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FS KKR Capital Corp. Announces First Quarter 2026 Performance

On May 11, 2026, FS KKR Capital Corp. (NYSE: FSK) unveiled its financial results for the quarter that concluded on March 31, 2026. The company reported a net investment income of $0.42 per share, a reduction from $0.48 in the previous quarter. Adjusted net investment income also fell to $0.41 per share from $0.52. Moreover, the net asset value plunged to $18.83 per share compared to $20.89 at the end of 2025. These results prompted a strategic shift by FS KKR, highlighted by its commitment to enhancing shareholder value through various initiatives.

Financial Metrics at a Glance

The financial highlights for the quarter include:

• - Total realized and unrealized loss per share: $2.00, significantly higher than $0.89 from the prior quarter.
• - Investment sales totaled: $710 million against $499 million in purchases.
• - Net debt to equity ratio: 131%, increasing from 122% at the end of December 2025.

Despite the drop in values, FS KKR has declared a distribution of $0.42 per share for the second quarter of 2026, reinforcing its consistent return of capital to investors. This payment is set to occur on or about July 2, 2026, for shareholders recorded as of June 17, 2026.

Strategic Value Enhancement Actions

The company is taking bold steps to bolster its financial standing:
1. Cumulative Convertible Perpetual Preferred Stock: A $150 million investment from KKR's subsidiary, poised to close upon regulatory approval. This venture offers a 5% annual cash dividend or a 7% PIK dividend option and ranks junior to existing debts.
2. Tender Offer: FS KKR will initiate a tender offer amounting to $150 million for its common stock at a price of $11.00 per share. The tender process is projected to commence around May 12, 2026, and run for 20 business days.
3. Share Repurchase Initiative: A board-approved stock repurchase program worth $300 million will start after the tender offer concludes, focusing on enhancing shareholder value through share purchases in the open market.
4. Subordinated Income Incentive Fee Waiver: A temporary waiver of 50% on subordinated income incentive fees for four quarters has been agreed upon to support the level of net investment income and maintain distribution levels.

Executive Insights

Michael C. Forman, CEO and Chairman, along with Daniel R. Pietrzak, President and Chief Investment Officer, expressed their concerns regarding the recent decline in asset value. They attributed this downturn to previous investment impacts and market conditions affecting certain segments of their portfolio. However, they emphasized their strategic actions as steps to improve FSK's financial position and enhance shareholder confidence.

Recent Amendments and Developments

Additionally, on May 8, 2026, FS KKR amended its Senior Secured Revolving Credit Agreement, reducing total commitments and adjusting margins for lenders. This reflects a significant shift in managing its debt commitments and aligning with its overall financial strategy.

Conclusion

FS KKR Capital Corp. is actively navigating challenges while implementing strategic enhancements to its operational framework. The company's determined approach in both addressing immediate obstacles and planning for long-term growth underscores its commitment to delivering value to its shareholders amidst a fluctuating financial landscape. Investors will be keen to monitor the outcomes of these initiatives as FS KKR aims to stabilize and grow its portfolio in the future.