FS KKR Private Credit Fund Shares Decline on Dividend Reduction and Portfolio Impairments

FS KKR Capital Corp. Plunges 18% on Deeper Dividend Cut

FS KKR Capital Corp., a business development company jointly managed by Future Standard and KKR & Co., experienced a significant decline in its stock price of up to 18% on Thursday, the largest intraday drop since 2020. The company's decision to slash its quarterly dividend to 48 cents per share from 70 cents, a cut more substantial than the previously signaled reduction of 55 cents, contributed to the decline.

The FS KKR Capital Corp. portfolio faced challenges, with 3.4% of its assets, or approximately $440 million, on non-accrual status at year-end, up from 2.9% three months earlier. The company attributed the decline in earnings to lower interest rates and losses from troubled investments. Michael Forman, Chief Executive Officer, stated that "specific challenges associated with a few investments" weighed on results.

During the fourth quarter, loans to Dental Care Alliance, Gracent, and Lionbridge Technologies were placed on non-accrual status, as well as investments in AmeriVet Partners and Alacrity Solutions. FS KKR marked down its loan to software company Medallia to about 79 cents on the dollar from 91 cents in the prior quarter.

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