The Board of Trustees (the “Board”) of KKR Income
Opportunities Fund (the “Fund”) (NYSE: KIO) has approved the
terms of the issuance of transferable rights to its shareholders of
record as specified below. The Fund today also announced an
increase in its monthly distributions per common share beginning
with the distribution payable on March 31, 2023, after completion
of the Rights Offering, as described below.
Terms of Rights Offering
The Board has approved the terms of the issuance of transferable
rights (“Rights”) by the Fund to its shareholders of record
as of the Record Date (as defined below) entitling the holders of
these Rights to subscribe (the “Offer”) for common shares of
beneficial interest (the “Common Shares”). The Board, based
on the recommendations and presentations of KKR Credit Advisors
(US) LLC, the Fund’s investment adviser (“KKR Credit” or the
“Adviser”) and others, has determined that it is in the best
interests of the Fund and the holders of its Common Shares (the
“Common Shareholders”) to seek to increase the assets of the
Fund available for investment and therefore to conduct the Offer.
In making this determination, the Board considered a number of
factors, including potential benefits and costs (including
potential dilution). In particular, the Board considered the
Adviser’s belief that the Offer would enable the Fund to more fully
take advantage of existing and future investment opportunities that
may be or may become available, consistent with the Fund’s primary
investment objective to seek a high level of current income with a
secondary objective of capital appreciation. The Offer also seeks
to provide an opportunity to existing Common Shareholders to
purchase Common Shares at a discount to market price.
The record date for the Offer is currently expected to be
January 23, 2023 (the “Record Date”). The Fund will
distribute to Common Shareholders of record on the Record Date
(“Record Date Common Shareholders”) one Right for each
Common Share held on the Record Date. Record Date Common
Shareholders will be entitled to purchase one new Common Share for
every three Rights held (1 for 3); however, any Record Date Common
Shareholder who owns fewer than three Common Shares as of the close
of business on the Record Date will be entitled to subscribe for
one Common Share of the Fund. Fractional Common Shares will not be
issued.
The proposed subscription period is currently anticipated to
expire on February 16, 2023, unless extended by the Fund (the
“Expiration Date”). The Rights are transferable and are
expected to be admitted for trading on the New York Stock Exchange
(the “NYSE”) under the symbol “KIO RT” during the course of
the Offer. The subscription period will commence on the Record Date
and expire on the Expiration Date. Rights may be exercised at any
time during the subscription period.
The Fund has declared a monthly distribution to Common
Shareholders payable on January 31, 2023 with a record date of
January 13, 2023, which will not be payable with respect to Common
Shares issued pursuant to the Offer. The Fund has also declared a
monthly distribution to Common Shareholders payable on February 28,
2023 with a record date of February 3, 2023, which will not be
payable with respect to Common Shares that are issued pursuant to
the Offer after February 3, 2023, the record date for such
distribution.
The subscription price per Common Share (the “Subscription
Price”) will be determined on the Expiration Date, and will be
equal to 92.5% of the average of the last reported sales price of a
Common Share of the Fund on the NYSE on the Expiration Date and
each of the four (4) immediately preceding trading days (the
“Formula Price”). If, however, the Formula Price is less
than 82% of the Fund’s net asset value (“NAV”) per Common
Share at the close of trading on the NYSE on the Expiration Date,
the Subscription Price will be 82% of the Fund’s NAV per Common
Share at the close of trading on the NYSE on that day. The
estimated Subscription Price has not yet been determined by the
Fund.
Record Date Common Shareholders who exercise all of their
primary subscription Rights (other than those Rights that cannot be
exercised because they represent the right to acquire less than one
Common Share) will be eligible for an over-subscription privilege
entitling Record Date Common Shareholders to subscribe, subject to
certain limitations and allotment, for any additional Common Shares
not purchased pursuant to the primary subscription.
The Offer will be made only by means of a prospectus supplement
and accompanying prospectus, which, along with exercise
instructions, is expected to be mailed to shareholders on or about
January 23, 2023. The Offer, including the terms described herein,
is subject to effectiveness of the Fund’s registration statement on
file with the SEC. The definitive terms of the Offer, including the
estimated Subscription Price, will be contained in the Fund’s
prospectus supplement for the Offer.
