KKR Financial's 7.5% convertibles are not convertible after Feb. 15

By Marisa Wong

Madison, Wis., Jan. 18 - KKR Financial Holdings LLC issued a conversion rights termination notice to holders of its 7.5% convertible senior notes due 2017, according to a company press release.

Under the indenture for the notes, the company may terminate beginning Jan. 15 the right to convert the notes into shares of its common stock if the closing share price has exceeded 150% of the conversion price for at least 20 trading days in a 30-day trading period.

KKR has chosen Feb. 17 as the date on which the notes will no longer be convertible.

Holders may exercise their conversion rights at any time on or before Feb. 15, and they will receive cash, shares or a combination of both, at the company's option, in an amount equal to the conversion rate plus a make-whole premium.

The company said in the release that it expects to settle the principal amount of any converted notes in cash and the remainder of the amount due in shares.

The conversion rate is 141.8256 shares for each $1,000 principal amount of notes, plus an additional 9.2324 shares per $1,000 principal amount to account for the make-whole premium.

As of Jan. 18, $172.5 million principal amount of the notes was outstanding.

KKR is a specialty finance company based in San Francisco.

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