Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 31, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'KKR Financial Holdings LLC | ' |
Entity Central Index Key | '0001386926 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 100 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Sep. 30, 2014 | Apr. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company |
Collaterized loan obligation secured notes | |||||||
Assets | ' | ' | ' | ' | ' | ' | ' |
Cash and cash equivalents | $391,551 | ' | $210,413 | $157,167 | $221,986 | ' | $237,606 |
Restricted cash and cash equivalents | 668,274 | ' | ' | 350,385 | ' | ' | ' |
Securities, at estimated fair value | 589,160 | ' | ' | 573,312 | ' | ' | ' |
Corporate loans, net (includes $6,354,143 measured at estimated fair value as of September 30, 2014 and $237,480 measured at estimated fair value and $279,748 loans held for sale as of December 31, 2013) | 6,354,143 | ' | ' | 237,480 | ' | ' | ' |
Corporate loans, net (includes $6,354,143 measured at estimated fair value as of September 30, 2014 and $237,480 measured at estimated fair value and $279,748 loans held for sale as of December 31, 2013) | ' | ' | ' | 6,466,720 | ' | ' | ' |
Equity investments, at estimated fair value ($79,286 and zero pledged as collateral as of September 30, 2014 and December 31, 2013, respectively) | 162,759 | ' | ' | 181,212 | ' | ' | ' |
Oil and gas properties, net | 122,630 | ' | ' | 400,369 | ' | ' | ' |
Interests in joint ventures and partnerships, at estimated fair value | 745,005 | ' | ' | 436,241 | ' | ' | ' |
Derivative assets | 25,777 | ' | ' | 30,224 | ' | ' | ' |
Interest and principal receivable | 39,566 | ' | ' | 33,570 | ' | ' | ' |
Other assets | 110,835 | ' | ' | 87,998 | ' | ' | ' |
Total assets | 9,209,700 | ' | ' | 8,717,198 | ' | ' | ' |
Liabilities | ' | ' | ' | ' | ' | ' | ' |
Collateralized loan obligation secured notes (includes $5,443,586 and zero measured at estimated fair value as of September 30, 2014 and December 31, 2013, respectively) | ' | 5,443,586 | ' | ' | ' | ' | ' |
Collateralized loan obligation secured notes (includes $5,443,586 and zero measured at estimated fair value as of September 30, 2014 and December 31, 2013, respectively) | ' | ' | ' | 5,249,383 | ' | ' | ' |
Credit facilities | 0 | ' | ' | 125,289 | ' | ' | ' |
Senior notes | 414,905 | ' | ' | 362,276 | ' | ' | ' |
Junior subordinated notes | 246,484 | ' | ' | 283,517 | ' | ' | ' |
Accounts payable, accrued expenses and other liabilities | 350,368 | ' | ' | 58,215 | ' | ' | ' |
Accrued interest payable | 17,763 | ' | ' | 23,575 | ' | ' | ' |
Related party payable | 7,328 | ' | ' | 5,574 | ' | ' | ' |
Derivative liabilities | 47,788 | ' | ' | 81,635 | ' | ' | ' |
Total liabilities | 6,528,222 | ' | ' | 6,189,464 | ' | ' | ' |
Equity | ' | ' | ' | ' | ' | ' | ' |
Preferred shares, no par value, 50,000,000 shares authorized and 14,950,000 issued and outstanding as of both September 30, 2014 and December 31, 2013 | 0 | ' | ' | 0 | ' | ' | ' |
Common shares, no par value, 500,000,000 shares authorized, and 100 shares and 204,824,159 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively | 0 | ' | ' | 0 | ' | ' | ' |
Paid-in-capital | 2,763,648 | ' | ' | 3,315,117 | ' | ' | ' |
Accumulated other comprehensive loss | 0 | ' | -26,347 | -15,652 | -29,693 | -39,643 | -70,226 |
Accumulated deficit | -148,049 | ' | ' | -771,731 | ' | ' | ' |
Total KKR Financial Holdings LLC and Subsidiaries shareholders' equity | 2,615,599 | ' | ' | 2,527,734 | ' | ' | ' |
Noncontrolling interests | 65,879 | ' | ' | ' | ' | ' | ' |
Total Equity | 2,681,478 | ' | 2,572,085 | 2,527,734 | ' | ' | ' |
Total liabilities and equity | $9,209,700 | ' | ' | $8,717,198 | ' | ' | ' |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | Successor Company | Predecessor Company |
Corporate loans, estimated fair value (in dollars) | $6,354,143 | $237,480 |
Corporate loans, held for sale (in dollars) | ' | 279,748 |
Equity investments, at estimated fair value, pledged as collateral (in dollars) | 79,286 | 0 |
Collateralized loan obligation secured notes, estimated fair value (in dollars) | $5,443,586 | $0 |
Preferred shares, no par value (in dollars per share) | ' | ' |
Preferred shares, shares authorized | 50,000,000 | 50,000,000 |
Preferred shares, shares issued | 14,950,000 | 14,950,000 |
Preferred shares, shares outstanding | 14,950,000 | 14,950,000 |
Common shares, no par value (in dollars per share) | ' | ' |
Common shares, shares authorized | 500,000,000 | 500,000,000 |
Common shares, shares issued | 100 | 204,824,159 |
Common shares, shares outstanding | 100 | 204,824,159 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (USD $) | 3 Months Ended | 5 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Affiliates | Affiliates | ||||||
Revenues | ' | ' | ' | ' | ' | ' | ' |
Loan interest income | $81,944 | $135,627 | $82,541 | $114,096 | $272,919 | ' | ' |
Securities interest income | 14,323 | 19,410 | 10,933 | 13,081 | 39,326 | ' | ' |
Oil and gas revenue | 17,929 | 49,859 | 32,446 | 61,782 | 84,118 | ' | ' |
Other | 10,560 | 14,173 | 2,782 | 28,283 | 10,033 | ' | ' |
Total revenues | 124,756 | 219,069 | 128,702 | 217,242 | 406,396 | ' | ' |
Investment costs and expenses | ' | ' | ' | ' | ' | ' | ' |
Interest expense | 47,682 | 83,578 | 39,767 | 64,362 | 118,366 | 6,839 | 26,485 |
Provision for loan losses | ' | ' | 9,339 | ' | 20,407 | ' | ' |
Oil and gas production costs | 6,701 | 14,561 | 9,163 | 14,772 | 26,420 | ' | ' |
Oil and gas depreciation, depletion and amortization | 5,968 | 17,102 | 11,806 | 22,471 | 29,910 | ' | ' |
Other | 989 | 1,763 | 963 | 220 | 2,531 | ' | ' |
Total investment costs and expenses | 61,340 | 117,004 | 77,877 | 101,825 | 224,119 | ' | ' |
Other (loss) income | ' | ' | ' | ' | ' | ' | ' |
Net realized and unrealized (loss) gain on investments | -127,418 | -73,318 | 5,673 | 61,553 | 125,397 | ' | ' |
Net realized and unrealized gain (loss) on derivatives and foreign exchange | 152 | -9,012 | -3,062 | -9,783 | -5,012 | ' | ' |
Net realized and unrealized loss on debt | -1,453 | -26,849 | ' | ' | ' | ' | ' |
Net loss on restructuring and extinguishment of debt | ' | ' | ' | ' | -20,269 | ' | ' |
Other income | 3,034 | 4,381 | 3,615 | 4,564 | 17,565 | ' | ' |
Total other (loss) income | -125,685 | -104,798 | 6,226 | 56,334 | 117,681 | ' | ' |
Other expenses | ' | ' | ' | ' | ' | ' | ' |
Total related party management compensation | 12,544 | 22,950 | 10,920 | 29,841 | 56,744 | ' | ' |
General, administrative and directors expenses | 2,041 | 4,454 | 4,654 | 8,891 | 13,138 | ' | ' |
Professional services | 313 | 1,858 | 1,573 | 26,877 | 5,288 | ' | ' |
Total other expenses | 14,898 | 29,262 | 17,147 | 65,609 | 75,170 | ' | ' |
(Loss) income before income taxes | -77,167 | -31,995 | 39,904 | 106,142 | 224,788 | ' | ' |
Income tax expense | 34 | 62 | 18 | 162 | 434 | ' | ' |
Net (loss) income | -77,201 | -32,057 | 39,886 | 105,980 | 224,354 | ' | ' |
Net income attributable to noncontrolling interests | 816 | 816 | ' | ' | ' | ' | ' |
Net (loss) income attributable to KKR Financial Holdings LLC and Subsidiaries | -78,017 | -32,873 | 39,886 | 105,980 | 224,354 | ' | ' |
Preferred share distributions | 6,891 | 13,782 | 6,891 | 6,891 | 20,520 | ' | ' |
Net (loss) income available to common shares | ($84,908) | ($46,655) | $32,995 | $99,089 | $203,834 | ' | ' |
Net (loss) income per common share: | ' | ' | ' | ' | ' | ' | ' |
Basic (in dollars per share) | ' | ' | $0.16 | $0.48 | $1.01 | ' | ' |
Diluted (in dollars per share) | ' | ' | $0.16 | $0.48 | $1.01 | ' | ' |
Weighted-average number of common shares outstanding: | ' | ' | ' | ' | ' | ' | ' |
Basic (in shares) | ' | ' | 204,134 | 204,276 | 201,824 | ' | ' |
Diluted (in shares) | ' | ' | 204,134 | 204,276 | 201,824 | ' | ' |
Distributions declared per common share (in dollars per share) | ' | ' | $0.21 | $0.22 | $0.68 | ' | ' |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Income (USD $) | 3 Months Ended | 5 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 |
Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Net (loss) income | ($77,201) | ($32,057) | $39,886 | $105,980 | $224,354 |
Other comprehensive (loss) income: | ' | ' | ' | ' | ' |
Unrealized losses on securities available-for-sale | ' | ' | 3,137 | -5,253 | 2,322 |
Unrealized (losses) gains on cash flow hedges | ' | ' | 6,813 | -5,442 | 38,211 |
Total other comprehensive (loss) income | ' | ' | 9,950 | -10,695 | 40,533 |
Comprehensive (loss) income | -77,201 | -32,057 | 49,836 | 95,285 | 264,887 |
Comprehensive (loss) income attributable to KKR Financial Holdings LLC and Subsidiaries | ($77,201) | ($32,057) | $49,836 | $95,285 | $264,887 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Changes in Shareholders' Equity (USD $) | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company |
In Thousands, except Share data, unless otherwise specified | Preferred Shares | Preferred Shares Paid-In Capital | Common Shares | Common Shares Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Noncontrolling interests | USD ($) | Preferred Shares | Preferred Shares Paid-In Capital | Common Shares | Common Shares Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | USD ($) |
USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | |||||||
Balance at Dec. 31, 2013 | ' | ' | ' | ' | ' | ' | ' | ' | ' | $361,622 | ' | $2,953,495 | ($15,652) | ($771,731) | $2,527,734 |
Balance (in shares) at Dec. 31, 2013 | ' | ' | ' | ' | ' | ' | ' | ' | 14,950,000 | ' | 204,824,159 | ' | ' | ' | ' |
Increase (Decrease) in Shareholders' Equity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 105,980 | 105,980 |
Other comprehensive loss | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -10,695 | ' | -10,695 |
Distributions declared on preferred shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -6,891 | -6,891 |
Distributions declared on common shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -45,061 | -45,061 |
Share-based compensation expense related to restricted common shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,018 | ' | ' | 1,018 |
Balance at Apr. 30, 2014 | ' | 361,622 | ' | 2,954,513 | -26,347 | -717,703 | ' | 2,572,085 | ' | 361,622 | ' | 2,954,513 | -26,347 | -717,703 | 2,572,085 |
Balance (in shares) at Apr. 30, 2014 | 14,950,000 | ' | 204,824,159 | ' | ' | ' | ' | ' | 14,950,000 | ' | 204,824,159 | ' | ' | ' | ' |
Increase (Decrease) in Shareholders' Equity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase accounting adjustments | ' | 17,361 | ' | -570,040 | 26,347 | 717,703 | ' | 191,371 | ' | ' | ' | ' | ' | ' | ' |
Balance (in shares) at May. 01, 2014 | 14,950,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at Apr. 30, 2014 | ' | ' | ' | ' | ' | ' | ' | 2,572,085 | ' | 361,622 | ' | ' | ' | ' | ' |
Balance (in shares) at Apr. 30, 2014 | 14,950,000 | ' | 204,824,159 | ' | ' | ' | ' | ' | 14,950,000 | ' | 204,824,159 | ' | ' | ' | ' |
Increase (Decrease) in Shareholders' Equity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | ' | ' | ' | ' | ' | ' | ' | -32,057 | ' | ' | ' | ' | ' | ' | ' |
Balance at Sep. 30, 2014 | ' | 378,983 | ' | ' | ' | ' | ' | 2,681,478 | ' | ' | ' | ' | ' | ' | ' |
Balance (in shares) at Sep. 30, 2014 | 14,950,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at May. 01, 2014 | ' | ' | ' | 2,384,473 | ' | ' | ' | 2,763,456 | ' | ' | ' | ' | ' | ' | ' |
Balance (in shares) at May. 01, 2014 | 14,950,000 | ' | 204,824,159 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Increase (Decrease) in Shareholders' Equity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reverse stock split (in shares) | ' | ' | -204,824,059 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Contribution of assets of previously unconsolidated entities | ' | ' | ' | ' | ' | ' | 65,063 | 65,063 | ' | ' | ' | ' | ' | ' | ' |
Net income | ' | ' | ' | ' | ' | -32,873 | 816 | -32,057 | ' | ' | ' | ' | ' | ' | ' |
Distributions declared on preferred shares | ' | ' | ' | ' | ' | -13,782 | ' | -13,782 | ' | ' | ' | ' | ' | ' | ' |
Distributions to Parent | ' | ' | ' | ' | ' | -392,923 | ' | -392,923 | ' | ' | ' | ' | ' | ' | ' |
Contributions from Parent | ' | ' | ' | ' | ' | 291,529 | ' | 291,529 | ' | ' | ' | ' | ' | ' | ' |
Capital contributions from Parent | ' | ' | ' | 192 | ' | ' | ' | 192 | ' | ' | ' | ' | ' | ' | ' |
Balance at Sep. 30, 2014 | ' | 378,983 | ' | 2,384,665 | ' | -148,049 | 65,879 | 2,681,478 | ' | ' | ' | ' | ' | ' | ' |
Balance (in shares) at Sep. 30, 2014 | 14,950,000 | ' | 100 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at Jun. 30, 2014 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Increase (Decrease) in Shareholders' Equity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | ' | ' | ' | ' | ' | ' | ' | -77,201 | ' | ' | ' | ' | ' | ' | ' |
Balance at Sep. 30, 2014 | ' | $378,983 | ' | ' | ' | ' | ' | $2,681,478 | ' | ' | ' | ' | ' | ' | ' |
Balance (in shares) at Sep. 30, 2014 | 14,950,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements of Cash Flows (USD $) | 5 Months Ended | 4 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 |
Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Affiliates | Nonaffiliates | ||||
Cash flows from operating activities | ' | ' | ' | ' | ' |
Net (loss) income | ($32,873) | $105,980 | $224,354 | ' | ' |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' | ' | ' | ' |
Net realized and unrealized loss on derivatives and foreign exchange | 9,012 | 9,783 | 5,012 | ' | ' |
Net loss on restructuring and extinguishment of debt | ' | ' | 20,269 | ' | ' |
Write-off of debt issuance costs | ' | 1,472 | 6,014 | ' | ' |
Lower of cost or estimated fair value adjustment on corporate loans held for sale | ' | -5,038 | 11,442 | ' | ' |
Provision for loan losses | ' | ' | 20,407 | ' | ' |
Impairment charges | ' | 4,391 | 17,496 | ' | ' |
Share-based compensation | ' | 1,018 | 2,842 | ' | ' |
Net realized and unrealized loss (gain) on investments | 73,318 | -60,906 | -154,335 | ' | ' |
Depreciation and net amortization | 16,817 | 15,832 | -2,771 | ' | ' |
Net realized and unrealized loss on debt | 26,849 | ' | ' | ' | ' |
Changes in assets and liabilities: | ' | ' | ' | ' | ' |
Interest receivable | 1,124 | -6,753 | 4,960 | ' | ' |
Other assets | -13,639 | -19,668 | -33,574 | ' | ' |
Related party payable | 7,648 | -1,815 | -7,151 | ' | ' |
Accounts payable, accrued expenses and other liabilities | -20,894 | 27,211 | -5,113 | ' | ' |
Accrued interest payable | 131 | ' | ' | -2,498 | -4,022 |
Net cash provided by operating activities | 67,493 | 70,037 | 103,332 | ' | ' |
Cash flows from investing activities | ' | ' | ' | ' | ' |
Principal payments from corporate loans | 479,322 | 906,166 | 1,243,853 | ' | ' |
Principal payments from securities | 20,174 | 21,223 | 113,544 | ' | ' |
Proceeds from sales of corporate loans | 533,310 | 36,595 | 210,280 | ' | ' |
Proceeds from sales of securities | 16,085 | 44,373 | 30,584 | ' | ' |
Proceeds from equity and other investments | 65,996 | 48,911 | 98,621 | ' | ' |
Proceeds from securities sold, not yet purchased | ' | ' | 4,218 | ' | ' |
Purchases of corporate loans | -686,994 | -886,230 | -1,555,087 | ' | ' |
Purchases of securities | -62,258 | -78,106 | -115,959 | ' | ' |
Purchases of equity and other investments | -110,742 | -104,301 | -344,018 | ' | ' |
Cover securities sold, not yet purchased | ' | ' | -2,928 | ' | ' |
Net change in proceeds, purchases, and settlements of derivatives | -12,116 | -7,265 | -7,856 | ' | ' |
Net change in restricted cash and cash equivalents | -18,411 | -299,579 | 386,708 | ' | ' |
Net cash provided by (used in) investing activities | 224,366 | -318,213 | 61,960 | ' | ' |
Cash flows from financing activities | ' | ' | ' | ' | ' |
Issuance of collateralized loan obligation secured notes | 524,035 | 648,197 | 449,002 | ' | ' |
Retirement of collateralized loan obligation secured notes | -778,866 | -221,914 | -774,302 | ' | ' |
Proceeds from credit facilities | 60,100 | 13,300 | 2,400 | ' | ' |
Repayment of credit facilities | -40,000 | -75,400 | -61,700 | ' | ' |
Net proceeds from issuance of preferred shares | ' | ' | 361,622 | ' | ' |
Distributions on common shares | -74,598 | -45,061 | -139,253 | ' | ' |
Distributions on preferred shares | -6,891 | -13,782 | -13,629 | ' | ' |
Distributions to Parent | -25,900 | ' | ' | ' | ' |
Contributions from Parent | 235,759 | ' | ' | ' | ' |
Capital contributions from Parent | 192 | ' | ' | ' | ' |
Other capitalized costs | -4,552 | -3,918 | -5,052 | ' | ' |
Net cash (used in) provided by financing activities | -110,721 | 301,422 | -180,912 | ' | ' |
Net increase (decrease) in cash and cash equivalents | 181,138 | 53,246 | -15,620 | ' | ' |
Cash and cash equivalents at beginning of period | 210,413 | 157,167 | 237,606 | ' | ' |
Cash and cash equivalents at end of period | 391,551 | 210,413 | 221,986 | ' | ' |
Supplemental cash flow information | ' | ' | ' | ' | ' |
Cash paid for interest | 65,835 | 53,576 | 121,170 | ' | ' |
Net cash paid for income taxes | 93 | 157 | 7,618 | ' | ' |
Non-cash investing and financing activities | ' | ' | ' | ' | ' |
Assets distributed To Parent | -292,425 | ' | ' | ' | ' |
Assets contributed from Parent | 55,770 | ' | ' | ' | ' |
Natural resources assets transferred out | -114,546 | ' | ' | ' | ' |
Interest in Trinity transferred in | 114,546 | ' | ' | ' | ' |
Preferred share distributions declared, not yet paid | 6,891 | ' | 6,891 | ' | ' |
Loans transferred from held for investment to held for sale | ' | 348,808 | 316,003 | ' | ' |
Conversion of convertible senior notes to common shares | ' | ' | 186,254 | ' | ' |
Issuance of restricted common shares | ' | ' | $3,282 | ' | ' |
Condensed_Consolidated_Stateme4
Condensed Consolidated Statements of Cash Flows (Parenthetical) (Predecessor Company, Distributions on preferred shares incorrectly presented as preferred share distribution payable, USD $) | 4 Months Ended |
In Millions, unless otherwise specified | Apr. 30, 2014 |
Predecessor Company | Distributions on preferred shares incorrectly presented as preferred share distribution payable | ' |
Supplemental cash flow information | ' |
Preferred share distribution payable | $6.90 |
ORGANIZATION
ORGANIZATION | 9 Months Ended |
Sep. 30, 2014 | |
ORGANIZATION | ' |
ORGANIZATION | ' |
NOTE 1. ORGANIZATION | |
KKR Financial Holdings LLC together with its subsidiaries (the “Company” or “KFN”) is a specialty finance company with expertise in a range of asset classes. The Company’s core business strategy is to leverage the proprietary resources of KKR Financial Advisors LLC (the “Manager”) with the objective of generating current income. The Company’s holdings primarily consist of below investment grade syndicated corporate loans, also known as leveraged loans, high yield debt securities, interests in joint ventures and partnerships, and royalty interests in oil and gas properties. The corporate loans that the Company holds are typically purchased via assignment or participation in the primary or secondary market. | |
