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.