period. Per share numbers may not sum due to rounding. | |
| 2) | Adjusted net investment income is a non-GAAP financial measure. Adjusted net investment income is presented for all periods as GAAP net investment income excluding (i) the accrual for the capital gains incentive fee for realized and unrealized gains; (ii) excise taxes (iii) the impact of accretion resulting from merger accounting; and (iv) certain non-recurring operating expenses that are one-time in nature and are not representative of ongoing operating expenses incurred during FSK’s normal course of business. FSK uses this non-GAAP financial measure internally in analyzing financial results and believes that the use of this non-GAAP financial measure is useful to investors as an additional tool to evaluate ongoing results and trends and in comparing its financial results with other business development companies. Adjusted net realized and unrealized gain is a non-GAAP financial measure. Adjusted net realized and unrealized gain is presented for all periods as GAAP realized and unrealized gains to exclude the impact of the merger accounting. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. A reconciliation of GAAP net investment income to adjusted net investment income and GAAP net realized and unrealized gain to adjusted net realized and unrealized gain can be found above. | |
| 3) | Net debt to equity ratio is debt outstanding, net of cash and foreign currency and net payable/receivable for investments purchased/sold and repaid, divided by net assets. | |
| 4) | The per share data for distributions reflects the amount of distributions paid per share of our common stock to stockholders of record during each applicable period. | |
| 5) | See FSK’s quarterly report on Form 10-Q for the quarter ended March 31, 2026 for important information, including information related to the calculation and definition of weighted average annual yield on accruing debt investments, weighted average annual yield on all debt investments, variable rate debt investments, fixed rate debt investments, other income producing investments and non-income producing investments. | |
| 6) | Interest income is recorded on an accrual basis. See FSK’s quarterly report on Form 10-Q for the quarter ended March 31, 2026 for a description of FSK’s revenue recognition policy. | |
| 7) | Does not include investments on non-accrual status. | |
| 8) | Restricted cash is the cash collateral required to be posted pursuant to the Company’s derivative contracts. |
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| 9) | Total AUM estimated as of December 31, 2025. 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 (excluding CLOs wholly-owned by Future Standard); (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. |
Contact Information:
Investor Relations Contact
Caitlin Welch
Caitlin.Welch@futurestandard.com
Future Standard Media Team
Marc Hazelton
Marc.Hazelton@futurestandard.com
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