FS/KKR Receives Shareholder Approval for Non-Traded BDC Merger
FS/KKR Advisor LLC, a partnership between FS Investments and KKR Credit Advisors LLC, announced that the shareholders of four business development companies under its advisement – FS Investment Corporation II (FSIC II), FS Investment Corporation III (FSIC III), FS Investment Corporation IV (FSIC IV) and Corporate Capital Trust II (CCT II) – have voted to approve all proposals related to the mergers of FSIC III, FSIC IV and CCT II with and into FSIC II.
FS/KKR Advisor LLC, a partnership between FS Investments and KKR Credit Advisors LLC, announced that the shareholders of four business development companies under its advisement – FS Investment Corporation II (FSIC II), FS Investment Corporation III (FSIC III), FS Investment Corporation IV (FSIC IV) and Corporate Capital Trust II (CCT II) – have voted to approve all proposals related to the mergers of FSIC III, FSIC IV and CCT II with and into FSIC II.
The mergers will create the second largest business development company, with approximately $9 billion in assets on a pro forma basis as of September 30, 2019. FS/KKR currently expects the mergers to close on December 18, 2019.
“We appreciate the support we have received from our shareholders, as this is an important step in maximizing value for them,” said Michael Forman, Chairman and CEO of FS Investments. “We continue to believe this combination will enhance portfolio diversification, reduce operating expenses and add further flexibility to the capital structure, all of which we expect will drive value.”
Upon closing of the mergers, shareholders of FSIC III, FSIC IV and CCT II will receive a number of FSIC II shares with a net asset value equal to the NAV of the shares they hold in each respective BDC being merged with FSIC II, with NAV determined shortly before closing.
At that time, FSIC II will be renamed FS KKR Capital Corp. II (FSK II). The common equity of the company will likely be listed on the New York Stock Exchange in the first half of 2020.
Post-merger, FSK II intends to pay distributions on a quarterly basis, with the first distribution payment expected to be declared in March 2020 and paid in early April 2020.
Following the closing of the mergers and prior to public listing, FSK II intends to issue 5.50 percent perpetual preferred equity, representing approximately 20 percent of its NAV to all holders of FSK II common equity.
FS/KKR serves as the investment adviser to BDCs with approximately $17 billion in assets under management as of September 30, 2019. The companies include FS KKR Capital Corp., FSIC II, FSIC III, FSIC IV and CCT II.
