00:00I look at these stories and I'm like, haven't all these funds learned from what happened with BREIT, for example,
00:05when they got this like huge cash infusion from the University of California?
00:09Are some of these BDCs looking for those lifelines?
00:12Are they going to do what KKR is doing and just turn internally to look for cash infusions to their
00:17struggling funds?
00:19Yeah, well, it's interesting. I mean, this is kind of coming on the same day as we've seen another story
00:22about Apollo actually looking to sell out of its BDC.
00:28So the KKR example, they're trying to buy their way out of trouble by this capital injection, 150 of preferred
00:34equity, 150 million share tender.
00:39And as you say, also waiving their management fee, which suggests kind of how keen they are to stabilize this
00:45fund,
00:45which really has seen a big jump in defaults, a big jump in the number of non-accruals or non
00:51-performing loans.
00:52But this is, yeah, this is one strategy. Apollo, on the other hand, is taking a more defensive strategy by
01:00trying to buy essentially,
01:02according to reports at least, looking for a buyer, possibly another BDC of its underperforming BDC.
01:10I'm just, Bruce, trying to work through the details of how this is actually going to work.
01:15So KKR injects money by buying a different share class and also converts.
01:23But is the fund also doing a $300 million buyback on top of that?
01:29Yeah, so there's $150 million of preferred equity, there's $150 million tender offer, and there's a $300 million share buyback.
01:37And what they're trying to do with the share buyback is put a floor under the stock price.
01:41I think they've said it around $11.
01:44It's currently trading just under that.
01:47Whereas, you know, that's actually at a kind of significant discount to what KKR itself kind of valued the shares
01:55at.
01:56So it is a kind of significant markdown, but it is an attempt, as I say, to put a floor
02:00under the price and stop some of the bleeding.
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