To exercise their Rights, Record Date Common Shareholders who
hold their Common Shares through a broker, custodian, trust
company, or other intermediary should contact such entity to
forward their instructions to either exercise or sell their Rights
on their behalf. Record Date Common Shareholders who do not hold
Common Shares through a broker, custodian, trust company, or other
intermediary should forward their instructions to either exercise
or sell their Rights by completing the subscription certificate and
delivering it to the subscription agent for the Offer, together
with their payment, at one of the locations indicated on the
subscription certificate or in the prospectus supplement.
Declaration of Monthly Distributions
The Fund also today announced its upcoming monthly
distributions, payable on the dates and in the amounts below. Based
on the Fund’s current share price of $11.64 per share (as of market
close on January 11, 2023), the distributions represent an
annualized distribution rate of 12.53% (calculated by annualizing
the distribution amount and dividing it by the current share
price). The increase in the Fund’s monthly distribution rate from
$0.1050 per share to $0.1215 per share represents a 15.71% increase
in the Fund’s monthly distribution.
The monthly distribution schedule is as follows for the months
of February, March, and April:
Ex-Date: February 2, 2023
Record Date:
February 3, 2023
Payable Date:
February 28, 2023
Amount:
$0.1050 per share
Ex-Date:
March 9, 2023
Record Date:
March 10, 2023
Payable Date:
March 31, 2023
Amount:
$0.1215 per share
Ex-Date:
April 13, 2023
Record Date:
April 14, 2023
Payable Date:
April 28, 2023
Amount:
$0.1215 per share
Information regarding the distribution rate is included for
informational purposes only and is not necessarily indicative of
future results, the achievement of which cannot be assured. The
distribution rate should not be considered the yield or total
return on an investment in the Fund.
In compliance with Section 19 of the Investment Company Act of
1940, a notice will be provided to shareholders for any
distribution that does not consist solely of net investment income.
A portion of each distribution may be treated as paid from sources
other than net investment income, including but not limited to
short-term capital gains, long-term capital gains or return of
capital.
The amounts and sources of distributions reported in this notice
are only estimates and are not being provided for tax reporting
purposes. The final determination of the source of all
distributions in 2023 will be made after year-end. The Fund will
send you a Form 1099-DIV for the calendar year that will tell you
how to report these distributions for federal income tax
purposes.
The Fund is a diversified, closed-end fund. Investors should
consider the Fund’s investment objectives and policies, risks,
charges and expenses carefully before investing.
The investment return, price, yields, market value and NAV of a
fund's shares will fluctuate with market conditions. Closed-end
funds frequently trade at a discount to their NAV, which may
increase an investor’s risk of loss. There is no assurance that the
Fund will meet its investment objectives. The Fund’s distribution
rate may be affected by numerous factors, including changes in
realized and projected market returns, Fund performance, and other
factors. There can be no assurance that a change in market
conditions or other factors will not result in a change in a Fund
distribution rate at a future time.
An investment in the Fund is not appropriate for all investors
and is not intended to be a complete investment program. The Fund
is designed as a long-term investment and not as a trading vehicle.
Investors should carefully review the prospectus supplement and
accompanying prospectus, when available, and consider the Fund’s
investment objectives and policies, risks, charges and expenses
before investing.
Investment return and principal value will fluctuate, and it is
possible to lose money by investing in the Fund. Past performance
is not a guarantee of future results.
Forward Looking Statements
This press release contains certain statements that may include
"forward-looking statements" within the meaning of the federal
securities laws. All statements, other than statements of
historical fact, included herein are "forward-looking statements."
The forward-looking statements are based on the Fund’s and KKR's
beliefs, assumptions and expectations of its future performance,
taking into account all information currently available to it.
These beliefs, assumptions and expectations can change as a result
of many possible events or factors, not all of which are known to
the Fund or KKR or are within their control. The Fund and KKR do
not undertake any obligation to update any forward-looking
statements to reflect circumstances or events that occur after the
date on which such statements were made except as required by
law.
This document is not an offer to sell securities and is not
soliciting an offer to buy securities in any jurisdiction where the
offer or sale is not permitted. Investors should read the
prospectus supplement and accompanying prospectus, when available,
and consider the Fund’s investment objectives and policies, risks,
charges and expenses carefully before investing. An investment in
the Fund should not constitute a complete investment program.