The majority of the Company’s holdings consist of corporate loans and high yield debt securities held in collateralized loan obligation (“CLO”) transactions that are structured as on-balance sheet securitizations and are used as long term financing for the Company’s investments in corporate debt. The senior secured debt issued by the CLO transactions is generally owned by unaffiliated third party investors and the Company owns the majority of the subordinated notes in the CLO transactions. The Company executes its core business strategy through its majority-owned subsidiaries, including CLOs. | |
The Manager, a wholly-owned subsidiary of KKR Asset Management LLC, manages the Company pursuant to a management agreement (the “Management Agreement”). Effective as of September 30, 2014, KKR Asset Management LLC changed its name to KKR Credit Advisors (US) LLC. KKR Credit Advisors (US) LLC is a wholly-owned subsidiary of Kohlberg Kravis Roberts & Co. L.P. (“KKR”), which is a subsidiary of KKR & Co. L.P. (“KKR & Co.”). | |
On April 30, 2014, the Company became a subsidiary of KKR & Co., whereby KKR & Co. acquired all of the Company’s outstanding common shares through an exchange of equity through which the Company’s shareholders received 0.51 common units representing the limited partnership interests of KKR & Co. for each common share of KFN (the “Merger Transaction”). Following the Merger Transaction, KKR Fund Holdings L.P. (“KKR Fund Holdings”), a subsidiary of KKR & Co., became the sole holder of all of the outstanding common shares of the Company and is the parent of the Company (the “Parent”). | |
As of the close of trading on April 30, 2014, the Company’s common shares were delisted on the New York Stock Exchange (“NYSE”). The Company’s 7.375% Series A LLC Preferred Shares (“Series A LLC Preferred Shares”), senior notes and junior subordinated notes remain outstanding and the Company continues to file periodic reports under the Securities Exchange Act of 1934, as amended. Refer to Note 3 to these condensed consolidated financial statements for further details around the Merger Transaction. | |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2014 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | |
The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated financial statements include the accounts of the Company and entities established to complete secured financing transactions that are considered to be variable interest entities (“VIEs”) and for which the Company is the primary beneficiary. Also included in the condensed consolidated financial statements are the financial results of a certain entity, which is not considered a VIE, but in which the Company is presumed to have control. The ownership interests held by third parties are reflected as noncontrolling interests in the accompanying financial statements. | |
As further described in Note 3 to these condensed consolidated financial statements, the Merger Transaction was accounted for using the acquisition method of accounting, which required that the assets purchased and the liabilities assumed all be reported in the acquirer’s financial statements at their fair value, with any excess of net assets over the purchase price being reported as a bargain purchase gain. The application of the acquisition method of accounting represented a push down of accounting basis to the Company, whereby it was also required to record the assets and liabilities at fair value as of the date of the Merger Transaction. This change in accounting basis resulted in the termination of the prior reporting entity and a corresponding creation of a new reporting entity. | |
Accordingly, the Company’s condensed consolidated financial statements and transactional records prior to the effective date, or May 1, 2014 (the “Effective Date”), reflect the historical accounting basis of assets and liabilities and are labeled “Predecessor Company,” while such records subsequent to the Effective Date are labeled “Successor Company” and reflect the push down basis of accounting for the new estimated fair values in the Company’s condensed consolidated financial statements. This change in accounting basis is represented in the condensed consolidated financial statements by a vertical black line which appears between the columns entitled “Predecessor Company” and “Successor Company” on the statements and in the relevant notes. The black line signifies that the amounts shown for the periods prior to and subsequent to the Merger Transaction are not comparable. | |
In addition to the new accounting basis established for assets and liabilities, purchase accounting also required the reclassification of any retained earnings or accumulated deficit from periods prior to the acquisition and the elimination of any accumulated other comprehensive income or loss to be recognized within the Company’s shareholders’ equity section of the Company’s condensed consolidated financial statements. Accordingly, the Company’s accumulated deficit at September 30, 2014 represents only the results of operations subsequent to April 30, 2014, the date of the Merger Transaction. | |
For the following assets not carried at fair value, as presented under the Predecessor Company, the Company adopted the fair value option of accounting as of the Effective Date: (i) corporate loans held for investment at amortized cost, net of an allowance for loan losses, (ii) corporate loans held for sale at lower of cost or estimated fair value and (iii) certain other investments at cost. In addition, the Company elected the fair value option of accounting for its collateralized loan obligation secured notes. As such, the accounting policies followed by the Company in the preparation of its condensed consolidated financial statements for the Successor period present all financial assets and CLO secured notes at estimated fair value. The Company’s adoption of fair value accounting was for the primary purpose of reporting values that more closely aligned with KKR & Co.’s method of accounting. | |
Unrealized gains and losses for the financial assets and liabilities carried at estimated fair value are reported in net realized and unrealized (loss) gain on investments and net realized and unrealized loss on debt, respectively, in the condensed consolidated statements of operations. Unrealized gains or losses primarily reflect the change in instrument values, including the reversal of previously recorded unrealized gains or losses when gains or losses are realized. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the asset without regard to unrealized gains or losses previously recognized. For the Successor period, upon the sale of a corporate loan or debt security, the net realized gain or loss is computed using the specific identification method. Comparatively, for the Predecessor period, the realized net gain or loss was computed on a weighted average cost basis. | |
In addition, for the Successor period, all purchases and sales of assets are recorded on the trade date. Comparatively, for the Predecessor periods, corporate loans were recorded on the settlement date. | |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company uses historical experience and various other assumptions and information that are believed to be reasonable under the circumstances in developing its estimates and judgments. Estimates and assumptions about future events and their effects cannot be predicted with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. While the Company believes that the estimates and assumptions used in the preparation of the condensed consolidated financial statements are appropriate, actual results could differ from those estimates. | |
Estimates of oil, natural gas and natural gas liquid (“NGL”) reserves and their values, future production rates and future costs and expenses are inherently uncertain, including many factors beyond the Company’s control. Reservoir engineering is a subjective process of estimating underground accumulations of oil, natural gas and NGL that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of many factors including the following: the quality and quantity of available data, the interpretation of that data, the accuracy of various mandated economic assumptions and the judgments of the individuals preparing the estimates. In addition, reserve estimates are a function of many assumptions, all of which could deviate significantly from actual results. As such, reserve estimates may materially vary from the ultimate quantities of oil, natural gas and NGL eventually recovered, and could materially affect the Company’s future depreciation, depletion and amortization expense (“DD&A”), its asset retirement obligations or impairment considerations. | |
Consolidation | |
KKR Financial CLO 2005-1, Ltd. (“CLO 2005-1”), KKR Financial CLO 2005-2, Ltd. (“CLO 2005-2”), KKR Financial CLO 2006-1, Ltd. (“CLO 2006-1”), KKR Financial CLO 2007-1, Ltd. (“CLO 2007-1”), KKR Financial CLO 2007-A, Ltd. (“CLO 2007-A”), KKR Financial CLO 2011-1, Ltd. (“CLO 2011-1”), KKR Financial CLO 2012-1, Ltd. (“CLO 2012-1”), KKR Financial CLO 2013-1, Ltd. (“CLO 2013-1”), KKR Financial CLO 2013-2, Ltd. (“CLO 2013-2”) and KKR CLO 9, Ltd. (“CLO 9”) (collectively the “Cash Flow CLOs”) are entities established to complete secured financing transactions. These entities are VIEs which the Company consolidates as the Company has determined it has the power to direct the activities that most significantly impact these entities’ economic performance and the Company has both the obligation to absorb losses of these entities and the right to receive benefits from these entities that could potentially be significant to these entities. In CLO transactions, subordinated notes have the first risk of loss and conversely, the residual value upside of the transactions. | |
The Company finances the majority of its corporate debt investments through its CLOs. As of September 30, 2014, the Company’s CLOs held $6.6 billion par amount, or $6.4 billion estimated fair value, of corporate debt investments. As of December 31, 2013, the Company had eight CLOs that held $6.7 billion par amount, or $6.4 billion estimated fair value, of corporate debt investments. The assets in each CLO can be used only to settle the debt of the related CLO. As of September 30, 2014 and December 31, 2013, the aggregate par amount of CLO debt totaled $5.5 billion and $5.3 billion, respectively, held by unaffiliated third parties. | |
The Company consolidates all non-VIEs in which it holds a greater than 50 percent voting interest. Specifically, the Company consolidates KKR Nautilus Aggregator Limited (“Nautilus Aggregator”), a majority owned entity, which it is presumed to have control and for which the ownership interests held by third parties are reflected as noncontrolling interests in the accompanying financial statements. Nautilus Aggregator holds the Company’s investment focused on maritime lending. | |
In addition, the Company has noncontrolling interests in joint ventures and partnerships that do not qualify as VIEs and do not meet the control requirements for consolidation as defined by GAAP. | |
All inter-company balances and transactions have been eliminated in consolidation. | |
Fair Value Option | |
In connection with the application of acquisition accounting related to the Merger Transaction, the Successor Company elected the fair value option of accounting for its financial assets and CLO secured notes for the primary purpose of reporting values that more closely aligned with KKR & Co.’s method of accounting. Related unrealized gains and losses are reported in net realized and unrealized (loss) gain on investments in the condensed consolidated statements of operations. | |
Fair Value of Financial Instruments | |
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation techniques are applied. These valuation techniques involve varying levels of management estimation and judgment, the degree of which is dependent on a variety of factors including the price transparency for the instruments or market and the instruments’ complexity for disclosure purposes. Assets and liabilities in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined under GAAP, are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets and liabilities, and are as follows: | |
Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. | |
Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability. | |
Level 3: Inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. | |
A significant decrease in the volume and level of activity for the asset or liability is an indication that transactions or quoted prices may not be representative of fair value because in such market conditions there may be increased instances of transactions that are not orderly. In those circumstances, further analysis of transactions or quoted prices is needed, and a significant adjustment to the transactions or quoted prices may be necessary to estimate fair value. | |
The availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors, including, for example, the type of instrument, whether the instrument is new, whether the instrument is traded on an active exchange or in the secondary market, and the current market condition. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the asset. The variability and availability of the observable inputs affected by the factors described above may cause transfers between Levels 1, 2, and/or 3, which the Company recognizes at the end of the reporting period. | |
Many financial assets and liabilities have bid and ask prices that can be observed in the marketplace. Bid prices reflect the highest price that the Company and others are willing to pay for an asset. Ask prices represent the lowest price that the Company and others are willing to accept for an asset. For financial assets and liabilities whose inputs are based on bid-ask prices, the Company does not require that fair value always be a predetermined point in the bid-ask range. The Company’s policy is to allow for mid-market pricing and adjusting to the point within the bid-ask range that meets the Company’s best estimate of fair value. | |
Depending on the relative liquidity in the markets for certain assets, the Company may transfer assets to Level 3 if it determines that observable quoted prices, obtained directly or indirectly, are not available. The valuation techniques used for the assets and liabilities that are valued using Level 3 of the fair value hierarchy are described below. | |
Securities and Corporate Loans, at Estimated Fair Value: Securities and corporate loans, at estimated fair value are initially valued at transaction price and are subsequently valued using market data for similar instruments (e.g., recent transactions or broker quotes), comparisons to benchmark derivative indices or valuation models. Valuation models are based on yield analysis techniques, where the key inputs are based on relative value analyses, which incorporate similar instruments from similar issuers. In addition, an illiquidity discount is applied where appropriate. | |
Equity Investments, at Estimated Fair Value: Equity investments, at estimated fair value, are initially valued at transaction price and are subsequently valued using observable market prices, if available, or internally developed models in the absence of readily observable market prices. Valuation models are generally based on market and income (discounted cash flow) approaches, in which various internal and external factors are considered. Factors include key financial inputs and recent public and private transactions for comparable investments. Key inputs used for the discounted cash flow approach, which incorporates significant assumptions and judgment, include the weighted average cost of capital and assumed inputs used to calculate terminal values, such as earnings before interest, taxes, depreciation and amortization (“EBITDA”) exit multiples. Upon completion of the valuations conducted using these approaches, a weighting is ascribed to each approach and an illiquidity discount is applied where appropriate. The ultimate fair value recorded for a particular investment will generally be within the range suggested by the two approaches. | |
Interests in Joint Ventures and Partnerships: Interests in joint ventures and partnerships include certain equity investments related to the oil and gas, commercial real estate and specialty lending sectors. Interests in joint ventures and partnerships are initially valued at transaction price and are subsequently valued using observable market prices, if available, or internally developed models in the absence of readily observable market prices. Valuation models are generally based on market and income (discounted cash flow) approaches, in which various internal and external factors are considered. Key inputs include the weighted average cost of capital and EBITDA multiples. In addition, an illiquidity discount is applied where appropriate. | |
Over-the-counter (“OTC”) Derivative Contracts: OTC derivative contracts include forward, swap and option contracts related to interest rates, foreign currencies, credit standing of reference entities and equity prices. OTC derivatives are initially valued using quoted market prices, if available, or models using a series of techniques, including closed-form analytic formulae, such as the Black-Scholes option-pricing model, and/or simulation models in the absence of quoted market prices. Many pricing models employ methodologies that have pricing inputs observed from actively quoted markets, as is the case for generic interest rate swap and option contracts. | |
Residential Mortgage-Backed Securities, at Estimated Fair Value: RMBS are initially valued at transaction price and are subsequently valued using a third party valuation servicer. The most significant inputs to the valuation of these instruments are default and loss expectations and constant prepayment rates. | |
Collateralized Loan Obligation Secured Notes: Collateralized loan obligation secured notes are initially valued at transaction price and are subsequently valued using a third party valuation servicer. The most significant inputs to the valuation of these instruments are default and loss expectations and discount margins. | |
