FS KKR Capital (NYSE: FSK) reported a 9.9% decline in net asset value (NAV) per share for the first quarter, dropping to $18.83 as of March 31, driven by credit events and mark-to-market adjustments. The company’s net investment income was $0.42 per share, with total investment income at $304 million, down $44 million from the previous quarter.
To stabilize the business, FSK announced a series of strategic actions, including a $150 million fixed-price tender offer at $11 per share, another $150 million investment through convertible preferred stock, and a $300 million share repurchase program. The board declared a second-quarter distribution of $0.42 per share, aligning with FSK’s policy of paying out 100% of GAAP net investment income.
As of March 31, FSK’s investment portfolio was valued at $12.3 billion, comprising 236 portfolio companies, with the top ten accounting for about 20% of the fair value. Non-accrual investments rose to 8.1% of the portfolio at cost, highlighting ongoing challenges from inflation and elevated interest rates. Management projects net investment income to be in the range of 8% to 9% of NAV annually, depending on market conditions.
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