KKR Upsizes and Prices Offering of Mandatory Convertible Preferred Stock

KKR & Co. Inc. (“KKR”) (NYSE:KKR) today announced that it has priced an offering of $1.0 billion (20,000,000 shares) of its 6.00% Series C Mandatory Convertible Preferred Stock (the “mandatory convertible preferred stock”) at a price to the public and liquidation preference of $50.00 per share. The offering was upsized from the previously announced size of $750.0 million (15,000,000 shares). The underwriters have a 30-day option to purchase up to an additional $150.0 million (3,000,000 shares) of mandatory convertible preferred stock, solely to cover over-allotments. The offering is expected to close on August 14, 2020, subject to customary closing conditions.

The net proceeds from the mandatory convertible preferred stock offering will be approximately $972.5 million (or approximately $1,118.4 million if the underwriters exercise their option to purchase additional shares in full), after deducting underwriting discounts. KKR intends to use the net proceeds from the offering, together with a combination of cash on hand, proceeds from potential minority co-investors and the net proceeds, if any, from other financing transactions, to fund KKR’s previously announced acquisition (the “acquisition”) of Global Atlantic Financial Group Limited and pay related costs and expenses, and the remainder, if any, for general corporate purposes. Pending application of the net proceeds, they may be invested temporarily in investment-grade securities or similar instruments.

The offering is not conditioned upon the consummation of the acquisition, although under certain circumstances the mandatory convertible preferred stock is subject to redemption at KKR’s option, in whole but not in part, if the acquisition is not consummated. If for any reason the acquisition is not consummated and KKR does not exercise its redemption right, KKR intends to use the net proceeds from the offering for general corporate purposes.

Unless earlier converted at the option of the holders or redeemed by KKR, each share of mandatory convertible preferred stock will automatically convert on September 15, 2023 (subject to postponement for certain market disruption events) into between 1.1662 and 1.4285 shares of KKR's common stock, subject to certain customary anti-dilution adjustments. The number of shares of common stock issuable upon conversion will be determined based on the average volume-weighted average price (VWAP) per share of common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately preceding September 15, 2023.

Dividends on the mandatory convertible preferred stock will be payable on a cumulative basis when, as and if declared by KKR's board of directors, at an annual rate of 6.00% on the liquidation preference of $50.00 per share. If declared, these dividends will be paid in cash, in shares of common stock or in a combination of cash and shares of common stock, at KKR's election, subject to certain limitations, on March 15, June 15, September 15 and December 15 of each year, commencing on December 15, 2020 and continuing to, and including, September 15, 2023.

Goldman Sachs & Co. LLC, KKR Capital Markets LLC and Morgan Stanley & Co. LLC are acting as joint book-running managers for the offering.

The offering is being made pursuant to an effective shelf registration statement on file with the U.S. Securities and Exchange Commission (the “SEC”). The offering is being made by means of a prospectus and related preliminary prospectus supplement only. An electronic copy of the preliminary prospectus supplement, together with the accompanying prospectus, is available on the SEC’s website at www.sec.gov. Alternatively, copies of the preliminary prospectus supplement and accompanying prospectus may be obtained by contacting the joint book-running managers: Goldman Sachs & Co. LLC, Attention: Prospectus Department, 200 West Street, New York, New York 10282, telephone: 1-212-902-1171, facsimile: 212-902-9316 or by emailing prospectus-ny@ny.email.gs.com; KKR Capital Markets LLC, 9 West 57th Street, New York, New York 10019, telephone at 1-212-750-8300; or Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, NY 10014.

This press release shall not constitute an offer to sell or a solicitation of an offer to purchase the mandatory convertible preferred stock or any other securities, and shall not constitute an offer, solicitation or sale of the mandatory convertible preferred stock in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Forward-looking statements may be identified by use of words such as “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “estimates” or other words of similar meaning, and relate to expectations, estimates, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements are based on KKR’s beliefs, assumptions and expectations, taking into account all information currently available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to KKR or are within its control. If a change occurs, KKR’s business, financial condition, liquidity and results of operations, including but not limited to dividends, tax assets, tax liabilities, assets under management, fee paying assets under management, after-tax distributable earnings, capital invested, syndicated capital, uncalled commitments, cash and short-term investments, fee related earnings, adjusted EBITDA, core interest expense and book value, debt levels, outstanding shares of common stock and capital structure may vary materially from those expressed in the forward-looking statements. The following factors, among others, could cause actual results to vary from the forward-looking statements: failure to realize the anticipated benefits within the expected timeframes from the planned acquisition of Global Atlantic; unforeseen liabilities or integration and other costs of the Global Atlantic acquisition and timing related thereto; availability and cost of financing to fund the acquisition; ability to syndicate to potential co-investors; changes in Global Atlantic’s business; any delays or difficulties in receiving regulatory approvals; failure to complete the Global Atlantic transaction; distraction of management or other diversion of resources within each company caused by the Global Atlantic transaction; retention of key Global Atlantic employees; Global Atlantic’s ability to maintain business relationships during the pendency of and following the acquisition; the severity and duration of the COVID-19 pandemic; the pandemic’s impact on the U.S. and global economies; federal, state and local governmental responses to the pandemic; whether KKR realizes all or any of the anticipated benefits from converting to a corporation (the “Conversion”) and the timing of realizing such benefits; whether there are increased or unforeseen costs associated with the Conversion, including any adverse change in tax law; the volatility of the capital markets; failure to realize the benefits of or changes in KKR’s or Global Atlantic’s business strategies including the ability to realize the anticipated synergies from acquisitions, strategic partnerships or other transactions; availability, terms and deployment of capital; availability of qualified personnel and expense of recruiting and retaining such personnel; changes in the asset management or insurance industry, interest rates, credit spreads, currency exchange rates or the general economy; underperformance of KKR’s or Global Atlantic’s investments and decreased ability to raise funds; changes in Global Atlantic policyholders’ behavior; any disruption in servicing Global Atlantic’s insurance policies; the use of estimates and risk management in Global Atlantic’s business; outcome of Global Atlantic’s litigation and regulatory matters; and the degree and nature of KKR’s and Global Atlantic’s competition. All forward-looking statements speak only as of the date hereof. KKR does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made except as required by law. In addition, KKR’s business strategy is focused on the long term and financial results are subject to significant volatility. Additional information about factors affecting KKR is available in KKR & Co. Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 18, 2020, quarterly reports on Form 10-Q for subsequent quarters and other filings with the SEC, which are available at www.sec.gov.

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