KCAP Financial, Inc. Announces Formation of Investment Joint Venture with Freedom 3 and Redemption of Approximately $148 Mill...
July 20 2017 - 8:00AM
KCAP Financial, Inc. (Nasdaq:KCAP) (the “Company”) today announced
that it has implemented steps to facilitate future growth.
The Company has formed a joint venture with Freedom 3
Opportunities LLC, an affiliate of Freedom 3 Capital LLC, to create
KCAP Freedom 3 LLC (the “KCAP-F3 Joint Venture”). The Company and
Freedom 3 Opportunities LLC contributed approximately $35 million
and $25 million, respectively, in assets to the KCAP-F3 Joint
Venture, which in turn used the assets to capitalize a new fund
(the “Fund”) managed by one of the Company’s wholly-owned
investment advisers. In addition, the Fund used cash on hand and
borrowings under a credit facility to purchase approximately $183
million of loans from the Company and the Company used the cash
from such sale to redeem approximately $148 million in debt.
The KCAP-F3 Joint Venture may originate loans from time to time and
sell them to the Fund. The joint venture agreement will allow
the Company to invest in senior middle-market loans as well as
provide additional sources of investments through its Joint Venture
partner.
Dayl Pearson, President and Chief Executive Officer of the
Company, noted, “We are pleased to enter into this joint venture
transaction which is similar to those entered into by other
business development companies and will allow us to continue
investing in senior middle-market loans and provide significant
liquidity for balance sheet growth. Following the completion of the
debt redemption, KCAP Financial will have the financial flexibility
to pursue attractive investment opportunities that generate strong
free cash flow and drive value for our shareholders.”
Jason Block, Partner at Freedom 3 Capital LLC, commented, “We
are excited to partner with the KCAP team. We have known many
of them for over 20 years and their strong credit culture allowed
us to buy into a great portfolio at the outset. We look
forward to working with their team’s continued expertise in growing
the venture.”
About KCAP Financial, Inc.
KCAP Financial, Inc. is a publicly traded, internally managed
business development company. The Company’s middle market
investment business originates, structures, finances and manages a
portfolio of term loans, mezzanine investments and selected equity
securities in middle market companies. The Company’s wholly owned
portfolio companies, Trimaran Advisors, L.L.C. and Katonah Debt
Advisors, L.L.C. and related entities, manage collateralized debt
obligation funds that invest in broadly syndicated corporate term
loans, high-yield bonds and other credit instruments.
KCAP Financial, Inc.'s filings with the Securities and Exchange
Commission, earnings releases, press releases and other financial,
operational and governance information are available on its website
at www.kcapfinancial.com.
About Freedom 3 Capital LLC
Freedom 3 Opportunities LLC is a special purpose finance company
sponsored by Freedom 3 Capital LLC, a New York based private credit
firm, which is registered with the Securities and Exchange
Commission as an investment adviser and manages approximately $250
million of assets.
Forward Looking StatementsThis press release
contains forward-looking statements. The matters discussed in this
press release that are forward-looking statements are based on
current management expectations that involve substantial risks and
uncertainties which could cause actual results to differ materially
from the results expressed in, or implied by, these forward-looking
statements. Forward-looking statements relate to future events or
our future financial performance. We generally identify
forward-looking statements by terminology such as "may," "will,"
"should," "expects," "plans," "anticipates," "could," "intends,"
"target," "projects," "contemplates," "believes," "estimates,"
"predicts," "potential" or "continue" or the negative of these
terms or other similar words. Further information about factors
that could affect our financial and other results is included in
our filings with the Securities and Exchange Commission. We do
not undertake to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required to be reported under the rules and
regulations of the Securities and Exchange Commission.
KCAP-G
Contact:
Ted Gilpin
gilpin@kcapinc.com
(212) 455-8300
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