SAN FRANCISCO, March 31, 2011 /PRNewswire/ -- KKR Financial Holdings LLC (NYSE: KFN) (the "Company") announced today that it closed KKR Financial CLO 2011-1, Ltd. ("CLO 2011-1"), a $400 million secured financing transaction that is non-recourse to the Company, on March 31, 2011.
CLO 2011-1, a consolidated subsidiary of the Company, has entered into a privately negotiated financing transaction with a third-party senior lender that will permit CLO 2011-1 to borrow up to $300 million at a rate of three-month LIBOR plus 1.35% to finance a portfolio of senior secured leveraged commercial loans. CLO 2011-1 has been capitalized with a $100 million cash contribution by the Company in exchange for which CLO 2011-1 issued the Company a $100 million residual interest consisting of $20 million of mezzanine notes and $80 million of subordinated notes. Highlights of this transaction include:
- Maturity date: April 2, 2018;
- Portfolio: Static pool of senior secured U.S. dollar denominated leveraged commercial loans;
- Non-call period: Six months after portfolio is ramped; and
- Principal waterfall: Principal receipts from the portfolio are distributed to the senior lender and the Company pro rata, subject to maintaining a 3:1 leverage ratio.
Additional terms of the CLO 2011-1 transaction are outlined in a Form 8-K filed by the Company today with the Securities and Exchange Commission.
Separately, the Company announced that during March 2011 it acquired an overriding royalty interest in developed and undeveloped oil and gas properties located in Texas for $55 million.
The Company's Chief Executive Officer, William C. Sonneborn, stated, "We are pleased with the completion of these transactions as they both represent attractive growth opportunities that we expect will increase earnings for shareholders and the enterprise value of KFN. We have now deployed all of the capital we raised in the fourth quarter of 2010 at expected attractive rates of return and consistent with our strategy."
About KKR Financial Holdings LLC
KKR Financial Holdings LLC is a specialty finance company with expertise in a range of asset classes. KFN's core business strategy is to leverage the proprietary resources of its manager with the objective of generating both current income and capital appreciation. KFN is externally managed by KKR Financial Advisors LLC, a wholly-owned subsidiary of KKR Asset Management LLC, which is a wholly-owned subsidiary of Kohlberg Kravis Roberts & Co. L.P. KFN executes its core business strategy through its majority-owned subsidiaries. Additional information regarding KFN is available at http://www.kkr.com.
Investor Relations Contact:
Kohlberg Kravis Roberts & Co.
Tel: +1 (415) 315-6567
Media Relations Contacts:
Kohlberg Kravis Roberts & Co.
Tel: + 1 (212) 750-8300
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain information contained in this press release constitutes "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on our current expectations, estimates and projections. Pursuant to those sections, we may obtain a "safe harbor" for forward-looking statements by identifying and accompanying those statements with cautionary statements, which identify factors that could cause actual results to differ from those expressed in the forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements, which include, among others, statements regarding future expected returns of invested capital. The words "believe," "anticipate," "intend," "aim," "expect," "strive," "plan," "estimate," and "project," and similar words identify forward-looking statements. Such statements are not guarantees of future performance, events or results and involve potential risks and uncertainties. Accordingly, actual results and the timing of certain events could differ materially from those addressed in forward-looking statements due to a number of factors including, but not limited to, changes in interest rates and market values, financing and capital availability, changes in prepayment rates, general economic and political conditions and events, changes in market conditions, particularly in the global fixed income, credit and equity markets, the impact of current, pending and future legislation, regulation and legal actions, and other factors not presently identified. Other factors that may impact our actual results are discussed under "Risk Factors" in Item 1A of the Company’s Annual Report on Form 10-K filed with the Securities Exchange Commission on February 28, 2011. We do not undertake, and specifically disclaim, any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except for as required by federal securities laws.
SOURCE KKR Financial Holdings LLC