KKR Financial Holdings LLC

FAQs

KKR Financial Holdings LLC (NYSE: KFN) is a publicly traded specialty finance company with expertise in a range of asset classes. KFN's core business strategy is to leverage the proprietary resources of its manager, KKR Financial Advisors LLC, a wholly-owned subsidiary of KKR Asset Management LLC, with the objective of generating both current income and capital appreciation. KFN executes its core business strategy through its majority-owned subsidiaries.

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As a holding company, our income is generated primarily from our majority-owned subsidiaries. Income earned by our subsidiaries includes (i) net interest income and dividend income, (ii) revenue earned from our working and royalty interests in oil and natural gas properties, (iii) realized gains and losses from the sales of investments, and (iv) fee income.

Our majority-owned subsidiaries hold financial assets primarily consisting of corporate loans and securities, including senior secured and unsecured loans, mezzanine loans, high yield corporate bonds, distressed and stressed debt securities, marketable and non-marketable equity securities, and credit default swaps. In addition, our subsidiaries hold working and royalty interests in oil and natural gas properties.

We are not an investment company and therefore we do not calculate net asset value. However, we do disclose book value per share in our quarterly earnings release.

KFN's common shares are listed and traded on the NYSE under ticker symbol KFN. KFN's cusip number is 48248A 30 6

We are a Delaware limited liability company and were organized on January 17, 2007. We are the successor to KKR Financial Corp. (the "REIT Subsidiary"), a Maryland corporation. The REIT Subsidiary was originally incorporated in the State of Maryland on July 7, 2004 and elected to be treated as a real estate investment trust ("REIT") for U.S. federal income tax purposes.

The REIT Subsidiary completed its initial private placement of shares of its common stock in August 2004, and completed its initial public offering of shares of its common stock in June 2005. On June 23, 2005, we effected a reverse stock split of our common stock at a ratio of one share of common stock for every two shares of common stock then outstanding. On May 4, 2007, we completed a restructuring transaction (the "Restructuring Transaction"), pursuant to which the REIT Subsidiary became our subsidiary and each outstanding share of the REIT Subsidiary's common stock was converted into one of our common shares, which are publicly traded on the New York Stock Exchange ("NYSE") under the symbol "KFN". Although we have not elected to be treated as a REIT for U.S. federal income tax purposes, we intend to continue to operate so as to qualify as a partnership, and not as an association or publicly traded partnership taxable as a corporation, for U.S. federal income tax purposes. For more, see history.

On May 4, 2007, we completed a restructuring transaction pursuant to which we created a REIT Subsidiary and each outstanding share of the REIT Subsidiary's common stock was converted into one of our common shares, which are publicly traded on the New York Stock Exchange ("NYSE") under the symbol "KFN".

KFN is managed by KKR Asset Management, a wholly-owned subsidiary of KKR. Certain individuals associated with KKR serve on our board of directors and our Manager's investment committee. KFN, through its manager and subject to applicable restrictions, has exclusive access to the insight and relationships of KKR and co-invests in private equity investments with KKR from time to time.

Yes, regardless of how long the holding period, an investor will receive a K-1 reflecting his/her share of income.

The amount and timing of distributions to our common shareholders, including quarterly distributions or any special distributions, is determined by our board of directors and is based upon a review of various factors including current market conditions, existing restrictions under borrowing agreements, the amount of ordinary taxable income or loss earned by us, gains or losses recognized by us on the disposition of assets and our liquidity needs. For this purpose, we will generally determine gains or losses based upon the price we paid for those assets. We note, however, because of the tax rules applicable to partnerships, the gains or losses recognized by a shareholder on the sale of assets held by us may be higher or lower depending upon the purchase price the shareholder paid for our shares.

A schedule of the distributions paid to shareholders is available for viewing on the Distribution History page of this website.

We expect to make quarterly distributions to our shareholders, however, the actual amount and timing of distributions is at the discretion of our board of directors and may not be in even amounts throughout our fiscal year. A schedule of the distributions paid to shareholders is available for viewing on the Distribution History page of this website.

Distributions are not taxable to shareholders; cash payments made by KFN to its shareholders are considered partnership distributions under the tax laws of most jurisdictions.

KFN is structured as publicly traded LLC. When an investor purchases KFN shares, the investor becomes a shareholder (or member) of the partnership. From a federal tax reporting perspective, LLC's (whether publicly traded or not) are generally taxed as flow thru entities whereby the LLC will often not pay entity level tax but rather the LLC's income will flow thru to shareholders and be taxed at the shareholder level. A shareholder of an LLC will generally receive the same federal tax form (Schedule K-1) as a partner of a limited partnership (LP) or a limited liability partnership (LLP). The Schedule K-1 will show each shareholder's allocable share of income & deductions related to the LLC. It is important to note that the income reported on the Schedule K-1 is not the same as cash distributions received from the partnership during the year.

KKR Financial Holdings LLC does not provide legal, accounting or tax advice. Investors are encouraged to discuss the tax treatment of holding our shares with a professional advisor.

We do not have a dividend re-investment program or a direct stock purchase plan. You may purchase stock directly through your broker.

The transfer agent for KKR Financial Holdings LLC is American Stock Transfer & Trust Company.

Documents filed with the Securities and Exchange Commission are available on the SEC Filings page of this website. Printed materials may be requested by contacting Investor Relations

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