FS KKR Capital Corp (FSK) has announced a significant strategic response to its recent challenges, including two dividend cuts within the last two quarters. The management team, led by KKR, is investing $600 million to bolster the company’s undervalued stock, which currently trades at 58 cents on the dollar relative to its net asset value (NAV) of $18.83.
Key actions include a $150 million purchase of FSK preferred stock convertible at the current NAV, a $150 million tender for common stock at $11 per share, a $300 million share repurchase program, and a waiver of half of KKR’s income incentive fee for four quarters. These measures aim to stabilize the dividend and reposition the stock closer to its fair market value, with potential returns estimated at 36% within the next year.
As of the first quarter of 2026, FSK’s NAV fell from $20.89 to $18.83, with non-accrual loans increasing to 4.2%. The BDC sector is currently facing wider credit spreads and rising delinquency rates, impacting performance across the industry.
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