FS KKR Capital Corp. II (FSKR), a publicly traded business development company focused on providing customized credit solutions to private middle market U.S. companies, reported its financial and operating results for the quarter ended June 30, 2020. Effective June 10, 2020, FSKR completed a four to one reverse stock split of its shares of common stock. On June 17, 2020, shares of FSKR’s common stock began trading on the New York Stock Exchange.
Financial and Operating Highlights
- Net investment income of $0.44 per share compared with $0.55 per share for the quarter ended March 31, 2020
- Adjusted net investment income of $0.48 per share, which excludes $6.6 million, or $0.04 per share, in fees associated with FSKR’s listing on the NYSE
- Total net realized and unrealized loss of $0.31 per share compared with a total net realized and unrealized loss of $4.72 per share for the quarter ended March 31, 2020
- Paid cash distributions to stockholders totaling $0.60 per share
- Total purchases of $182 million versus $367 million of sales and repayments
- Net asset value of $24.22 per share compared with $24.68 per share as of March 31, 2020
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“We took a significant step forward during the second quarter, as we successfully listed FSKR on the NYSE, thereby providing liquidity to our existing shareholders while simultaneously positioning the company for future growth by receiving shareholder approval to take advantage of the 150% asset coverage ratio as defined by the SEC,” Michael C. Forman, CEO and chairman of FSKR, said. “With this approval, FSKR becomes one of the most well positioned BDCs in the industry with approximately $1.6 billion of committed growth capital. In addition, our third quarter dividend of $0.55 per share equates to an annualized yield of 9.1% on our net asset value per share and is reflective of our view toward future growth.”
FSKR’s board of directors declared a cash distribution for the third quarter of $0.55 per share, which will be paid on or about Oct. 1, 2020 to stockholders of record as of the close of business on Sept. 16, 2020.
Portfolio Highlights
- Total fair value of investments was $7.3 billion of which 77% was invested in senior secured securities.
- Direct originations represented approximately 88% of the portfolio by fair value as of June 30, 2020.
- Weighted average annual yield on accruing debt investments was 8.7% compared with 8.9% as of March 31, 2020.
- Weighted average annual yield on all debt investments was 7.4% compared with 7.8% as of March 31, 2020.
- Exposure to the top 10 largest portfolio companies by fair value was 26% as of June 30, 2020 compared with 26% as of March 31, 2020.
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Leverage and Liquidity
- FSKR reported a net debt to equity ratio of 75%, based on $3.4 billion in total debt outstanding, $295 million of cash and foreign currency and $29 million of net payable for investments purchased and stockholders’ equity of $4.2 billion. FSKR’s weighted average effective interest rate (including the effect of non-usage fees) was 3.54%.
- FSKR also reported cash and foreign currency of $295 million and availability under its financing arrangements of $1,685 million, subject to borrowing base and other limitations.
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