Key unobservable inputs that have a significant impact on the Company’s Level 3 valuations as described above are included in Note 9 to these condensed consolidated financial statements. The Company utilizes several unobservable pricing inputs and assumptions in determining the fair value of its Level 3 investments. These unobservable pricing inputs and assumptions may differ by asset and in the application of the Company’s valuation methodologies. The reported fair value estimates could vary materially if the Company had chosen to incorporate different unobservable pricing inputs and other assumptions or, for applicable investments, if the Company only used either the discounted cash flow methodology or the market comparables methodology instead of assigning a weighting to both methodologies. | |
Valuation Process | |
The valuation process involved in Level 3 measurements for assets and liabilities is completed on a quarterly basis and is designed to subject the valuation of Level 3 investments to an appropriate level of consistency, oversight and review. The Company utilizes a valuation committee, whose members consist of the Company’s Chief Financial Officer, General Counsel and certain other employees of the Manager. The valuation committee is responsible for coordinating and implementing the Company’s quarterly valuation process. | |
Investments are generally valued based on quotations from third party pricing services, unless such a quotation is unavailable or is determined to be unreliable or inadequately representing the fair value of the particular assets. In that case, valuations are based on either valuation data obtained from one or more other third party pricing sources, including broker dealers, or will reflect the valuation committee’s good faith determination of estimated fair value based on other factors considered relevant. For assets classified as Level 3, the investment professionals are responsible for documenting preliminary valuations based on various factors including their evaluation of financial and operating data, company specific developments, market valuations of comparable companies and model projections discussed above. All valuations are approved by the valuation committee. | |
Cash and Cash Equivalents | |
Cash and cash equivalents include cash on hand, cash held in banks and highly liquid investments with original maturities of three months or less. Interest income earned on cash and cash equivalents is recorded in other within total revenues on the condensed consolidated statements of operations. | |
Restricted Cash and Cash Equivalents | |
Restricted cash and cash equivalents represent amounts that are held by third parties under certain of the Company’s financing and derivative transactions. Interest income earned on restricted cash and cash equivalents is recorded in other within total revenues on the condensed consolidated statements of operations. | |
On the condensed consolidated statements of cash flows, net additions or reductions to restricted cash and cash equivalents are classified as an investing activity as restricted cash and cash equivalents reflect the receipts from collections or sales of investments, as well as payments made to acquire investments held by third parties. | |
Securities | |
Securities Available-for-Sale | |
The Predecessor and Successor Company both classify certain of their investments in securities as available-for-sale as the Companies may sell them prior to maturity and do not hold them principally for the purpose of selling them in the near term. These investments are carried at estimated fair value. The Successor Company elected the fair value option of accounting for its securities, with changes in estimated fair value reported in net realized and unrealized (loss) gain on investments in the condensed consolidated statements of operations. Comparatively, the Predecessor Company reported all unrealized gains and losses in accumulated other comprehensive loss on the condensed consolidated balance sheets. | |
The Predecessor Company monitored its available-for-sale securities portfolio for impairments. A loss was recognized when it was determined that a decline in the estimated fair value of a security below its amortized cost was other-than-temporary. The Company considered many factors in determining whether the impairment of a security was deemed to be other-than-temporary, including, but not limited to, the length of time the security had a decline in estimated fair value below its amortized cost and the severity of the decline, the amount of the unrealized loss, recent events specific to the issuer or industry, external credit ratings and recent changes in such ratings. In addition, for debt securities, the Company considered its intent to sell the debt security, the Company’s estimation of whether or not it expected to recover the debt security’s entire amortized cost if it intended to hold the debt security, and whether it was more likely than not that the Company was required to sell the debt security before its anticipated recovery. For equity securities, the Company also considered its intent and ability to hold the equity security for a period of time sufficient for a recovery in value. | |
The amount of the loss that was recognized when it was determined that a decline in the estimated fair value of a security below its amortized cost was other-than-temporary was dependent on certain factors. If the security was an equity security or if the security was a debt security that the Company intended to sell or estimated that it was more likely than not that the Company would be required to sell before recovery of its amortized cost, then the impairment amount recognized in earnings was the entire difference between the estimated fair value of the security and its amortized cost. For debt securities that the Company did not intend to sell or estimated that it was not more likely than not to be required to sell before recovery, the impairment was separated into the estimated amount relating to credit loss and the estimated amount relating to all other factors. Only the estimated credit loss amount was recognized in earnings, with the remainder of the loss amount recognized in accumulated other comprehensive loss. | |
Unamortized premiums and unaccreted discounts on securities available-for-sale were recognized in interest income over the contractual life, adjusted for actual prepayments, of the securities using the effective interest method. | |
Other Securities, at Estimated Fair Value | |
The Predecessor and Successor Company both elected the fair value option of accounting for certain of their securities for the purpose of enhancing the transparency of their financial condition as fair value is consistent with how the Companies manage the risks of these securities. All securities, at estimated fair value are included within securities on the condensed consolidated balance sheets. | |
Estimated fair values are based on quoted market prices, when available, on estimates provided by independent pricing sources or dealers who make markets in such securities, or internal valuation models when external sources of fair value are not available. In accounting for the Merger Transaction, the difference between the estimated fair value, as of the Effective Date, and the par amount became the new premium or discount to be amortized or accreted over the remaining terms, adjusted for actual prepayments, of the securities using the effective interest method. | |
Residential Mortgage-Backed Securities, at Estimated Fair Value | |
The Predecessor and Successor Company both elected the fair value option of accounting for their residential mortgage investments for the purpose of enhancing the transparency of their financial condition as fair value is consistent with how the Companies manage the risks of these investments. RMBS, at estimated fair value are included within securities on the condensed consolidated balance sheets. | |
Equity Investments, at Estimated Fair Value | |
The Predecessor and Successor Company both elected the fair value option of accounting for certain of their equity investments, at estimated fair value, including private equity investments received through restructuring debt transactions or issued by an entity in which the Company may have significant influence. The Companies elected the fair value option for certain of their equity investments for the purpose of enhancing the transparency of their financial condition as fair value is consistent with how the Companies manage the risks of these investments. Equity investments carried at estimated fair value are presented separately on the condensed consolidated balance sheets. | |
Interests in Joint Ventures and Partnerships | |
The Predecessor and Successor Company both elected the fair value option of accounting for certain of their interests in joint ventures and partnerships. The Companies elected the fair value option of accounting for certain of their noncontrolling interests in joint ventures and partnerships for the purpose of enhancing the transparency of their financial condition as fair value is consistent with how the Companies manage the risks of these interests. Interests in joint ventures and partnerships are presented separately on the condensed consolidated balance sheets. | |
Corporate Loans, Net | |
In connection with the Company’s application of acquisition accounting related to the Merger Transaction and to align more closely with KKR & Co.’s method of accounting, the Company elected to carry all of its corporate loans at estimated fair value as of the Effective Date, with changes in estimated fair value recorded in net realized and unrealized (loss) gain on investments in the condensed consolidated statements of operations. As presented under the Predecessor Company, corporate loans had previously been accounted for based on the following three categories: (i) corporate loans held for investment, which were measured based on their principal plus or minus unaccreted purchase discounts and unamortized purchase premiums, net of an allowance for loan losses; (ii) corporate loans held for sale, which were measured at lower of cost or estimated fair value; and (iii) corporate loans at estimated fair value, which were measured at fair value. As such, the disclosures related to loans held for investment and loans held for sale pertain to the Predecessor Company. | |
Corporate Loans | |
Prior to the Effective Date, corporate loans were generally held for investment and the Company initially recorded corporate loans at their purchase prices. The Company subsequently accounted for corporate loans based on their outstanding principal plus or minus unaccreted purchase discounts and unamortized purchase premiums and corporate loans that the Company transferred to held for sale were transferred at the lower of cost or estimated fair value. As of the Effective Date, the Company initially recorded corporate loans at their purchase prices and subsequently accounts for all corporate loans at estimated fair value. | |
Interest income on corporate loans includes interest at stated coupon rates adjusted for accretion of purchase discounts and the amortization of purchase premiums. Unamortized premiums and unaccreted discounts are recognized in interest income over the contractual life, adjusted for actual prepayments, of the corporate loans using the effective interest method. | |
Other than corporate loans measured at estimated fair value, corporate loans acquired with deteriorated credit quality are recorded at initial cost and interest income is recognized as the difference between the Company’s estimate of all cash flows that it will receive from the loan in excess of its initial investment on a level-yield basis over the life of the corporate loan (accretable yield) using the effective interest method. | |
A corporate loan is typically placed on non-accrual status at such time as: (i) management believes that scheduled debt service payments may not be paid when contractually due; (ii) the corporate loan becomes 90 days delinquent; (iii) management determines the borrower is incapable of, or has ceased efforts toward, curing the cause of the impairment; or (iv) the net realizable value of the collateral securing the corporate loan decreases below the Company’s carrying value of such corporate loan. As such, corporate loans placed on non-accrual status may or may not be contractually past due at the time of such determination. While on non-accrual status, previously recognized accrued interest is reversed if it is determined that such amounts are not collectible and interest income is recognized using the cost-recovery method, cash-basis method or some combination of the two methods. A corporate loan is placed back on accrual status when the ultimate collectability of the principal and interest is not in doubt. | |
Prior to the Effective Date, the Company may have modified corporate loans in transactions where the borrower was experiencing financial difficulty and a concession was granted to the borrower as part of the modification. These concessions may have included one or a combination of the following: a reduction of the stated interest rate; payment extensions; forgiveness of principal; or an exchange of assets. Such modifications typically qualified as troubled debt restructurings (“TDRs”). In order to determine whether the borrower was experiencing financial difficulty, an evaluation was performed including the following considerations: whether the borrower was or would have been in payment default on any of its debt in the foreseeable future without the modification; whether there was a potential for a bankruptcy filing; whether there was a going-concern issue; or whether the borrower was unable to secure financing elsewhere. | |
Corporate loans whose terms had been modified in a TDR were considered impaired, unless accounted for at fair value or the lower of cost or estimated fair value, and were typically placed on non-accrual status, but could have been moved to accrual status when, among other criteria, payment in full of all amounts due under the restructured terms was expected and the borrower demonstrated a sustained period of repayment performance, typically six months. | |
TDRs were separately identified for impairment disclosures and were measured at either the estimated fair value or the present value of estimated future cash flows using the respective corporate loan’s effective rate at inception. Impairments associated with TDRs were included within the allocated component of the Company’s allowance for loan losses. | |
The Company may have also identified receivables that were newly considered impaired and disclosed the total amount of receivables and the allowance for credit losses as of the end of the period of adoption related to those receivables that were newly considered impaired. | |
The corporate loans the Company invested in were generally deemed in default upon the non-payment of a single interest payment or as a result of the violation of a covenant in the respective corporate loan agreement. The Company charged-off a portion or all of its amortized cost basis in a corporate loan when it determined that it was uncollectible due to either: (i) the estimation based on a recovery value analysis of a defaulted corporate loan that less than the amortized cost amount would have been recovered through the agreed upon restructuring of the corporate loan or as a result of a bankruptcy process of the issuer of the corporate loan or (ii) the determination by the Company to transfer a corporate loan to held for sale with the corporate loan having an estimated fair value below the amortized cost basis of the corporate loan. | |
In addition to TDRs, the Company may have also modified corporate loans which usually involved changes in existing interest rates combined with changes of existing maturities to prevailing market rates/maturities for similar instruments at the time of modification. Such modifications typically did not meet the definition of a TDR since the respective borrowers were neither experiencing financial difficulty nor were seeking a concession as part of the modification. | |
Allowance for Loan Losses | |
As a result of the Merger Transaction, the acquisition method of accounting and adoption of fair value for corporate loans eliminated the need for an allowance for loan losses. The reevaluation of assets required by the acquisition method of accounting resulted in all loans being reported at their estimated fair values as of the Effective Date. The estimated fair value took into account the contractual payments on loans that were not expected to be received and consequently, no allowance for loan losses was carried over for the Successor Company. As of the Effective Date, no allowance for loan losses will be recorded as all corporate loans are carried at estimated fair value. As such, the disclosure related to the allowance for loan losses pertains to the Predecessor Company. | |
The Company’s corporate loan portfolio is comprised of a single portfolio segment which includes one class of financing receivables, that is, high yield loans that are typically purchased via assignment or participation in either the primary or secondary market. High yield loans are generally characterized as having below investment grade ratings or being unrated. | |
Prior to the Effective Date, the Company’s allowance for loan losses represented its estimate of probable credit losses inherent in its corporate loan portfolio held for investment as of the balance sheet date. Estimating the Company’s allowance for loan losses involved a high degree of management judgment and was based upon a comprehensive review of the Company’s corporate loan portfolio that was performed on a quarterly basis. The Company’s allowance for loan losses consisted of two components, an allocated component and an unallocated component. The allocated component of the allowance for loan losses pertained to specific corporate loans that the Company had determined were impaired. The Company determined a corporate loan was impaired when management estimated that it was probable that the Company would be unable to collect all amounts due according to the contractual terms of the corporate loan agreement. On a quarterly basis the Company performed a comprehensive review of its entire corporate loan portfolio and identified certain corporate loans that it had determined were impaired. Once a corporate loan was identified as being impaired, the Company placed the corporate loan on non-accrual status, unless the corporate loan was already on non-accrual status, and recorded an allowance that reflected management’s best estimate of the loss that the Company expected to recognize from the corporate loan. The expected loss was estimated as being the difference between the Company’s current cost basis of the corporate loan, including accrued interest receivable, and the present value of expected future cash flows discounted at the corporate loan’s effective interest rate, except as a practical expedient, the corporate loan’s observable estimated fair value may have been used. The Company also estimated the probable credit losses inherent in its unfunded loan commitments as of the balance sheet date. Any credit loss reserve for unfunded loan commitments was recorded in accounts payable, accrued expenses and other liabilities on the Company’s condensed consolidated balance sheets. | |
