Fs Kkr Capital Stock Earnings Reports

Key points for investors: FSK reported a challenging Q1 2026: NAV fell 9.9% to $18.83 per share and GAAP net investment income (NII) was $0.42 per share. The Board declared a Q2 distribution of $0.42 (consistent with paying 100% of GAAP NII). Management and KKR announced a four-part strategic package designed to stabilize the fund: (1) KKR to commence a $150 million fixed-price tender offer at $11 per share to provide liquidity and signal value; (2) KKR to invest $150 million via a cumulative convertible preferred security (initial conversion price $18.83, starting dividend 5% cash or 7% PIK); (3) a $300 million share repurchase authorization to be executed after the tender, funded in part by convertible preferred proceeds and investment repayments; and (4) a temporary waiver (four quarters) of 50% of the subordinated income incentive fee to support NII and distributions. Portfolio drivers: the NAV decline was driven by company-specific credit events (notably legacy and certain 2021–2022 vintage loans) and mark-to-market spread moves. Specific underperformers called out include Medallia (placed on nonaccrual), ATX and Production Resource Group (PRG) — together significant contributors to the NAV decline. Nonaccruals increased to 8.1% of portfolio on a cost basis (4.2% on a fair value basis). Portfolio composition and liquidity: fair value portfolio $12.3B across 236 companies; ~60% first-lien loans (69% first lien when including joint venture look-through) and ~64% senior secured; weighted average yield on accruing debt 9.7%; gross/net debt-to-equity ~138%/131%; pro forma liquidity after credit amendment $2.3B. Near-term posture and outlook: management will reduce new originations, prioritize portfolio support and rotation, lower leverage and execute buybacks as repayments arrive. They expect Q2 net repayments >$500M and project NII on an annualized basis of roughly 8–9% of NAV going forward (subject to market/portfolio variability). Management emphasized this is a transitional period; the fund may be smaller over time but should have a stronger balance sheet and improved trading profile if actions are executed.