KKR Financial Looks to Raise $500M in Share Sale

| About: KKR (KKR)

KKR Financial, an affiliate of private equity giant Kohlberg Kravis Roberts & Co., announced Monday it was seeking to raise $500 million through share sales to institutional and private investors. The firm plans to raise $230 million by selling stock to seven institutional KFN 20 08 2007 Chartinvestors, including Morgan Stanley and Oak Hill Advisors, and offering the other $270 million to current shareholders. The share price for both transactions will be $14.40. Existing shareholders will be able to buy one share per five that they own. If the offering is not fully subscribed, Kohlberg Kravis Roberts will buy up to $100 million of the shares themselves. Last Wednesday, KKR Financial shares plunged 31% after the company announced it could lose nearly $200 million because of highly leveraged investments in mortgage-backed securities. The company has already lost $40 million as a result of unwinding its $5.1 billion worth of mortgage loans (see full summary). Shares are up 4.9% to $15.10 in pre-market trading.

Sources: Press release, MarketWatch, TheStreet.com,
Commentary: KKR Financial Plunges on Mortgage LossesRecent Monthly Adjustable Mortgage Reset Values and a Look Ahead
Stocks/ETFs to watch: KFN, MS. Competitors: AHR, DFR, LUM. ETFs: PSP

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