The unallocated component of the Company’s allowance for loan losses represented its estimate of probable losses inherent in the corporate loan portfolio as of the balance sheet date where the specific loan that the loan loss relates to was indeterminable. The Company estimated the unallocated component of the allowance for loan losses through a comprehensive review of its corporate loan portfolio and identified certain corporate loans that demonstrated possible indicators of impairment, including internally assigned credit quality indicators. This assessment excluded all corporate loans that were determined to be impaired and as a result, an allocated reserve had been recorded as described in the preceding paragraph. Such indicators included the current and/or forecasted financial performance, liquidity profile of the issuer, specific industry or economic conditions that may have impacted the issuer, and the observable trading price of the corporate loan if available. All corporate loans were first categorized based on their assigned risk grade and further stratified based on the seniority of the corporate loan in the issuer’s capital structure. The seniority classifications assigned to corporate loans were senior secured, second lien and subordinate. Senior secured consisted of corporate loans that were the most senior debt in an issuer’s capital structure and therefore had a lower estimated loss severity than other debt that was subordinate to the senior secured loan. Senior secured corporate loans often had a first lien on some or all of the issuer’s assets. Second lien consisted of corporate loans that were secured by a second lien interest on some or all of the issuer’s assets; however, the corporate loan was subordinate to the first lien debt in the issuer’s capital structure. Subordinate consisted of corporate loans that were generally unsecured and subordinate to other debt in the issuer’s capital structure. | |
There were three internally assigned risk grades that were applied to loans that have not been identified as being impaired: high, moderate and low. High risk meant that there was evidence of possible loss due to the current and/or forecasted financial performance, liquidity profile of the issuer, specific industry or economic conditions that may have impacted the issuer, observable trading price of the corporate loan if available, or other factors that indicated that the breach of a covenant contained in the related loan agreement was possible. Moderate risk meant that while there was not observable evidence of possible loss, there were issuer and/or industry specific trends that indicated a loss may have occurred. Low risk meant that while there was no identified evidence of loss, there was the risk of loss inherent in the loan that had not been identified. All loans held for investment, with the exception of loans that had been identified as impaired, were assigned a risk grade of high, moderate or low. | |
The Company applied a range of default and loss severity estimates in order to estimate a range of loss outcomes upon which to base its estimate of probable losses that resulted in the determination of the unallocated component of the Company’s allowance for loan losses. | |
Corporate Loans Held for Sale | |
As described above, corporate loans held for sale related to the Predecessor Company. From time to time the Company made the determination to transfer certain of its corporate loans from held for investment to held for sale. The decision to transfer a loan to held for sale was generally as a result of the Company determining that the respective loan’s credit quality in relation to the loan’s expected risk-adjusted return no longer met the Company’s investment objective and/or the Company deciding to reduce or eliminate its exposure to a particular loan for risk management purposes. Corporate loans held for sale were stated at lower of cost or estimated fair value and were assessed on an individual basis. Prior to transferring a loan to held for sale, any difference between the carrying amount of the loan and its outstanding principal balance was recognized as an adjustment to the yield by the effective interest method. The loan was transferred from held for investment to held for sale at the lower of its cost or estimated fair value and was carried at the lower of its cost or estimated fair value thereafter. Subsequent to transfer and while the loan was held for sale, recognition as an adjustment to yield by the effective interest method was discontinued for any difference between the carrying amount of the loan and its outstanding principal balance. | |
From time to time the Company also made the determination to transfer certain of its corporate loans from held for sale back to held for investment. The decision to transfer a loan back to held for investment was generally as a result of the circumstances that led to the initial transfer to held for sale no longer being present. Such circumstances may have included deteriorated market conditions often resulting in price depreciation or assets becoming illiquid, changes in restrictions on sales and certain loans amending their terms to extend the maturity, whereby the Company determined that selling the asset no longer met its investment objective and strategy. The loan was transferred from held for sale back to held for investment at the lower of its cost or estimated fair value, whereby a new cost basis was established based on this amount. | |
Interest income on corporate loans held for sale was recognized through accrual of the stated coupon rate for the loans, unless the loans were placed on non-accrual status, at which point previously recognized accrued interest was reversed if it was determined that such amounts were not collectible and interest income was recognized using either the cost-recovery method or on a cash-basis. | |
Corporate Loans, at Estimated Fair Value | |
The Predecessor and Successor Company both elected the fair value option of accounting for certain of their corporate loans for the purpose of enhancing the transparency of their financial condition as fair value is consistent with how the Companies manage the risks of these corporate loans. All corporate loans carried at estimated fair value are included within corporate loans, net on the condensed consolidated balance sheets. | |
Estimated fair values are based on quoted prices for similar instruments in active markets and inputs other than observable quoted prices, or internal valuation models when external sources of fair value are not available. In accounting for the Merger Transaction, the difference between the estimated fair value, as of the Effective Date, and the par amount became the new premium or discount to be amortized or accreted over the remaining terms, adjusted for actual prepayments, of the corporate loans using the effective interest method. | |
As described above under “Basis of Presentation,” as of the Effective Date, purchases and sales of corporate loans are recorded on the trade date. | |
Oil and Natural Gas Properties | |
Oil and natural gas producing activities are accounted for under the successful efforts method of accounting. Under this method, exploration costs, other than the costs of drilling exploratory wells, are charged to expense as incurred. Costs that are associated with the drilling of successful exploration wells are capitalized if proved reserves are found. Lease acquisition costs are capitalized when incurred. Costs associated with the drilling of exploratory wells that do not find proved reserves, geological and geophysical costs and costs of certain nonproducing leasehold costs are expensed as incurred. | |
Expenditures for repairs and maintenance, including workovers, are charged to expense as incurred. | |
The capitalized costs of producing oil and natural gas properties were depleted on a field-by-field basis using the units-of production method based on the ratio of current production to estimated total net proved oil, natural gas and NGL reserves. Proved developed reserves were used in computing depletion rates for drilling and development costs and total proved reserves were used for depletion rates of leasehold costs. | |
Estimated dismantlement and abandonment costs for oil and natural gas properties, net of salvage value, are capitalized at their estimated net present value and amortized on a unit-of-production basis over the remaining life of the related proved developed reserves. | |
Oil and Gas Revenue Recognition | |
Oil, natural gas and NGL revenues are recognized when production is sold to a purchaser at fixed or determinable prices, when delivery has occurred and title has transferred and collectability of the revenue is reasonably assured. The Company follows the sales method of accounting for natural gas revenues. Under this method of accounting, revenues are recognized based on volumes sold, which may differ from the volume to which the Company is entitled based on the Company’s working interest. An imbalance is recognized as a liability only when the estimated remaining reserves will not be sufficient to enable the under-produced owners to recoup their entitled share through future production. Under the sales method, no receivables are recorded when the Company has taken less than its share of production and no payables are recorded when the Company has taken more than its share of production. | |
Long-Lived Assets | |
Whenever events or changes in circumstances indicate that the carrying amounts of such properties may not be recoverable, the Company evaluates its proved oil and natural gas properties and related equipment and facilities for impairment on a field-by-field basis. The determination of recoverability is made based upon estimated undiscounted future net cash flows. The amount of impairment loss, if any, is determined by comparing the fair value, as determined by a discounted cash flow analysis, with the carrying value of the related asset. The factors used to determine fair value include, but are not limited to, estimates of proved reserves, future commodity pricing, future production estimates, anticipated capital expenditures, future operating costs and a discount rate commensurate with the risk on the properties and cost of capital. Unproved oil and natural gas properties were assessed periodically and, at a minimum, annually on a property-by-property basis, and any impairment in value was recognized when incurred. | |
Borrowings | |
The Company finances the majority of its investments through the use of secured borrowings in the form of securitization transactions structured as non-recourse secured financings and other secured and unsecured borrowings. In addition, the Company financed certain of its oil and gas asset acquisitions through borrowings. The Company recognizes interest expense on all borrowings on an accrual basis. | |
In connection with the Company’s application of acquisition accounting related to the Merger Transaction and to align more closely with KKR & Co.’s method of accounting, the Company elected to carry its collateralized loan obligation secured notes at estimated fair value as of the Effective Date, with changes in estimated fair value recorded in net realized and unrealized loss on debt in the condensed consolidated statements of operations. Prior to the Effective Date, collateralized loan obligation secured notes were carried at amortized cost. | |
Trust Preferred Securities | |
Trusts formed by the Company for the sole purpose of issuing trust preferred securities are not consolidated by the Company as the Company has determined that it is not the primary beneficiary of such trusts. The Company’s investment in the common securities of such trusts is included within other assets on the condensed consolidated balance sheets. | |
Preferred Shares | |
Distributions on the Company’s Series A LLC Preferred Shares are cumulative and payable quarterly when and if declared by the Company’s board of directors at a 7.375% rate per annum. The Company accrues for the distribution upon declaration and is included within accounts payable, accrued expenses and other liabilities on the condensed consolidated balance sheets. | |
Derivative Instruments | |
The Company recognizes all derivatives on the condensed consolidated balance sheet at estimated fair value. On the date the Company enters into a derivative contract, the Company designates and documents each derivative contract as one of the following at the time the contract is executed: (i) a hedge of a recognized asset or liability (“fair value” hedge); (ii) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge); (iii) a hedge of a net investment in a foreign operation; or (iv) a derivative instrument not designated as a hedging instrument (“free-standing derivative”). For a fair value hedge, the Company records changes in the estimated fair value of the derivative instrument and, to the extent that it is effective, changes in the fair value of the hedged asset or liability in the current period earnings in the same financial statement category as the hedged item. For a cash flow hedge, the Company records changes in the estimated fair value of the derivative to the extent that it is effective in accumulated other comprehensive loss and subsequently reclassifies these changes in estimated fair value to net income in the same period(s) that the hedged transaction affects earnings. The effective portion of the cash flow hedges is recorded in the same financial statement category as the hedged item. For free-standing derivatives, the Company reports changes in the fair values in net realized and unrealized gain (loss) on derivatives and foreign exchange on the condensed consolidated statements of operations. | |
The Company formally documents at inception its hedge relationships, including identification of the hedging instruments and the hedged items, its risk management objectives, strategy for undertaking the hedge transaction and the Company’s evaluation of effectiveness of its hedged transactions. Periodically, the Company also formally assesses whether the derivative it designated in each hedging relationship is expected to be and has been highly effective in offsetting changes in estimated fair values or cash flows of the hedged item using either the dollar offset or the regression analysis method. If the Company determines that a derivative is not highly effective as a hedge, it discontinues hedge accounting. | |
In connection with the Merger Transaction, the Company discontinued hedge accounting for its cash flow hedges and, as of the Effective Date, classifies all derivative instruments as free-standing derivatives. As a result, the Company records changes in the estimated fair value of the derivative instruments in net realized and unrealized gain (loss) on derivatives and foreign exchange on the condensed consolidated statements of operations. | |
Foreign Currency | |
The Company makes investments in non-United States dollar denominated assets including securities, loans, equity investments and interests in joint ventures and partnerships. As a result, the Company is subject to the risk of fluctuation in the exchange rate between the United States dollar and the foreign currency in which it makes an investment. In order to reduce the currency risk, the Company may hedge the applicable foreign currency. All investments denominated in a foreign currency are converted to the United States dollar using prevailing exchange rates on the balance sheet date. | |
Income, expenses, gains and losses on investments denominated in a foreign currency are converted to the United States dollar using the prevailing exchange rates on the dates when they are recorded. Foreign exchange gains and losses are recorded in net realized and unrealized gain (loss) on derivatives and foreign exchange on the condensed consolidated statements of operations. | |
Noncontrolling Interests | |
Noncontrolling interests represent noncontrolling interests in consolidated entities held by third party investors. Income (loss) is allocated to noncontrolling interests based on the relative ownership interests of third party investors and is presented as net income attributable to noncontrolling interests on the condensed consolidated statements of operations. Noncontrolling interests are also presented separately within equity in the condensed consolidated balance sheets. | |
Manager Compensation | |
The Management Agreement provides for the payment of a base management fee to the Manager, as well as an incentive fee if the Company’s financial performance exceeds certain benchmarks. Additionally, the Management Agreement provides for the Manager to be reimbursed for certain expenses incurred on the Company’s behalf. The base management fee and the incentive fee are accrued and expensed during the period for which they are earned by the Manager. | |
Share-Based Compensation | |
In connection with the Merger Transaction, the Predecessor Company’s common shares were converted into 0.51 KKR & Co. common units. Prior to the Effective Date, the Company accounted for share-based compensation issued to its directors and to its Manager using the fair value based methodology in accordance with relevant accounting guidance. Compensation cost related to restricted common shares issued to the Company’s directors was measured at its estimated fair value at the grant date, and was amortized and expensed over the vesting period on a straight-line basis. Compensation cost related to restricted common shares and common share options issued to the Manager was initially measured at estimated fair value at the grant date, and was remeasured on subsequent dates to the extent the awards were unvested. The Company elected to use the graded vesting attribution method to amortize compensation expense for the restricted common shares and common share options granted to the Manager. | |
Income Taxes | |
The Company intends to continue to operate so as to qualify, for United States federal income tax purposes, as a partnership and not as an association or publicly traded partnership taxable as a corporation. Therefore, the Company generally is not subject to United States federal income tax at the entity level, but is subject to limited state and foreign taxes. Holders of the Company’s preferred shares will be allocated a share of the Company’s gross ordinary income for the taxable year of the Company ending within or with their taxable year. Holders of the Company’s preferred shares will not be allocated any gains or losses from the sale of the Company’s assets. | |