KKR Income Opportunities Fund
KKR Income Opportunities Fund is a diversified, closed-end
management investment company managed by KKR Credit, an indirect
subsidiary of KKR & Co. Inc. (“KKR”). The Fund’s primary
investment objective is to seek a high level of current income with
a secondary objective of capital appreciation. The Fund will seek
to achieve its investment objectives by investing primarily in
first- and second-lien secured loans, unsecured loans and high
yield corporate debt instruments. It expects to employ a dynamic
strategy of investing in a targeted portfolio of loans and
fixed-income instruments of U.S. and non-U.S. issuers and
implementing hedging strategies in order to achieve attractive
risk-adjusted returns. Please visit www.kkrfunds.com/kio for
additional information.
About KKR Credit
Launched by KKR in August 2004, KKR Credit invests on behalf of
its managed funds, clients and accounts across the corporate credit
spectrum, including secured credit, bank loans and high yield
securities and alternative assets such as mezzanine financing,
special situations investing and structured finance. With 437
employees, including approximately 190 investment professionals,
KKR Credit’s investment teams are closely aligned with KKR’s wealth
of private equity investment and industry resources.
About KKR
KKR is a leading global investment firm that offers alternative
asset management as well as capital markets and insurance
solutions. KKR aims to generate attractive investment returns by
following a patient and disciplined investment approach, employing
world-class people, and supporting growth in its portfolio
companies and communities. KKR sponsors investment funds that
invest in private equity, credit and real assets and has strategic
partners that manage hedge funds. KKR’s insurance subsidiaries
offer retirement, life and reinsurance products under the
management of Global Atlantic Financial Group. References to KKR’s
investments may include the activities of its sponsored funds and
insurance subsidiaries. For additional information about KKR &
Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com and
on Twitter @KKR_Co.
The Fund will pay expenses associated with
the Offer which will be borne indirectly by the Fund’s Common
Shareholders.
The information herein is not complete and
is subject to change. This document is not an offer to sell any
securities and is not soliciting an offer to buy any securities in
any jurisdiction where the offer or sale is not permitted. This
document is not an offering, which can only be made by a prospectus
supplement and accompanying prospectus. Investors should consider
the Fund’s investment objectives and policies, risks, charges and
expenses carefully before investing. The Fund’s prospectus
supplement and accompanying prospectus will contain this and
additional information about the Fund and additional information
about the Offer, and should be read carefully before investing. For
further information regarding the Offer, or to obtain a copy of the
prospectus supplement and accompanying prospectus, when available,
please contact the Fund’s information agent:
AST Fund Solutions, LLC 55 Challenger
Road, Suite 201 Ridgefield Park, NJ 07660 (866)
387-9392
Contact the Fund at (855) 330-3927 or visit
the Fund’s website at https://www.kkrfunds.com/kio for additional
information.
The Fund invests in loans and other types of fixed‐income
instruments and securities. Such investments may be secured,
partially secured or unsecured and may be unrated, and whether or
not rated, may have speculative characteristics. The market price
of the Fund’s investments will change in response to changes in
interest rates and other factors. Generally, when interest rates
rise, the values of fixed‐income instruments fall, and vice
versa.
Use of leverage creates an opportunity for increased income
and return for Common Shareholders but, at the same time, creates
risks, including the likelihood of greater volatility in the NAV
and market price of, and distributions on, the Common Shares. In
particular, leverage may magnify interest rate risk, which is the
risk that the prices of portfolio securities will fall (or rise) if
market interest rates for those types of securities rise (or fall).
As a result, leverage may cause greater changes in the Fund’s NAV,
which will be borne entirely by the Fund’s Common
Shareholders.
Derivative investments have risks, including the imperfect
correlation between the value of such instruments and the
underlying assets of the Fund. The risk of loss from a short sale
is unlimited because the Fund must purchase the shorted security at
a higher price to complete the transaction and there is no upper
limit for the security price. The use of options, swaps, and
derivatives by the Fund has the potential to significantly increase
the Fund’s volatility. In addition to the normal risks associated
with investing, international investments may involve risk of
capital loss from unfavorable fluctuation in currency values, from
differences in generally accepted accounting principles or from
social, economic or political instability in other nations. The
Fund’s investments in securities or other instruments of non‐U.S.
issuers or borrowers may be traded in undeveloped, inefficient and
less liquid markets and may experience greater price volatility and
changes in value.
NOT FDIC INSURED NO BANK GUARANTEE
MAY LOSE VALUE
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version on businesswire.com: https://www.businesswire.com/news/home/20230112005869/en/
KKR Julia Kosygina, 212-750-8300 media@kkr.com
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