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4 BDCs advised by FS/KKR complete merger

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4 BDCs advised by FS/KKR complete merger

FS/KKR Advisor LLC announced the closing of the mergers of four nontraded business development companies under its advisement.

Based on the merger exchange ratios, FS Investment Corp. III, FS Investment Corp. IV and Corporate Capital Trust II shareholders will receive 0.9804, 1.3634 and 1.1319 shares of FS Investment Corp. II, respectively, for each share of FS Investment Corp. III, FS Investment Corp. IV and Corporate Capital Trust II held. FS Investment Corp. II will be renamed FS KKR Capital Corp. II, which is the combined entity.

The exchange ratios were based on the closing net asset value per share of $7.36, $7.22, $10.03 and $8.33 for FS Investment Corp. II, FS Investment Corp. III, FS Investment Corp. IV and Corporate Capital Trust II, respectively, as of Dec. 16.

The ratios also ensure that the NAV of shares investors will own in FS KKR Capital Corp. II will be equal to the NAV of the shares they held in each fund.

FS KKR Capital Corp. II becomes the second-largest BDC with over $9.5 billion in assets and, as of the end of September, 210 portfolio companies across 21 industries, according to a news release.

The company plans to list its common stock on the NYSE in 2020, subject to market conditions and board approval.

Before listing, FS KKR Capital Corp. II plans to issue 5.50% perpetual preferred shares equivalent to about 20% of its NAV, pro rata to all holders of its common stock.

FS/KKR Advisor is a partnership between FS Investments and KKR Credit Advisors (US) LLC. It advises BDCs with roughly $17 billion in AUM as of Sept. 30.