The Company owns equity interests in entities that have elected or intend to elect to be taxed as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). A REIT generally is not subject to United States federal income tax to the extent that it currently distributes its income and satisfies certain asset, income and ownership tests, and recordkeeping requirements, but it may be subject to some amount of federal, state, local and foreign taxes based on its taxable income. | |
The Company has wholly-owned domestic and foreign subsidiaries that are taxable as corporations for United States federal income tax purposes and thus are not consolidated with the Company for United States federal income tax purposes. For financial reporting purposes, current and deferred taxes are provided for on the portion of earnings recognized by the Company with respect to its interest in the domestic taxable corporate subsidiaries, because each is taxed as a regular corporation under the Code. Deferred income tax assets and liabilities are computed based on temporary differences between the GAAP consolidated financial statements and the United States federal income tax basis of assets and liabilities as of each consolidated balance sheet date. The foreign corporate subsidiaries were formed to make certain foreign and domestic investments from time to time. The foreign corporate subsidiaries are organized as exempted companies incorporated with limited liability under the laws of the Cayman Islands, and are anticipated to be exempt from United States federal and state income tax at the corporate entity level because they restrict their activities in the United States to trading in stock and securities for their own account. However, the Company will be required to include their current taxable income in the Company’s calculation of its gross ordinary income allocable to shareholders. | |
The Company must recognize the tax impact from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax impact recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. Penalties and interest related to uncertain tax positions are recorded as tax expense. Significant judgment is required in the identification of uncertain tax positions and in the estimation of penalties and interest on uncertain tax positions. If it is determined that recognition for an uncertain tax provision is necessary, the Company would record a liability for an unrecognized tax expense from an uncertain tax position taken or expected to be taken. | |
Earnings Per Common Share | |
In connection with the Merger Transaction, as of the Effective Date, the Company is now a subsidiary of KKR Fund Holdings, which owns 100 common shares of the Company constituting all of the Company’s outstanding common shares. As KKR Fund Holdings is the Company’s sole shareholder, earnings per common share is not reported for the Successor Company. Prior to the Effective Date, the Company presented both basic and diluted earnings per common share (“EPS”) in its condensed consolidated financial statements and footnotes thereto. Basic earnings per common share (“Basic EPS”) excluded dilution and was computed by dividing net income or loss available to common shareholders by the weighted average number of common shares, including vested restricted common shares, outstanding for the period. The Company calculated EPS using the more dilutive of the two-class method or the if-converted method. The two-class method was an earnings allocation formula that determined EPS for common shares and participating securities. Unvested share-based payment awards that contained non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) were participating securities and were included in the computation of EPS using the two-class method. Accordingly, all earnings (distributed and undistributed) were allocated to common shares, preferred shares and participating securities based on their respective rights to receive dividends. Diluted earnings per common share (“Diluted EPS”) reflected the potential dilution of common share options and unvested restricted common shares using the treasury method or if-converted method. | |
Recent Accounting Pronouncements | |
Consolidation | |
In August 2014, the FASB amended existing standards to provide an entity that consolidates a collateralized financing entity (“CFE”) that had elected the fair value option for the financial assets and financial liabilities of such CFE an alternative to current fair value measurement guidance. If elected, the Company could measure both the financial assets and the financial liabilities of the CFE by using the fair value of the financial assets or the fair value of the financial liabilities, whichever is more observable. The election would effectively eliminate any measurement difference previously reflected in earnings and attributed to the reporting entity in the condensed consolidated statements of operations. The guidance is effective for annual reporting periods beginning on or after January 1, 2016, and interim periods within those annual periods, with a modified retrospective approach. The Company is currently evaluating the impact of this accounting update on its financial statements should it elect adoption. | |
MERGER_TRANSACTION
MERGER TRANSACTION | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
MERGER TRANSACTION | ' | ||||
MERGER TRANSACTION | ' | ||||
NOTE 3. MERGER TRANSACTION | |||||
On December 16, 2013, the Company announced the signing of a definitive merger agreement pursuant to which KKR & Co. had agreed to acquire all of the Company’s outstanding common shares through an exchange of equity through which the Company’s shareholders would receive 0.51 common units representing the limited partnership interests of KKR & Co. for each common share of KFN. On April 30, 2014, the date of the Merger Transaction, the transaction was approved by the Company’s common shareholders and the merger was completed, resulting in KFN becoming a subsidiary of KKR & Co. The merger was a taxable transaction for the Company’s common shareholders for U.S. federal income tax purposes. | |||||
Pursuant to the merger agreement, on the date of the Merger Transaction, (i) each outstanding option to purchase a KFN common share was cancelled, as the exercise price per share applicable to all outstanding options exceeded the cash value of the number of KKR & Co. common units that a holder of one KFN common share is entitled to in the merger, (ii) each outstanding restricted KFN common share (other than those held by the Manager) was converted into 0.51 KKR & Co. common units having the same terms and conditions as applied immediately prior to the effective time, and (iii) each phantom share under KFN’s Non-Employee Directors’ Deferred Compensation and Share Award Plan was converted into a phantom share in respect of 0.51 KKR & Co. common units and otherwise remains subject to the terms of the plan. | |||||
The Merger Transaction was recorded under the acquisition method of accounting by KKR & Co. and pushed down to the Company by allocating the total purchase consideration of $2.4 billion to the cost of the assets purchased and the liabilities assumed based on their estimated fair values at the date of the Merger Transaction. The excess of the total estimated fair values of the assets acquired and liabilities assumed over the purchase price and value of the preferred shares, which constitute noncontrolling interests in the Company, was recorded as a bargain purchase gain by KKR & Co. | |||||
In connection with the Merger Transaction, the Company recognized approximately $24.2 million of total transaction costs. Of this total, $22.7 million was recorded during the four months ended April 30, 2014 within general, administrative and directors expenses on the condensed consolidated statements of operations. These costs included the contingent consideration owed to the Company’s financial and legal advisors upon the merger closing. | |||||
The following table summarizes the estimated fair values assigned to the assets purchased and liabilities assumed (amounts in thousands): | |||||
Assets acquired: | |||||
Cash and cash equivalents | $ | 210,413 | |||
Restricted cash and cash equivalents | 649,967 | ||||
Securities | 541,149 | ||||
Corporate loans | 6,649,054 | ||||
Equity investments | 297,054 | ||||
Oil and gas properties, net | 505,238 | ||||
Interests in joint ventures and partnerships | 491,324 | ||||
Derivative assets | 26,383 | ||||
Interest and principal receivable | 35,992 | ||||
Other assets | 208,144 | ||||
Total assets | 9,614,718 | ||||
Liabilities assumed: | |||||
Collateralized loan obligation secured notes | 5,663,666 | ||||
Credit facilities | 63,189 | ||||
Senior notes | 415,538 | ||||
Junior subordinated notes | 245,782 | ||||
Accounts payable, accrued expenses and other liabilities | 357,084 | ||||
Accrued interest payable | 17,647 | ||||
Derivative liabilities | 88,356 | ||||
Total liabilities | 6,851,262 | ||||
Fair value of preferred shares | 378,983 | ||||
Fair value of net assets acquired | 2,384,473 | ||||
Less: Purchase price | 2,369,559 | ||||
Bargain purchase gain(1) | $ | 14,914 | |||
-1 | Represents the excess of the fair value of the net assets acquired over the purchase price and value of the preferred shares, which constitute noncontrolling interests in the Company. This difference was recorded as an adjustment to the Company’s additional paid-in-capital as of the Effective Date. | ||||
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The estimated fair values of assets acquired and liabilities assumed were primarily based on information that was available as of the Merger Transaction date. The methodology used to estimate the fair values to apply purchase accounting are summarized below. | |||||
The carrying values of cash, restricted cash, interest and principal receivable, credit facilities, accounts payable, accrued expenses and other liabilities, and accrued interest payable represented the fair values. Fair value measurements for financial instruments and other assets included (i) market data for similar instruments (e.g. recent transactions or broker quotes), comparisons to benchmark derivative indices or valuation models for corporate loans and securities, (ii) third party valuation servicers for residential mortgage-backed securities, (iii) observable market prices, if available, or internally developed models, for equity investments, oil and gas properties, interests in joint ventures and partnerships, and (iv) quoted market prices, if available, or models using a series of techniques for derivative assets and liabilities. The fair value measurements for the liabilities assumed included (i) third party valuation servicers for the collateralized loan obligation secured notes and junior subordinated notes and (ii) observable market prices for the senior notes. | |||||
SECURITIES
SECURITIES | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
SECURITIES. | ' | |||||||||||||||||||
SECURITIES | ' | |||||||||||||||||||
NOTE 4. SECURITIES | ||||||||||||||||||||
In connection with the Merger Transaction and as of the Effective Date, the Company accounts for all of its securities, including RMBS, at estimated fair value. Prior to the Effective Date, the Company accounted for securities based on the following categories: (i) securities available-for-sale, which were carried at estimated fair value, with unrealized gains and losses reported in accumulated other comprehensive loss; (ii) other securities, at estimated fair value, with unrealized gains and losses recorded in the condensed consolidated statements of operations; and (iii) RMBS, at estimated fair value, with unrealized gains and losses recorded in the condensed consolidated statements of operations. | ||||||||||||||||||||
Successor Company | ||||||||||||||||||||
The following table summarizes the Company’s securities as of September 30, 2014, which are carried at estimated fair value (amounts in thousands): | ||||||||||||||||||||
September 30, 2014 | ||||||||||||||||||||
Par | Amortized Cost | Estimated | ||||||||||||||||||
Fair Value | ||||||||||||||||||||
Securities, at estimated fair value | $ | 647,189 | $ | 586,052 | $ | 589,160 | ||||||||||||||
Total | $ | 647,189 | $ | 586,052 | $ | 589,160 | ||||||||||||||
Net Realized and Unrealized Gains (Losses) | ||||||||||||||||||||
Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the asset without regard to unrealized gains or losses previously recognized. Unrealized gains or losses are computed as the difference between the estimated fair value of the asset and the amortized cost basis of such asset. Unrealized gains or losses primarily reflect the change in asset values, including the reversal of previously recorded unrealized gains or losses when gains or losses are realized. The following table presents the Company’s realized and unrealized (losses) gains from securities for the three and five months ended September 30, 2014 (amounts in thousands): | ||||||||||||||||||||
Three months ended | Five months ended | |||||||||||||||||||
September 30, 2014 | September 30, 2014 | |||||||||||||||||||
Net realized (losses) gains | $ | (103 | ) | $ | 632 | |||||||||||||||
Net change in unrealized (losses) gains | (4,645 | ) | 6,178 | |||||||||||||||||
Net realized and unrealized (losses) gains | $ | (4,748 | ) | $ | 6,810 | |||||||||||||||
Defaulted Securities | ||||||||||||||||||||
As of September 30, 2014, the Company had a corporate debt security from one issuer in default with an estimated fair value of $12.8 million, which was on non-accrual status. | ||||||||||||||||||||
Concentration Risk | ||||||||||||||||||||
The Company’s corporate debt securities portfolio has certain credit risk concentrated in a limited number of issuers. As of September 30, 2014, approximately 64% of the estimated fair value of the Company’s corporate debt securities portfolio was concentrated in ten issuers, with the three largest concentrations of debt securities in securities issued by JC Penney Corp. Inc., LCI Helicopters Limited and NXP Semiconductor NV, which combined represented $157.5 million, or approximately 30% of the estimated fair value of the Company’s corporate debt securities. | ||||||||||||||||||||
Pledged Assets | ||||||||||||||||||||
Note 7 to these condensed consolidated financial statements describes the Company’s borrowings under which the Company has pledged securities for borrowings. The following table summarizes the estimated fair value of securities pledged as collateral as of September 30, 2014 (amounts in thousands): | ||||||||||||||||||||
As of | ||||||||||||||||||||
September 30, 2014 | ||||||||||||||||||||
Pledged as collateral for collateralized loan obligation secured debt | $ | 315,462 | ||||||||||||||||||
Total | $ | 315,462 | ||||||||||||||||||
Predecessor Company | ||||||||||||||||||||
The following table summarizes the Company’s securities as of December 31, 2013, which were carried at estimated fair value (amounts in thousands): | ||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Amortized | Gross | Gross | Estimated | |||||||||||||||||
Cost | Unrealized | Unrealized | Fair | |||||||||||||||||
Gains | Losses | Value | ||||||||||||||||||
Securities available-for-sale | $ | 326,775 | $ | 24,791 | $ | (1,225 | ) | $ | 350,341 | |||||||||||
Other securities, at estimated fair value(1) | 135,968 | 12,436 | (1,437 | ) | 146,967 | |||||||||||||||
Residential mortgage-backed securities, at estimated fair value(1) | 138,284 | 2,809 | (65,089 | ) | 76,004 | |||||||||||||||
Total securities | $ | 601,027 | $ | 40,036 | $ | (67,751 | ) | $ | 573,312 | |||||||||||
-1 | Unrealized gains and losses presented represent amounts as of period-end. Unrealized gains and losses recognized during the year for these securities are recorded in earnings. | |||||||||||||||||||
The following table shows the gross unrealized losses and estimated fair value of the Company’s available-for-sale securities, aggregated by length of time that the individual securities had been in a continuous unrealized loss position as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||||
Less Than 12 months | 12 Months or More | Total | ||||||||||||||||||
Estimated | Unrealized | Estimated | Unrealized | Estimated | Unrealized | |||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Securities available-for-sale | $ | 25,543 | $ | (658 | ) | $ | 30,034 | $ | (567 | ) | $ | 55,577 | $ | (1,225 | ) | |||||
The unrealized losses in the table above were considered to be temporary impairments due to market factors and were not reflective of credit deterioration. The Company considered many factors when evaluating whether impairment was other-than-temporary. For securities available-for-sale included in the table above, the Company did not intend to sell or believe that it was more likely than not that the Company would be required to sell any of its securities available-for-sale prior to recovery. In addition, based on the analyses performed by the Company on each of its securities available-for-sale, the Company believed that it was able to recover the entire amortized cost amount of the securities available-for-sale included in the table above. | ||||||||||||||||||||
During the four months ended April 30, 2014, the Company recognized losses totaling $4.4 million compared to $5.0 million and $17.5 million for the three and nine months ended September 30, 2013, respectively, for securities available-for-sale that it determined to be other-than-temporarily impaired. The Company intended to sell these securities and as a result, the entire amount of the loss was recorded through earnings in net realized and unrealized (loss) gain on investments in the condensed consolidated statements of operations. | ||||||||||||||||||||
Securities available-for-sale sold at a loss typically included those that the Company determined to be other-than-temporarily impaired or had a deterioration in credit quality. The following table shows the net realized gains on the sales of securities available-for-sale (amounts in thousands): | ||||||||||||||||||||
For the four | For the three | For the nine | ||||||||||||||||||
months ended | months ended | months ended | ||||||||||||||||||
April 30, 2014 | September 30, 2013 | September 30, 2013 | ||||||||||||||||||
Gross realized gains | $ | 2,516 | $ | — | $ | 2,829 | ||||||||||||||
Gross realized losses | — | — | (6 | ) | ||||||||||||||||
Net realized gains | $ | 2,516 | $ | — | $ | 2,823 | ||||||||||||||
Troubled Debt Restructurings | ||||||||||||||||||||
