FS KKR Capital Corp. and FS KKR Capital Corp. II Provide Fourth Quarter 2020 Estimates
The White Law Group continues to investigate potential securities claims involving broker dealers who may have improperly recommended FS Investments (fka Franklin Square) business development companies to its clients.
FS KKR Capital Corp. II (FSKR) was launched at the end of 2019 as the product of a merger of four non-traded BDCs –FS Investment Corporation II (FSIC II), FS Investment Corporation III (FSIC III), FS Investment Corporation IV (FSIC IV) and Corporate Capital Trust II (CCT II). The new entity began trading on the New York Stock Exchange in June 2020, after a 2019 merger between four FS Investments entities. The company said it was looking to take advantage of dislocations in the market caused by the coronavirus global pandemic.
Unfortunately for investors, due to a 4 to 1 reverse stock split, each of the four common shares issued and outstanding were combined into one share, reducing the number of shares outstanding from approximately 691.2 million to approximately 172.9 million. FSKR’s net asset value per share as of March 31, 2020 was $24.68, instead of $6.17 per share.
FSKR and FSK Plan to Merge
According to a press release on Feb. 1, 2021, FS KKR Capital Corp. (NYSE: FSK) and FS KKR Capital Corp. II (NYSE: FSKR), announced preliminary estimates of financial results for the fourth quarter ended December 31, 2020. The Companies also are reportedly providing preliminary estimates of results after a proposed merger of FSK and FSKR, was announced on November 24, 2020.
FSKR estimated its net asset value per share is estimated to be between $25.00 and $25.10 as of December 31, 2020, compared to $24.66 as of September 30, 2020. FSKR closed yesterday at $17.27.
FSK estimated its net asset value per share to be between $24.95 and $25.05 as of December 31, 2020, compared to $24.46 as of September 30, 2020. FSK closed yesterday at $17.64.
Both BDCs plan to release their fourth quarter and full year 2020 results after the close of trading on the New York Stock Exchange on Monday, March 1, 2021.
How Does a Merger Affect Shareholders?
Companies often merge as part of a strategic effort to boost shareholder value, often by creating new business lines and/or gaining greater market share. However, the economic environment at the time of the merger, size of the companies and management of the merger process all play a part in future returns for shareholders.
Shareholders may experience a significant loss of voting power, and while the spike in trading volume tends to inflate share prices, if economic conditions are not favorable at the time of the merger, shareholders may see significant losses.
Filing a Complaint against your Brokerage Firm
The White Law Group is currently representing many BDC investors in claims against the brokerage firms that recommended Franklin Square’s FSKR offerings to investors.
These claims result when broker-dealers fail to perform adequate due diligence on the investments before offering them for sale to their clients. Additionally the brokerage firms often fail to determine whether the investments were appropriate in light of their clients’ age, investment, experience, net worth, and tolerance for risk.
If you are concerned about your investments in FS Investments (Franklin Square) offerings, please call the securities attorneys of The White Law Group at (888) 637-5510 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on The White Law Group, visit https://www.whitesecuritieslaw.com.