KKR greenshoe exercised, lifts 7.5% convertibles to $172.5 million

By Devika Patel

Knoxville, Tenn., Jan. 15 - Underwriters for KKR Financial Holdings LLC's offering of 7.5% seven-year convertible senior notes exercised their over-allotment option in full for $22.5 million more of the convertibles, increasing the size of the issue to $172.5 million, the company said in an 8-K filed Friday with the Securities and Exchange Commission.

As previously reported, the company sold the convertibles at par on Jan. 12 in a registered offering via joint bookrunners Citigroup Global Markets Inc., Bank of America Merrill Lynch and J.P. Morgan Securities Inc. KKR Capital Markets LLC was the co-manager.

The convertibles have an initial conversion premium of 22.5% and a conversion price of $8.18, which equals a conversion ratio of 122.2046.

After year three, KKR can terminate investors' conversion rights if KKR's share price exceeds 150% of the conversion price for 20 out the 30 trading days. Investors may convert at a preferred conversion rate, or make whole, during the notice period for this feature.

There are no puts.

KKR Financial intends to use substantially all of the proceeds to repay a portion of its existing senior debt, with the remaining proceeds to be used for general corporate purposes.

San Francisco-based KKR Financial is a real estate investment trust and specialty finance company.

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