As discussed above in Note 2 to these condensed consolidated financial statements, beginning the Effective Date, the Company accounts for all of its securities at estimated fair value with unrealized gains and losses recorded in the condensed consolidated financial statements. Accordingly, TDR disclosure pertains to the Predecessor Company. During the four months ended April 30, 2014, the Company modified a security with an amortized cost of $24.1 million related to a single issuer in a restructuring that qualified as a TDR. The TDR involving this security, along with corporate loans related to the same issuer, were converted into a combination of equity carried at estimated fair value and cash. Post-modification, the equity securities received from the security TDR had an estimated fair value of $16.1 million. Refer to “Troubled Debt Restructurings” section within Note 5 to these condensed consolidated financial statements for further discussion on the loan TDRs related to this single issuer. There were no securities that qualified as TDRs during the three and nine months ended September 30, 2013. | ||||||||||||||||||||
As of April 30, 2014, no securities modified as TDRs were in default within a twelve month period subsequent to their original restructuring. | ||||||||||||||||||||
Defaulted Securities | ||||||||||||||||||||
As of December 31, 2013, the Company had a corporate debt security from one issuer in default with an estimated fair value of $25.4 million, which was on non-accrual status. | ||||||||||||||||||||
Concentration Risk | ||||||||||||||||||||
As of December 31, 2013, approximately 55% of the estimated fair value of the Company’s corporate debt securities portfolio was concentrated in ten issuers, with the three largest concentrations of debt securities in securities issued by LCI Helicopters Limited, JC Penney Corp. Inc. and NXP Semiconductor NV, which combined represented $104.5 million, or approximately 21% of the estimated fair value of the Company’s corporate debt securities. | ||||||||||||||||||||
Pledged Assets | ||||||||||||||||||||
Note 7 to these condensed consolidated financial statements describes the Company’s borrowings under which the Company has pledged securities for borrowings. The following table summarizes the estimated fair value of securities pledged as collateral as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||||
As of | ||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Pledged as collateral for collateralized loan obligation secured debt | $ | 324,830 | ||||||||||||||||||
Total | $ | 324,830 | ||||||||||||||||||
CORPORATE_LOANS_AND_ALLOWANCE_
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES | 9 Months Ended | |||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES | ' | |||||||||||||||||
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES | ' | |||||||||||||||||
NOTE 5. CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES | ||||||||||||||||||
In connection with the Merger Transaction and as of the Effective Date, the Company accounts for all of its corporate loans at estimated fair value. Prior to the Effective Date, the Company accounted for loans based on the following categories: (i) corporate loans held for investment, which were measured based on their principal plus or minus unaccreted purchase discounts and unamortized purchase premiums, net of an allowance for loan losses; (ii) corporate loans held for sale, which were measured at lower of cost or estimated fair value; and (iii) corporate loans, at estimated fair value, which were measured at fair value. | ||||||||||||||||||
Successor Company | ||||||||||||||||||
The following table summarizes the Company’s corporate loans, at estimated fair value as of September 30, 2014 (amounts in thousands): | ||||||||||||||||||
September 30, 2014 | ||||||||||||||||||
Par | Amortized Cost | Estimated | ||||||||||||||||
Fair Value | ||||||||||||||||||
Corporate loans, at estimated fair value | $ | 6,651,027 | $ | 6,457,031 | $ | 6,354,143 | ||||||||||||
Total | $ | 6,651,027 | $ | 6,457,031 | $ | 6,354,143 | ||||||||||||
Net Realized and Unrealized Gains (Losses) | ||||||||||||||||||
Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the asset without regard to unrealized gains or losses previously recognized. Unrealized gains or losses are computed as the difference between the estimated fair value of the asset and the amortized cost basis of such asset. Unrealized gains or losses primarily reflect the change in asset values, including the reversal of previously recorded unrealized gains or losses when gains or losses are realized. The following tables present the Company’s realized and unrealized losses from corporate loans for the three and five months ended September 30, 2014 (amounts in thousands): | ||||||||||||||||||
Three months ended | Five months ended | |||||||||||||||||
September 30, 2014 | September 30, 2014 | |||||||||||||||||
Net realized gains | $ | 6,353 | $ | 1,637 | ||||||||||||||
Net change in unrealized losses | (128,749 | ) | (102,888 | ) | ||||||||||||||
Net realized and unrealized losses | $ | (122,396 | ) | $ | (101,251 | ) | ||||||||||||
Non-Accrual Loans | ||||||||||||||||||
A loan is considered past due if any required principal and interest payments have not been received as of the date such payments were required to be made under the terms of the loan agreement. A loan may be placed on non-accrual status regardless of whether or not such loan is considered past due. As of September 30, 2014, the Company held a total par value and estimated fair value of $580.4 million and $391.9 million, respectively, of non-accrual loans carried at estimated fair value. As of September 30, 2014, the Company held a total par value and estimated fair value of $410.2 million and $300.9 million, respectively, of 90 or more days past due loans carried at estimated fair value, all of which were on non-accrual status and in default as of September 30, 2014. | ||||||||||||||||||
Defaulted Loans | ||||||||||||||||||
As of September 30, 2014, the Company held four corporate loans that were in default with a total estimated fair value of $300.9 million from two issuers. | ||||||||||||||||||
Concentration Risk | ||||||||||||||||||
The Company’s corporate loan portfolio has certain credit risk concentrated in a limited number of issuers. As of September 30, 2014 under the Successor Company where all corporate loans are carried at estimated fair value, approximately 40% of the total estimated fair value of the Company’s corporate loan portfolio was concentrated in twenty issuers, with the three largest concentrations of corporate loans in loans issued by U.S. Foods Inc., Texas Competitive Electric Holdings Company LLC (“TXU”) and First Data Corp., which combined represented $734.8 million, or approximately 12% of the aggregate estimated fair value of the Company’s corporate loans. | ||||||||||||||||||
Pledged Assets | ||||||||||||||||||
Note 7 to these condensed consolidated financial statements describes the Company’s borrowings under which the Company has pledged loans for borrowings. The following table summarizes the corporate loans pledged as collateral as of September 30, 2014 (amounts in thousands): | ||||||||||||||||||
As of | ||||||||||||||||||
September 30, 2014 | ||||||||||||||||||
Estimated Fair Value | ||||||||||||||||||
Pledged as collateral for collateralized loan obligation secured debt | $ | 6,046,310 | ||||||||||||||||
Total | $ | 6,046,310 | ||||||||||||||||
Predecessor Company | ||||||||||||||||||
The following table summarizes the Company’s corporate loans as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||
December 31, 2013 | ||||||||||||||||||
Corporate | Corporate Loans | Corporate Loans, at | Total | |||||||||||||||
Loans Held | Held for Sale | Estimated Fair Value | Corporate Loans | |||||||||||||||
for Investment | ||||||||||||||||||
Principal(1) | $ | 6,280,470 | $ | 315,738 | $ | 277,458 | $ | 6,873,666 | ||||||||||
Net unamortized discount | (105,979 | ) | (20,070 | ) | (54,997 | ) | (181,046 | ) | ||||||||||
Total amortized cost | 6,174,491 | 295,668 | 222,461 | 6,692,620 | ||||||||||||||
Lower of cost or fair value adjustment | — | (15,920 | ) | — | (15,920 | ) | ||||||||||||
Allowance for loan losses | (224,999 | ) | — | — | (224,999 | ) | ||||||||||||
Unrealized gains | — | — | 15,019 | 15,019 | ||||||||||||||
Net carrying value | $ | 5,949,492 | $ | 279,748 | $ | 237,480 | $ | 6,466,720 | ||||||||||
-1 | Principal amounts of corporate loans and corporate loans held for sale were net of cumulative charge-offs and other adjustments totaling $18.1 million as of December 31, 2013. | |||||||||||||||||
Allowance for Loan Losses | ||||||||||||||||||
As discussed above in Note 2 to these condensed consolidated financial statements, beginning the Effective Date, the new basis of accounting for corporate loans at estimated fair value eliminated the need for an allowance for loan losses. Accordingly, disclosure related to allowance for loan losses pertains to the Predecessor Company. As of December 31, 2013, the Company had an allowance for loan losses of $225.0 million. As described in Note 2 to these condensed consolidated financial statements, the allowance for loan losses represented the Company’s estimate of probable credit losses inherent in its loan portfolio as of the balance sheet date. The Company’s allowance for loan losses consisted of two components, an allocated component and an unallocated component. The allocated component of the allowance for loan losses consisted of individual loans that were impaired. The unallocated component of the allowance for loan losses represented the Company’s estimate of losses inherent, but not identified, in its portfolio as of the balance sheet date. | ||||||||||||||||||
The following table summarizes the changes in the allowance for loan losses for the Company’s corporate loan portfolio during the four months ended April 30, 2014 and three and nine months ended September 30, 2013 (amounts in thousands): | ||||||||||||||||||
For the four | For the three | For the nine | ||||||||||||||||
months ended | months ended | months ended | ||||||||||||||||
April 30, 2014 | September 30, 2013 | September 30, 2013 | ||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||
Beginning balance | $ | 224,999 | $ | 203,255 | $ | 223,472 | ||||||||||||
Provision for loan losses | — | 9,339 | 20,407 | |||||||||||||||
Charge-offs | (1,458 | ) | — | (31,285 | ) | |||||||||||||
Ending balance | $ | 223,541 | $ | 212,594 | $ | 212,594 | ||||||||||||
The following table summarizes the ending balances of the allowance and corporate loans portfolio by basis of impairment method as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||
December 31, 2013 | ||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 142,682 | ||||||||||||||||
Ending balance: collectively evaluated for impairment | 82,317 | |||||||||||||||||
$ | 224,999 | |||||||||||||||||
Corporate loans (recorded investment)(1): | ||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 554,442 | ||||||||||||||||
Ending balance: collectively evaluated for impairment | 5,638,790 | |||||||||||||||||
$ | 6,193,232 | |||||||||||||||||
-1 | Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||
As of December 31, 2013, the allocated component of the allowance for loan losses totaled $142.7 million and related to investments in certain loans issued by four issuers with an aggregate par amount of $594.4 million and an aggregate recorded investment of $554.4 million. Of the allocated component totaling $142.7 million, $66.9 million related to TXU, which had an aggregate amortized cost of $311.6 million as of December 31, 2013. | ||||||||||||||||||
The following table summarizes the Company’s recorded investment and unpaid principal balance in impaired loans, as well as the related allowance for credit losses as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||
December 31, 2013 | ||||||||||||||||||
Recorded | Unpaid | Related | ||||||||||||||||
Investment(1) | Principal | Allowance | ||||||||||||||||
Balance | ||||||||||||||||||
With no related allowance recorded | $ | — | $ | — | $ | — | ||||||||||||
With an allowance recorded | 554,442 | 594,416 | 142,682 | |||||||||||||||
Total | $ | 554,442 | $ | 594,416 | $ | 142,682 | ||||||||||||
-1 | Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||
The Company recognized $4.5 million of interest income related to impaired loans with a related allowance recorded for the four months ended April 30, 2014. The following table summarizes the Company’s average recorded investment in impaired loans and interest income recognized for the three and nine months ended September 30, 2013 (amounts in thousands): | ||||||||||||||||||
For the three months ended | For the nine months ended | |||||||||||||||||
September 30, 2013 | September 30, 2013 | |||||||||||||||||
Average | Interest | Average | Interest | |||||||||||||||
Recorded | Income | Recorded | Income | |||||||||||||||
Investment(1) | Recognized | Investment(1) | Recognized | |||||||||||||||
With no related allowance recorded | $ | — | $ | — | $ | 1,623 | $ | — | ||||||||||
With an allowance recorded | 554,554 | 4,471 | 517,544 | 14,740 | ||||||||||||||
Total | $ | 554,554 | $ | 4,471 | $ | 519,167 | $ | 14,740 | ||||||||||
-1 | Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||
As of December 31, 2013, the allocated component of the allowance for loan losses included all impaired loans. While all of the Company’s impaired loans were on non-accrual status, the Company’s non-accrual loans also included (i) other loans held for investment, (ii) corporate loans held for sale and (iii) loans carried at estimated fair value, which were not reflected in the table above. Any of these three classifications may have included those loans modified in a TDR, which were typically designated as being non-accrual (see “Troubled Debt Restructurings” section below). | ||||||||||||||||||
The following table summarizes the Company’s recorded investment in non-accrual loans as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||
December 31, 2013 | ||||||||||||||||||
Loans held for investment | $ | 554,442 | ||||||||||||||||
Loans held for sale | 44,823 | |||||||||||||||||
Loans at estimated fair value | 24,883 | |||||||||||||||||
Total non-accrual loans | $ | 624,148 | ||||||||||||||||
For the four months ended April 30, 2014, the amount of interest income recognized using the cash-basis method during the time within the period that the loans were on non-accrual status was $5.3 million, which included $4.5 million for non-accrual loans that were held for investment, $0.7 million for non-accrual loans held for sale and $0.1 million for non-accrual loans carried at estimated fair value. Comparatively, for the three months ended September 30, 2013, the amount of interest income recognized using the cash-basis method during the time within the period that the loans were on non-accrual status was $5.5 million, which included $4.5 million for non-accrual loans that were held for investment and $1.0 million for non-accrual loans held for sale. For the nine months ended September 30, 2013, the amount of interest income recognized using the cash-basis method during the time within the period that the loans were on non-accrual status was $20.9 million, which included $14.7 million for non-accrual loans that were held for investment and $6.2 million for non-accrual loans held for sale. | ||||||||||||||||||
A loan is considered past due if any required principal and interest payments have not been received as of the date such payments were required to be made under the terms of the loan agreement. A loan may be placed on non-accrual status regardless of whether or not such loan is considered past due. As of December 31, 2013, the Company held a total recorded investment of $237.2 million of non-accrual and past due loans held for investment from three issuers, certain of which were in default as of December 31, 2013. The associated past due interest payments related to the $237.2 million recorded investment was $5.6 million, of which $0.9 million was less than 30 days past due, $2.3 million was 60-89 days past due, and $2.4 million was 90 or more days past due. In addition, as of December 31, 2013, the Company held $15.5 million par amount and $12.2 million estimated fair value of non-accrual and past due loans carried at estimated fair value from one issuer, which was also in default as of December 31, 2013. The associated interest payments related to the $12.2 million loans at estimated fair value that were 90 or more days past due was $0.2 million. | ||||||||||||||||||
The unallocated component of the allowance for loan losses totaled $82.3 million as of December 31, 2013. As described in Note 2 to these condensed consolidated financial statements, the Company estimated the unallocated components of the allowance for loan losses through a comprehensive review of its loan portfolio and identified certain loans that demonstrated possible indicators of impairments, including credit quality indicators. The following table summarizes how the Company determined internally assigned grades related to credit quality based on a combination of concern as to probability of default and the seniority of the loan in the issuer’s capital structure as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||
Internally Assigned Grade | Capital Hierarchy | Recorded Investment | ||||||||||||||||
December 31, 2013 (1) | ||||||||||||||||||
High | Senior Secured Loan | $ | 26,886 | |||||||||||||||
Second Lien Loan | 286,996 | |||||||||||||||||
Subordinated | 11,643 | |||||||||||||||||
$ | 325,525 | |||||||||||||||||
Moderate | Senior Secured Loan | $ | 1,033,065 | |||||||||||||||
Second Lien Loan | 27,504 | |||||||||||||||||
Subordinated | 39,329 | |||||||||||||||||
$ | 1,099,898 | |||||||||||||||||
Low | Senior Secured Loan | $ | 4,148,913 | |||||||||||||||
Second Lien Loan | 25,864 | |||||||||||||||||
Subordinated | 38,590 | |||||||||||||||||
$ | 4,213,367 | |||||||||||||||||
Total Unallocated | $ | 5,638,790 | ||||||||||||||||
Total Allocated | 554,442 | |||||||||||||||||
Total Loans Held for Investment | $ | 6,193,232 | ||||||||||||||||
-1 | Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||
During the four months ended April 30, 2014, the Company recorded charge-offs totaling $1.5 million, comprised primarily of loans modified in TDRs. During the three and nine months ended September 30, 2013, the Company recorded charge-offs totaling zero and $31.3 million, respectively, comprised primarily of loans modified in TDRs. | ||||||||||||||||||
Loans Held For Sale and the Lower of Cost or Fair Value Adjustment | ||||||||||||||||||
