8-KMaterial AgreementsShareholder MattersCorporate Changes+1

KKR & Co. Inc. 8-K Report, Material Agreement (Mar 17, 2016)

Filed March 17, 2016For Securities:KKRKKRTKKR-PDKKRS

Summary

KKR & Co. L.P. (KKR) filed an 8-K on March 17, 2016, to report the issuance of 13,800,000 6.75% Series A Preferred Units. This issuance was part of an underwritten public offering and included an over-allotment option for underwriters. To accommodate these new units, KKR amended its partnership and LLC agreements to define the rights, preferences, and powers associated with the Series A Preferred Units. The Series A Preferred Units carry a fixed annual distribution rate of 6.75%, payable quarterly starting June 15, 2016. These distributions are non-cumulative. A key provision restricts KKR from declaring or paying distributions on its "Junior Units" (common units) if any distributions on the Series A Preferred Units are in arrears. The company also retains the option to redeem these preferred units under specific conditions, including a potential increase in the distribution rate upon a Change of Control event if redemption is not exercised.

Key Highlights

  • 1KKR issued 13,800,000 Series A Preferred Units via a public offering.
  • 2The Series A Preferred Units carry a fixed annual distribution rate of 6.75%, payable quarterly.
  • 3Distributions on the Series A Preferred Units are non-cumulative.
  • 4KKR's ability to pay distributions on junior units is restricted if Series A Preferred Unit distributions are not met.
  • 5KKR has the option to redeem the Series A Preferred Units starting June 15, 2021, at $25.00 per unit plus accrued unpaid distributions.
  • 6A Change of Control event may trigger redemption at $25.25 per unit or result in a distribution rate increase if not redeemed.
  • 7Significant amendments were made to KKR's partnership and LLC agreements to establish the terms of the Series A Preferred Units.

Frequently Asked Questions

The primary purpose of this 8-K filing is to report the issuance of 13,800,000 Series A Preferred Units by KKR & Co. L.P. in an underwritten public offering and to detail the associated amendments to the company's governing partnership and LLC agreements that establish the rights and terms of these preferred units.

The Series A Preferred Units have a fixed annual distribution rate of 6.75%, payable quarterly starting June 15, 2016. These distributions are non-cumulative. The redemption price is $25.00 per unit if redeemed at KKR's option on or after June 15, 2021, or $25.25 per unit if redeemed following a Change of Control event prior to that date.

The issuance creates a priority for the Series A Preferred Units. KKR is restricted from declaring or paying distributions on its 'Junior Units' (which would include common units) if any distributions on the Series A Preferred Units for the current period have not been declared and paid or set apart for payment.

KKR can redeem the Series A Preferred Units, in whole or in part, at its option on or after June 15, 2021, at $25.00 per unit plus declared but unpaid distributions. Additionally, KKR has the option to redeem the units in whole, at a price of $25.25 per unit plus declared but unpaid distributions, within 60 days of a Change of Control event, provided notice is given.