NEW YORK (AP) – KKR Financial Holdings LLC said Monday it is selling up to $500.4 million in stock to investment funds and its own shareholders to try and shore up cash as its industry struggles.
The San Francisco-based investment trust said it reached a deal to sell 16 million shares at $14.40 per share to Morgan Stanley, Farallon Capital Management LLC, Fir Tree Partners, JGE Capital Management, Marisco Capital Management, Oak Hill Advisors and Sageview Capital L.P.
KKR Financial Holdings, which is an affiliate of private equity firm Kohlberg Kravis Roberts & Co., expects proceeds of $230.4 million from that sale.
The fund is also offering its own shareholders 18.8 million shares for $270 million. Existing shareholders will be entitled to buy the equivalent of about a fifth of their stock in KKR at $14.40 per share.
KKR's stock closed Friday at $14.40 per share, down 46.2 percent for the year.
Kohlberg Kravis Roberts agreed to buy up to $100 million of stock if shareholders do not exercise their rights.
KKR manages a $17.1 billion fund that invests in corporate loans, home loans and bonds backed by mortgage debt. It has become very difficult to sell some of these investments at fair prices because buyers have been scared away by decaying credit quality.
The fund last week said it sold $5.1 billion of its mortgage debt and other investments at a $40 million loss.