As discussed above in Note 2 to these condensed consolidated financial statements, beginning the Effective Date, the new basis of accounting for corporate loans at estimated fair value eliminated the need for the bifurcation between corporate loans held for investment and loans held for sale. Accordingly, related disclosure pertains to the Predecessor Company. As of December 31, 2013, the Company had $279.7 million of loans held for sale. During the four months ended April 30, 2014, the Company transferred $348.8 million amortized cost amount of loans from held for investment to held for sale. During the three and nine months ended September 30, 2013, the Company transferred $239.2 million and $316.0 million amortized cost amount, respectively, of loans from held for investment to held for sale. The transfers of certain loans to held for sale were due to the Company’s determination that credit quality of a loan in relation to its expected risk-adjusted return no longer met the Company’s investment objective and the determination by the Company to reduce or eliminate the exposure for certain loans as part of its portfolio risk management practices. During the four months ended April 30, 2014 and the three and nine months ended September 30, 2013, the Company did not transfer any loans held for sale back to loans held for investment. Transfers back to held for investment may have occurred as the circumstances that led to the initial transfer to held for sale were no longer present. Such circumstances may have included deteriorated market conditions often resulting in price depreciation or assets becoming illiquid, changes in restrictions on sales and certain loans amending their terms to extend the maturity, whereby the Company determined that selling the asset no longer met its investment objective and strategy. | ||||||||||||||||||
The Company recorded a $5.0 million reduction to the lower of cost or estimated fair value adjustment for the four months ended April 30, 2014 for certain loans held for sale, which had a carrying value of $546.1 million as of April 30, 2014. Comparatively, the Company recorded a $2.8 million and $11.4 million net charge to earnings for the three and nine months ended September 30, 2013, respectively, for the lower of cost or estimated fair value adjustment for certain loans held for sale, which had a carrying value of $312.3 million as of September 30, 2013. | ||||||||||||||||||
Troubled Debt Restructurings | ||||||||||||||||||
As discussed above in Note 2 to these condensed consolidated financial statements, as of the Effective Date, the Company accounts for all of its corporate loans at estimated fair value. Accordingly, required disclosure related to TDRs pertains to the Predecessor Company. The recorded investment balance of TDRs at December 31, 2013 totaled $55.4 million, related to three issuers. Loans whose terms have been modified in a TDR were considered impaired, unless accounted for at fair value or the lower of cost or estimated fair value, and were typically placed on non-accrual status, but could have been moved to accrual status when, among other criteria, payment in full of all amounts due under the restructured terms was expected and the borrower had demonstrated a sustained period of repayment performance, typically six months. As of December 31, 2013, $55.4 million of TDRs were included in non-accrual loans (see “Non-Accrual Loans” section above). As of December 31, 2013, the allowance for loan losses included specific reserves of $22.1 million related to TDRs. | ||||||||||||||||||
The following table presents the aggregate balance of loans whose terms had been modified in a TDR during the four months ended April 30, 2014 (dollar amounts in thousands): | ||||||||||||||||||
Four months ended | ||||||||||||||||||
April 30, 2014 | ||||||||||||||||||
Number | Pre-modification | Post-modification | ||||||||||||||||
of TDRs | outstanding recorded | outstanding recorded | ||||||||||||||||
investment(1) | investment(1)(2) | |||||||||||||||||
Troubled debt restructurings: | ||||||||||||||||||
Loans held for investment | 1 | $ | 154,075 | $ | — | |||||||||||||
Loans at estimated fair value | 2 | 41,347 | 24,571 | |||||||||||||||
Total | $ | 195,422 | $ | 24,571 | ||||||||||||||
-1 | Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||
-2 | Excludes equity securities received from the loans held for investment and/or loans at estimated fair value TDRs with an estimated fair value of $92.0 million and $12.3 million, from the two issuers, respectively. | |||||||||||||||||
The following table presents the aggregate balance of loans whose terms had been modified in a TDR during the three and nine months ended September 30, 2013 (dollar amounts in thousands): | ||||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||||
September 30, 2013 | September 30, 2013 | |||||||||||||||||
Number | Pre-modification | Post-modification | Number | Pre-modification | Post-modification | |||||||||||||
of TDRs | outstanding | outstanding recorded | of TDRs | outstanding | outstanding recorded | |||||||||||||
recorded | investment(1) | recorded | investment(1)(2) | |||||||||||||||
investment(1) | investment(1) | |||||||||||||||||
Troubled debt restructurings: | ||||||||||||||||||
Loans held for investment | — | $ | — | $ | — | 2 | $ | 68,358 | $ | 39,430 | ||||||||
Loans held for sale | — | — | — | — | — | — | ||||||||||||
Loans at estimated fair value | — | — | — | 1 | 1,670 | 1,229 | ||||||||||||
Total | $ | — | $ | — | $ | 70,028 | $ | 40,659 | ||||||||||
-1 | Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||
-2 | Excludes equity securities received from the loans held for investment TDRs with an estimated fair value of $2.1 million. | |||||||||||||||||
During the four months ended April 30, 2014, the Company modified an aggregate recorded investment of $195.4 million related to two issuers in restructurings which qualified as TDRs. These restructurings involved conversions of the loans into one of the following: (i) a combination of equity carried at estimated fair value and cash, or (ii) a combination of equity and loans carried at estimated fair value with extended maturities ranging from an additional three to five-year period and a higher spread of 4.0%. Prior to the restructurings, one of the TDRs described above was already identified as impaired and had specific allocated reserves, while the other two were loans carried at estimated fair value. Upon restructuring the impaired loans held for investment, the difference between the recorded investment of the pre-modified loans and the estimated fair value of the new assets plus cash received was charged-off against the allowance for loan losses. The TDRs resulted in $1.1 million of charge-offs, or 76% of the total $1.5 million of charge-offs recorded during the four months ended April 30, 2014. | ||||||||||||||||||
During the nine months ended September 30, 2013, the Company modified an aggregate recorded investment of $70.0 million related to three issuers in restructurings which qualified as TDRs. These restructurings involved conversions of the loans into one of the following: (i) new term loans with extended maturities and fixed, rather than floating, interest rates, (ii) equity carried at estimated fair value, or (iii) a combination of equity and loans carried at estimated fair value. The modification involving an extension of maturity date was for an additional four-year period with a higher coupon of 6.8%. Prior to the restructurings, two of the TDRs described above were already identified as impaired and had specific allocated reserves, while the third was a loan carried at estimated fair value. Upon restructuring the impaired loans held for investment, the difference between the recorded investment of the pre-modified loans and the estimated fair value of the new assets was charged-off against the allowance for loan losses. The TDRs resulted in $26.8 million of charge-offs, or 86% of the total $31.3 million of charge-offs recorded during the nine months ended September 30, 2013. | ||||||||||||||||||
As of April 30, 2014, there were no commitments to lend additional funds to the issuers whose loans had been modified in a TDR. | ||||||||||||||||||
As of April 30, 2014, no loans modified as TDRs were in default within a twelve month period subsequent to their original restructuring. | ||||||||||||||||||
During the four months ended April 30, 2014, the Company modified $1.1 billion amortized cost of corporate loans that did not qualify as TDRs. During the three and nine months ended September 30, 2013, the Company modified $195.6 million and $2.0 billion amortized cost of corporate loans, respectively, that did not qualify as TDRs. These modifications involved changes in existing rates and maturities to prevailing market rates/maturities for similar instruments and did not qualify as TDRs as the respective borrowers were not experiencing financial difficulty or seeking (or granted) a concession as part of the modification. In addition, these modifications of non-troubled debt holdings were accomplished with modified loans that were not substantially different from the loans prior to modification. | ||||||||||||||||||
Defaulted Loans | ||||||||||||||||||
As of December 31, 2013, the Company held six corporate loans that were in default with a total amortized cost of $215.7 million from two issuers. Of the $215.7 million total amortized cost, $203.7 million were included in the loans that comprised the allocated component of the Company’s allowance for loan losses and $12.0 million were included in loans carried at estimated fair value. | ||||||||||||||||||
Concentration Risk | ||||||||||||||||||
The Company’s corporate loan portfolio has certain credit risk concentrated in a limited number of issuers. As of December 31, 2013, approximately 46% of the total amortized cost basis of the Company’s corporate loan portfolio was concentrated in twenty issuers, with the three largest concentrations of corporate loans in loans issued by TXU, Modular Space Corporation and U.S. Foods Inc., which combined represented $935.2 million, or approximately 14% of the aggregate amortized cost basis of the Company’s corporate loans. | ||||||||||||||||||
Pledged Assets | ||||||||||||||||||
Note 7 to these condensed consolidated financial statements describes the Company’s borrowings under which the Company has pledged loans for borrowings. The following table summarizes the corporate loans pledged as collateral as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||
As of | ||||||||||||||||||
December 31, 2013 | ||||||||||||||||||
Amortized Cost | ||||||||||||||||||
Pledged as collateral for collateralized loan obligation secured debt | $ | 6,231,541 | ||||||||||||||||
Total | $ | 6,231,541 | ||||||||||||||||
NATURAL_RESOURCES_ASSETS
NATURAL RESOURCES ASSETS | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
NATURAL RESOURCES ASSETS | ' | |||||||
NATURAL RESOURCES ASSETS | ' | |||||||
NOTE 6. NATURAL RESOURCES ASSETS | ||||||||
Natural Resources Properties | ||||||||
As described in Note 2 to these condensed consolidated financial statements, as a result of the Merger Transaction and new accounting basis established for assets and liabilities, oil and gas properties were adjusted to reflect estimated fair value as of the Effective Date, but will continue to be carried at cost net of DD&A. The following table summarizes the Company’s oil and gas properties as of September 30, 2014 and December 31, 2013 (amounts in thousands): | ||||||||
As of | As of | |||||||
September 30, 2014 | December 31, 2013 | |||||||
Proved oil and natural gas properties (successful efforts method) | $ | 128,800 | $ | 451,909 | ||||
Unproved oil and natural gas properties | — | 16,913 | ||||||
Less: Accumulated depreciation, depletion and amortization | (6,170 | ) | (68,453 | ) | ||||
Oil and gas properties, net | $ | 122,630 | $ | 400,369 | ||||
During the three months ended September 30, 2014, the Company closed a transaction whereby certain of the Company’s natural resources assets, specifically working interests in oil and gas properties, were merged with certain assets of KKR Natural Resources Funds and Legend Production Holdings, LLC, a portfolio company of Riverstone Holdings LLC, to create a new oil and gas company called Trinity River Energy, LLC (“Trinity”). As of September 30, 2014, the Trinity assets had a carrying value of $146.7 million and were classified as interests in joint ventures and partnerships, rather than oil and gas properties, net, on the Company’s condensed consolidated balance sheets. | ||||||||
Development and Other Purchases | ||||||||
The Company accounted for certain of its initial oil and natural gas properties as business combinations under the acquisition method of accounting, whereby the Company (i) conducted assessments of net assets acquired and recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values and (ii) expensed as incurred transaction and integration costs associated with the acquisitions. Separate from these acquisitions, the Company deployed capital to develop and purchase other interests and assets in the natural resources sector. | ||||||||
During the three months ended September 30, 2014, certain of the Company’s natural resources assets focused on development of oil and gas properties, with an approximate aggregate fair value of $179.2 million, were distributed to the Company’s Parent. Prior to this distribution, during the nine months ended September 30, 2014 and year ended December 31, 2013, the Company capitalized an additional $85.0 million and $154.5 million, respectively, as a result of purchasing natural resources assets or covering costs related to the development of oil and gas properties. Accordingly, these amounts were included in oil and gas properties, net on the condensed consolidated balance sheets. | ||||||||
BORROWINGS
BORROWINGS | 9 Months Ended | ||||||||||||||
Sep. 30, 2014 | |||||||||||||||
BORROWINGS | ' | ||||||||||||||
BORROWINGS | ' | ||||||||||||||
NOTE 7. BORROWINGS | |||||||||||||||
As described in Note 2 to these condensed consolidated financial statements, as a result of the Merger Transaction and new accounting basis established for assets and liabilities, all borrowings were adjusted to reflect estimated fair value as of the Effective Date. In addition, effective May 1, 2014, the Successor Company elected to account for its collateralized loan obligation secured notes at estimated fair value, with changes in estimated fair value recorded in the condensed consolidated statements of operations. Prior to the Effective Date, all liabilities were carried at amortized cost. | |||||||||||||||
Certain information with respect to the Company’s borrowings as of September 30, 2014 is summarized in the following table (dollar amounts in thousands): | |||||||||||||||
Par | Carrying | Weighted | Weighted | Collateral(2) | |||||||||||
Value(1) | Average | Average | |||||||||||||
Borrowing | Remaining | ||||||||||||||
Rate | Maturity | ||||||||||||||
(in days) | |||||||||||||||
CLO 2005-1 senior secured notes | $ | 200,058 | $ | 199,895 | 1.79 | % | 939 | $ | 243,376 | ||||||
CLO 2005-2 senior secured notes | 258,369 | 256,965 | 0.67 | 1,153 | 400,937 | ||||||||||
CLO 2006-1 senior secured notes | 224,947 | 224,303 | 1.10 | 1,425 | 460,164 | ||||||||||
CLO 2007-1 senior secured notes | 2,024,737 | 2,008,230 | 0.79 | 2,419 | 2,335,665 | ||||||||||
CLO 2007-1 mezzanine notes | 489,723 | 483,296 | 3.84 | 2,419 | 564,927 | ||||||||||
CLO 2007-1 subordinated notes(3) | 134,468 | 128,592 | 13.30 | 2,419 | 155,117 | ||||||||||
CLO 2007-A mezzanine notes | 63,902 | 63,895 | 7.73 | 1,111 | 62,924 | ||||||||||
CLO 2007-A subordinated notes(3) | 15,096 | 39,850 | 10.35 | 1,111 | 14,865 | ||||||||||
CLO 2011-1 senior debt | 405,239 | 405,239 | 1.58 | 1,415 | 515,671 | ||||||||||
CLO 2012-1 senior secured notes | 367,500 | 366,269 | 2.33 | 3,729 | 366,628 | ||||||||||
CLO 2012-1 subordinated notes(3) | 18,000 | 14,586 | 15.40 | 3,729 | 17,957 | ||||||||||
CLO 2013-1 senior secured notes | 458,500 | 446,590 | 1.97 | 3,941 | 479,944 | ||||||||||
CLO 2013-2 senior secured notes | 339,250 | 334,435 | 2.22 | 4,133 | 350,048 | ||||||||||
CLO 9 senior secured notes | 463,750 | 457,730 | 2.24 | 4,398 | 458,018 | ||||||||||
CLO 9 subordinated notes(3) | 15,000 | 13,711 | — | 4,398 | 14,815 | ||||||||||
Total collateralized loan obligation secured debt | 5,478,539 | 5,443,586 | 6,441,056 | ||||||||||||
8.375% Senior notes | 258,750 | 291,163 | 8.38 | 9,908 | — | ||||||||||
7.500% Senior notes | 115,043 | 123,742 | 7.50 | 10,033 | — | ||||||||||
Junior subordinated notes | 283,517 | 246,484 | 5.39 | 8,041 | — | ||||||||||
Total borrowings | $ | 6,135,849 | $ | 6,104,975 | $ | 6,441,056 | |||||||||
-1 | Carrying value represents estimated fair value for the collateralized loan obligation secured debt and amortized cost for all other borrowings. | ||||||||||||||
-2 | Collateral for borrowings consists of the estimated fair value of certain corporate loans, securities and equity investments at estimated fair value. For purposes of this table, collateral for CLO senior, mezzanine and subordinated notes are calculated pro rata based on the par amount for each respective CLO. | ||||||||||||||
-3 | Subordinated notes do not have a contractual coupon rate, but instead receive a pro rata amount of the net distributions from each respective CLO. Accordingly, weighted average borrowing rates for the subordinated notes were calculated based on annualized distributions during the quarter, if any. | ||||||||||||||
Certain information with respect to the Company’s borrowings as of December 31, 2013 is summarized in the following table (dollar amounts in thousands): | |||||||||||||||
Outstanding | Weighted | Weighted | Collateral(1) | ||||||||||||
Borrowings | Average | Average | |||||||||||||
Borrowing | Remaining | ||||||||||||||
Rate | Maturity | ||||||||||||||
(in days) | |||||||||||||||
CLO 2005-1 senior secured notes | $ | 193,909 | 0.73 | % | 1,212 | $ | 303,104 | ||||||||
CLO 2005-2 senior secured notes | 335,570 | 0.63 | 1,426 | 496,917 | |||||||||||
CLO 2006-1 senior secured notes | 384,925 | 0.69 | 1,698 | 649,894 | |||||||||||
CLO 2007-1 senior secured notes | 2,075,040 | 0.79 | 2,692 | 2,354,938 | |||||||||||
CLO 2007-1 mezzanine notes | 406,428 | 3.65 | 2,692 | 461,250 | |||||||||||
CLO 2007-1 subordinated notes(2) | 136,097 | 18.15 | 2,692 | 154,456 | |||||||||||
CLO 2007-A senior secured notes | 428,152 | 1.57 | 1,384 | 540,677 | |||||||||||
CLO 2007-A mezzanine notes | 55,327 | 7.44 | 1,384 | 69,867 | |||||||||||
CLO 2007-A subordinated notes(2) | 15,096 | 42.22 | 1,384 | 19,063 | |||||||||||
CLO 2011-1 senior debt | 388,703 | 1.25 | 1,688 | 517,597 | |||||||||||
CLO 2012-1 senior secured notes | 362,727 | 2.34 | 4,002 | 376,603 | |||||||||||
CLO 2012-1 subordinated notes(2) | 18,000 | 11.67 | 4,002 | 18,689 | |||||||||||
CLO 2013-1 senior secured notes | 449,409 | 1.98 | 4,214 | 468,915 | |||||||||||
