KKR to sell shares to investors, hold public rights offering

By Lisa Kerner

Charlotte, N.C., Aug. 20 - KKR Financial Holdings LLC agreed to sell 16 million of its common shares to seven unaffiliated institutional investors in separately negotiated transactions priced at $14.40 per share. The company's stock closed at $14.40 (NYSE: KFN) on Friday.

Net proceeds from the $230.4 million transaction will be used for general corporate purposes.

The investors include funds managed by Farallon Capital Management, LLC, Fir Tree Partners, JGE Capital Management, Marsico Capital Management, Morgan Stanley, Oak Hill Advisors and Sageview Capital LP.

"[KKR] will use the capital to strengthen its balance sheet and ensure it is able to operate from a position of strength in these turbulent times," chief executive officer Nino Fanlo said in a company news release.

Additionally, under the terms of a public rights offering, KKR will distribute non-transferable rights to subscribe for up to 18.75 million common shares to its shareholders. The San Francisco specialty finance company said holders will receive 0.1943 of a right for each common share held at the close of business on Aug. 30. The subscription price for the common shares will be $14.40 per share, and the rights expire on Sept. 19.

KKR also has a backstop commitment agreement with principals of Kohlberg Kravis Roberts & Co. LP to purchase up to approximately $100 million of common shares at $14.40 per share if the rights offering is not fully subscribed.

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