8-KEarnings & ResultsOther Events

KKR & Co. Inc. 8-K Report, Financial Results (Apr 14, 2020)

Filed April 14, 2020For Securities:KKRKKRTKKR-PDKKRS

Summary

KKR & Co. Inc. (KKR) filed a Current Report on Form 8-K on April 14, 2020, to provide an update on its business in light of the unfolding COVID-19 pandemic, particularly concerning its financial condition and operations. The company reported approximately $2.5 billion in cash and short-term investments and an undrawn $1.0 billion revolving credit facility as of March 31, 2020, indicating sufficient liquidity. KKR is considering an opportunistic offering of debt securities to fund business investments. The filing extensively discusses the potential adverse impacts of COVID-19 on KKR's business. These include the likelihood of reduced valuations for its investments due to market declines (citing significant drops in major indices in Q1 2020), challenges in fundraising, difficulties in exiting existing investments, increased credit and liquidity risks for portfolio companies, potential defaults from borrowers and tenants, and operational risks associated with remote work and employee well-being. While KKR acknowledges that market dislocations may present opportunities, the company cannot reasonably estimate the ultimate magnitude of COVID-19's impact at this time.

Key Highlights

  • 1KKR reported robust liquidity as of March 31, 2020, with approximately $2.5 billion in cash and short-term investments and an undrawn $1.0 billion corporate revolving credit facility.
  • 2The company is exploring an opportunistic offering of debt securities, intending to use the proceeds for investment in its business.
  • 3KKR anticipates that many of its investments will experience valuation declines from their December 31, 2019 levels due to the market impact of COVID-19.
  • 4The pandemic poses significant risks to KKR's ability to market new funds, exit existing investments, and manage its portfolio companies, potentially affecting revenues and investment values.
  • 5Portfolio companies, especially those in heavily impacted sectors like healthcare, travel, entertainment, hospitality, senior living, and retail, face increased credit and liquidity risks.
  • 6KKR is implementing business continuity measures, including remote work, to mitigate operational disruptions and cybersecurity risks associated with COVID-19.
  • 7The full magnitude of COVID-19's impact on KKR's financial performance and operations remains uncertain and cannot be reasonably estimated at this time.

Frequently Asked Questions

As of March 31, 2020, KKR had approximately $2.5 billion in cash and short-term investments. Additionally, the company had an undrawn $1.0 billion corporate revolving credit facility, indicating a strong liquidity position sufficient to meet its obligations.

KKR expects that many of its investments will be reduced in value from their December 31, 2019 valuations. This is primarily due to actual and expected revenue declines and decreased values of publicly traded and comparable privately held companies, largely driven by the COVID-19 pandemic and broader market declines, which saw indices like the S&P 500 fall 20% in Q1 2020.

Key risks include reduced investment valuations, challenges in fundraising and exiting investments, increased credit and liquidity risks for portfolio companies (potentially leading to impairments), difficulties for borrowers and tenants to meet obligations, and operational challenges related to remote work and employee well-being. The impact is expected to be particularly severe on portfolio companies in sectors like travel, hospitality, and retail.

Yes, KKR is considering an opportunistic offering of debt securities. The proceeds from such an offering are intended to be used to invest in its business.