FS KKR Capital Corp. II (FSKR)Tender Offer $1.50 Per share

Bad News for FS KKR Capital Corp. II (FSKR) Shareholders

FS KKR Announces Listing on NYSE 

Have you suffered losses investing in an FS Investment Corporation offering? 

FS KKR Capital Corp. II is a business development company (BDC) reportedly “designed to provide a high level of current income.” The fund was launched at the end of 2019 as the product of a merger of four non-traded BDCs –FS Investment Corporation II (FSIC II), FS Investment Corporation III (FSIC III), FS Investment Corporation IV (FSIC IV) and Corporate Capital Trust II (CCT II).

According to its prospectus, the fund primarily invests in floating rate, senior secured loans of private U.S. middle market companies and involves a high degree of risk and may be considered speculative.

The company has reportedly listed its shares of common stock on the New York Stock Exchange under the ticker symbol “FSKR.” According to the company,  FS KKR Capital Corp. II, together with its affiliate, FS KKR Capital Corp. (NYSE: FSK), represents the second largest publicly traded BDC platform in the market.

Shares of FSKR closed at $13.14 yesterday.

4-to-1 Stock Split

According to a press announcement, the company has finalized its preparation for listing on the New York Stock Exchange under the ticker symbol “FSKR” beginning approximately June 17, 2020.

The company noted that it has changed the record and payment dates of its $0.15 per share quarterly distribution, which will now be paid on June 8, 2020 to stockholders of record as of June 8, 2020. The distribution payment was previously expected on July 2, 2020.

The company plans to enact a 4-to-1 reverse stock split following the payment of the distribution, where every four shares of common stock issued and outstanding will be automatically combined into one share.

This will reportedly reduce the number of outstanding shares from approximately 684.8 million to approximately 171.2 million, and the net asset value per share as of March 31, 2020 would have been $24.68, instead of $6.17 per share.

Tender Offer Price Suggests Losses for FS KKR Capital Corp. II Shareholders

On March 16, 2020, Mackenzie Capital Partners LP  launched an unsolicited tender offer to purchase shares of FS KKR Capital Corp. II for $4.10 per share. The letter to shareholders stated that since FSK II intends to list its shares on the New York Stock Exchange in 2020, this would be a good time to cash out on the investment since there could be no guarantee that the listing would occur. The original offering price for the BDC was $10.00 per share.

Two days later, on March 18, Mackenzie reportedly amended the offer and lowered the price to $1.50 per share “in light of the global health and financial crisis stemming from the Coronavirus.”  The company said the reason for the amendment was because FSKR  made a statement claiming that numerous factors could have “material adverse effects” on the company’s financial condition including the possible significant decline of its Net Asset Value for the period.

The company reportedly suspended its Share Redemption Program (SRP) last May in connection with its merger.

Similar to non-traded REITs, Business Development Companies (BDCs) are high risk, illiquid investments. Investors looking to sell BDCs, such as FS KKR Capital Corp. II, often have difficulty finding a buyer, and can suffer significant losses on the sale.

NYSE Listing FSKR Ticker

According to a press announcement, the company has finalized its preparation for listing on the New York Stock Exchange under the ticker symbol “FSKR” beginning approximately June 17, 2020.

The company noted that it has changed the record and payment dates of its $0.15 per share quarterly distribution, which will now be paid on June 8, 2020 to stockholders of record as of June 8, 2020. The distribution payment was previously expected on July 2, 2020.

The company plans to enact a 4-to-1 reverse stock split following the payment of the distribution, where every four shares of common stock issued and outstanding will be automatically combined into one share.

This will reportedly reduce the number of outstanding shares from approximately 684.8 million to approximately 171.2 million, and the net asset value per share as of March 31, 2020 would have been $24.68, instead of $6.17 per share.

Free Consultation with a Securities Attorney

The White Law Group is currently investigating potential claims against brokerage firms who may have unsuitably recommended BDCs such as  FS KKR Capital Corp. II to investors.

These claims result when broker-dealers fail to perform adequate due diligence on the investments before offering them for sale to their clients. Additionally the brokerage firms often fail to determine whether the investments were appropriate in light of their clients’ age, investment, experience, net worth, and tolerance for risk.

If you are concerned about your investment losses in FS KKR Capital Corp. II, please call the securities attorneys of The White Law Group at (888) 637-5510 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington.

For more information on The White Law Group, visit https://whitesecuritieslaw.com.