Total collateralized loan obligation secured debt | 5,249,383 | 6,431,970 | |||||||||||||
Senior secured credit facility(3) | 75,000 | 1.39 | 699 | — | |||||||||||
2015 Asset-based borrowing facility | 50,289 | 2.42 | 674 | 213,935 | |||||||||||
2018 Asset-based borrowing facility(4) | — | — | 1,519 | — | |||||||||||
Total credit facilities | 125,289 | 213,935 | |||||||||||||
8.375% Senior notes | 250,800 | 8.38 | 10,181 | — | |||||||||||
7.500% Senior notes | 111,476 | 7.50 | 10,306 | — | |||||||||||
Junior subordinated notes | 283,517 | 5.39 | 8,347 | — | |||||||||||
Total borrowings | $ | 6,020,465 | $ | 6,645,905 | |||||||||||
-1 | Collateral for borrowings consists of the estimated fair value of certain corporate loans, securities available-for-sale and equity investments at estimated fair value. Also includes the carrying value of oil and gas assets. For purposes of this table, collateral for CLO senior, mezzanine and subordinated notes are calculated pro rata based on the outstanding borrowings for each respective CLO. | ||||||||||||||
-2 | Subordinated notes do not have a contractual coupon rate, but instead receive a pro rata amount of the net distributions from each respective CLO. Accordingly, weighted average borrowing rates for the subordinated notes were calculated based on year-to-date estimated distributions, if any. | ||||||||||||||
-3 | Capital stock of material domestic and foreign subsidiaries, as defined by the senior secured credit facility agreement, are eligible to be pledged as collateral. As of December 31, 2013, the total investments held within these eligible subsidiaries exceeded the amount of the outstanding debt. | ||||||||||||||
-4 | Borrowing rates range from 1.75% to 3.25% plus London interbank offered rate (“LIBOR”) per annum based on the amount outstanding. | ||||||||||||||
CLO Debt | |||||||||||||||
The indentures governing the Company’s CLO transactions stipulate the reinvestment period during which the collateral manager, which is an affiliate of the Company’s Manager, can generally sell or buy assets at its discretion and can reinvest principal proceeds into new assets. CLO 2007-A, CLO 2005-1, CLO 2005-2, CLO 2006-1 and CLO 2007-1 are no longer in their reinvestment periods as of September 30, 2014. As a result, principal proceeds from the assets held in each of these transactions are generally used to amortize the outstanding balance of senior notes outstanding. | |||||||||||||||
During the three and five months ended September 30, 2014, $104.4 million and $301.3 million, respectively, of original CLO 2005-1, CLO 2005-2, CLO 2006-1 and CLO 2007-1 senior notes were repaid. Pursuant to the terms of the indentures governing our CLO transactions, the Company has the ability to call its CLO transactions after the end of the respective non-call periods. During July 2014, the Company called CLO 2007-A. As a result, during both the three and five months ended September 30, 2014, the Company repaid aggregate senior and mezzanine notes totaling $431.0 million. The remaining CLO 2007-A mezzanine notes totaling $63.9 million were repaid in October 2014. During the four months ended April 30, 2014, $182.6 million of original CLO 2007-A, CLO 2005-1, CLO 2005-2 and CLO 2006-1 senior notes were repaid. Comparatively, during the three and nine months ended September 30, 2013, an aggregate $190.8 million and $697.1 million, respectively, of original CLO 2007-A, CLO 2005-1, CLO 2005-2 and CLO 2006-1 senior notes were repaid. CLO 2012-1, CLO 2013-1 and CLO 2013-2 will end their reinvestment periods during December 2016, July 2017 and January 2018, respectively. | |||||||||||||||
CLO 2011-1 does not have a reinvestment period and all principal proceeds from holdings in CLO 2011-1 are used to amortize the transaction. During both the three and five months ended September 30, 2014, $46.6 million of original CLO 2011-1 senior notes were repaid, while during the four months ended April 30, 2014, $39.4 million of original CLO 2011-1 senior notes were repaid. Comparatively, during the three and nine months ended September 30, 2013, $31.7 million and $77.2 million, respectively, of original CLO 2011-1 senior notes were repaid. | |||||||||||||||
On September 16, 2014, the Company closed CLO 9, a $518.0 million secured financing transaction maturing on October 15, 2026. The Company issued $463.8 million par amount of senior secured notes to unaffiliated investors, all of which was floating rate with a weighted-average coupon of three-month LIBOR plus 2.01%. The Company also issued $15.0 million of subordinated notes to unaffiliated investors. The investments that are owned by CLO 9 collateralize the CLO 9 debt, and as a result, those investments are not available to the Company, its creditors or shareholders. | |||||||||||||||
During the five months ended September 30, 2014, the Company issued $15.0 million par amount of CLO 2006-1 Class E notes for proceeds of $15.0 million and $37.5 million par amount of CLO 2007-1 Class E notes for proceeds of $37.6 million. | |||||||||||||||
During the four months ended April 30, 2014, the Company issued: (i) $61.1 million par amount of CLO 2007-A class D and E notes for proceeds of $61.3 million, (ii) $72.0 million par amount of CLO 2005-1 class D through F notes for proceeds of $71.5 million, (iii) $21.9 million par amount of CLO 2007-1 class E notes for proceeds of $21.9 million, (iv) $29.8 million par amount of CLO 2007-A class G notes for proceeds of $30.2 million and (v) $29.8 million par amount of CLO 2007-A class H notes for proceeds of $30.1 million. | |||||||||||||||
On January 23, 2014, the Company closed CLO 2013-2, a $384.0 million secured financing transaction maturing on January 23, 2026. The Company issued $339.3 million par amount of senior secured notes to unaffiliated investors, of which $319.3 million was floating rate with a weighted-average coupon of three-month LIBOR plus 2.16% and $20.0 million was fixed rate at 3.74%. The investments that are owned by CLO 2013-2 collateralize the CLO 2013-2 debt, and as a result, those investments are not available to the Company, its creditors or shareholders. | |||||||||||||||
On September 27, 2013, the Company amended the CLO 2011-1 senior loan agreement (the “CLO 2011-1 Agreement”) to upsize the transaction by $300.0 million, of which CLO 2011-1 is now able to borrow up to an incremental $225.0 million. Under the amended CLO 2011-1 Agreement, CLO 2011-1 matures on August 15, 2020 and borrowings under the CLO 2011-1 Agreement bear interest at a rate of the three-month LIBOR plus 1.35%. | |||||||||||||||
On June 25, 2013, the Company closed CLO 2013-1, a $519.4 million secured financing transaction maturing on July 15, 2025. The Company issued $458.5 million par amount of senior secured notes to unaffiliated investors, of which $442.0 million was floating rate with a weighted-average coupon of three-month LIBOR plus 1.67% and $16.5 million was fixed rate at 3.73%. The investments that are owned by CLO 2013-1 collateralize the CLO 2013-1 debt, and as a result, those investments are not available to the Company, its creditors or shareholders. | |||||||||||||||
Credit Facilities | |||||||||||||||
Senior Secured Credit Facility | |||||||||||||||
On November 30, 2012, the Company entered into a credit agreement for a three-year $150.0 million revolving credit facility, maturing on November 30, 2015 (the “2015 Facility”). The Company had the right to prepay loans under the 2015 Facility in whole or in part at any time. Loans under the 2015 Facility bore interest at a rate equal to, at the Company’s option, LIBOR plus 2.25% per annum, or an alternate base rate plus 1.25% per annum. As of December 31, 2013, the Company had $75.0 million of borrowings outstanding under the 2015 Facility. In connection with the merger, the Company terminated the 2015 Facility on April 30, 2014, with all amounts outstanding repaid as of March 31, 2014. | |||||||||||||||
Asset-Based Borrowing Facilities | |||||||||||||||
On May 20, 2014, the Company’s five-year nonrecourse, asset-based revolving credit facility, maturing on November 5, 2015 (the “2015 Natural Resources Facility”), was adjusted and reduced to $75.0 million, which is subject to, among other things, the terms of a borrowing base derived from the value of eligible specified oil and gas assets. The borrowing base was subject to certain caps and concentration limits customary for financings of this type. The Company had the right to prepay loans under the 2015 Natural Resources Facility in whole or in part at any time. Loans under the 2015 Natural Resources Facility bore interest at a rate equal to LIBOR plus a tiered applicable margin ranging from 1.75% to 2.75% per annum. The 2015 Natural Resources Facility contained customary covenants applicable to the Company. As of December 31, 2013, the Company had $50.3 million of borrowings outstanding under the 2015 Natural Resources Facility. On September 30, 2014, the 2015 Natural Resources Facility was terminated in connection with the Trinity transaction, with all amounts outstanding repaid as of September 30, 2014. | |||||||||||||||
On February 27, 2013, the Company entered into a separate credit agreement for a five-year $6.0 million non-recourse, asset-based revolving credit facility, maturing on February 27, 2018 (the “2018 Natural Resources Facility”), that was subject to, among other things, the terms of a borrowing base derived from the value of eligible specified oil and gas assets. On May 15, 2014, the 2018 Natural Resources Facility was adjusted and increased to $68.5 million. The Company had the right to prepay loans under the 2018 Natural Resources Facility in whole or in part at any time. Loans under the 2018 Natural Resources Facility bore interest at a rate equal to LIBOR plus a tiered applicable margin ranging from 1.75% to 3.25% per annum. The 2018 Natural Resources Facility contains customary covenants applicable to the Company. As of December 31, 2013, the Company had zero outstanding under the 2018 Natural Resources Facility. On July 1, 2014, the 2018 Natural Resources Facility was terminated in connection with the Company’s distribution of certain natural resources assets to its Parent, with all amounts outstanding repaid as of July 1, 2014. | |||||||||||||||
As of the termination date for each of the respective credit facilities and December 31, 2013, the Company believes it was in compliance with the covenant requirements for its credit facilities. | |||||||||||||||
Convertible Debt | |||||||||||||||
On January 18, 2013, in accordance with the indenture relating to the Company’s $172.5 million 7.5% convertible senior notes due January 15, 2017 (“7.5% Notes”), the Company issued a conversion rights termination notice (“Termination Notice”) to holders of the 7.5% Notes whereby it terminated the right to convert the 7.5% Notes to common shares. The conversion rate as of January 18, 2013 was equal to 141.8256 common shares for each $1,000 principal amount of 7.5% Notes, plus an additional 9.2324 common shares per $1,000 principal amount to account for the make-whole premium. Holders of $172.5 million 7.5% Notes submitted their notes for conversion for which the Company satisfied by physical settlement with 26.1 million common shares. | |||||||||||||||
DERIVATIVE_INSTRUMENTS
DERIVATIVE INSTRUMENTS | 9 Months Ended | |||||||||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | ' | |||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | ' | |||||||||||||||||||||||||||||
NOTE 8. DERIVATIVE INSTRUMENTS | ||||||||||||||||||||||||||||||
The Company enters into derivative transactions in order to hedge its interest rate risk exposure to the effects of interest rate changes. Additionally, the Company enters into derivative transactions in the course of its portfolio management activities. The counterparties to the Company’s derivative agreements are major financial institutions with which the Company and its affiliates may also have other financial relationships. In the event of nonperformance by the counterparties, the Company is potentially exposed to losses. The counterparties to the Company’s derivative agreements have investment grade ratings and, as a result, the Company does not anticipate that any of the counterparties will fail to fulfill their obligations. | ||||||||||||||||||||||||||||||
The table below summarizes the aggregate notional amount and estimated net fair value of the derivative instruments as of September 30, 2014 and December 31, 2013 (amounts in thousands): | ||||||||||||||||||||||||||||||
As of | As of | |||||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||
Notional | Estimated | Notional | Estimated | |||||||||||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||||||||||||
Interest rate swaps | $ | — | $ | — | $ | 478,333 | $ | (42,078 | ) | |||||||||||||||||||||
Free-Standing Derivatives: | ||||||||||||||||||||||||||||||
Interest rate swaps | 442,833 | (45,556 | ) | — | — | |||||||||||||||||||||||||
Commodity swaps | — | 26 | — | 1,493 | ||||||||||||||||||||||||||
Credit default swaps—protection purchased | — | — | (100,000 | ) | (2,019 | ) | ||||||||||||||||||||||||
Foreign exchange forward contracts | (372,015 | ) | 17,248 | (320,380 | ) | (25,258 | ) | |||||||||||||||||||||||
Foreign exchange options | — | — | 129,900 | 8,941 | ||||||||||||||||||||||||||
Common stock warrants | — | — | — | 945 | ||||||||||||||||||||||||||
Total rate of return swaps | — | 233 | — | (229 | ) | |||||||||||||||||||||||||
Options | — | 6,038 | — | 6,794 | ||||||||||||||||||||||||||
Total | $ | (22,011 | ) | $ | (51,411 | ) | ||||||||||||||||||||||||
Cash Flow Hedges | ||||||||||||||||||||||||||||||
Interest Rate Swaps | ||||||||||||||||||||||||||||||
As described above in Note 2 to these condensed consolidated financial statements, in connection with the Merger Transaction and as of the Effective Date, the Company discontinued hedge accounting for its cash flow hedges and records changes in the estimated fair value of the derivative instruments in the condensed consolidated statements of operations. Accordingly, disclosures related to cash flow hedges pertain to the Predecessor Company. | ||||||||||||||||||||||||||||||
The Company uses interest rate swaps to hedge a portion of the interest rate risk associated with its borrowings under CLO senior secured notes as well as certain of its floating rate junior subordinated notes. The Predecessor Company designated these interest rate swaps as cash flow hedges and as of December 31, 2013, had interest rate swaps with a notional amount totaling $478.3 million. Changes in the estimated fair value of the interest rate swaps were recorded through accumulated other comprehensive loss, with gains or losses representing hedge ineffectiveness, if any, recognized in earnings during the reporting period. | ||||||||||||||||||||||||||||||
The following table presents the net (losses) gains recognized in other comprehensive loss related to derivatives in cash flow hedging relationships for the four months ended April 30, 2014 and three and nine months ended September 30, 2013 (amounts in thousands): | ||||||||||||||||||||||||||||||
For the four | For the three | For the nine | ||||||||||||||||||||||||||||
months ended | months ended | months ended | ||||||||||||||||||||||||||||
April 30, 2014 | September 30, 2013 | September 30, 2013 | ||||||||||||||||||||||||||||
Net (losses) gains recognized in accumulated other comprehensive loss on cash flow hedges | $ | (5,442 | ) | $ | 6,813 | $ | 38,211 | |||||||||||||||||||||||
For all hedges where hedge accounting was being applied, effectiveness testing and other procedures to ensure the ongoing validity of the hedges were performed at least quarterly. During the four months ended April 30, 2014 and three and nine months ended September 30, 2013, the Company did not recognize any ineffectiveness in income on the condensed consolidated statements of operations from its cash flow hedges. | ||||||||||||||||||||||||||||||
As of September 30, 2014, the Successor Company had interest rate swaps with a notional amount of $442.8 million, which were classified as free-standing derivatives, rather than cash flow hedges. | ||||||||||||||||||||||||||||||
Free-Standing Derivatives | ||||||||||||||||||||||||||||||
Free-standing derivatives are derivatives that the Company has entered into in conjunction with its investment and risk management activities, but for which the Company has not designated the derivative contract as a hedging instrument for accounting purposes. Such derivative contracts may include commodity derivatives, credit default swaps (“CDS”) and foreign exchange contracts and options. Free-standing derivatives also include investment financing arrangements (total rate of return swaps) whereby the Company receives the sum of all interest, fees and any positive change in fair value amounts from a reference asset with a specified notional amount and pays interest on such notional amount plus any negative change in fair value amounts from such reference asset. | ||||||||||||||||||||||||||||||
Gains and losses on free-standing derivatives are reported in net realized and unrealized gain (loss) on derivatives and foreign exchange in the condensed consolidated statements of operations. Unrealized gains (losses) represent the change in fair value of the derivative instruments and are noncash items. | ||||||||||||||||||||||||||||||
Credit Default Swaps | ||||||||||||||||||||||||||||||
A CDS is a contract in which the contract buyer pays, in the case of a short position, or receives, in the case of long position, a periodic premium until the contract expires or a credit event occurs. In return for this premium, the contract seller receives a payment from or makes a payment to the buyer if there is a credit default or other specified credit event with respect to the issuer (also known as the reference entity) of the underlying credit instrument referenced in the CDS. Typical credit events include bankruptcy, dissolution or insolvency of the reference entity, failure to pay and restructuring of the obligations of the reference entity. | ||||||||||||||||||||||||||||||
As of September 30, 2014 and December 31, 2013, the Company had purchased protection with a notional amount of zero and $100.0 million, respectively. The Company sells or purchases protection to replicate fixed income securities and to complement the spot market when cash securities of the referenced entity of a particular maturity are not available or when the derivative alternative is less expensive compared to other purchasing alternatives. In addition, the Company may purchase protection to hedge economic exposure to declines in value of certain credit positions. The Company purchases its protection from banks and broker dealers, other financial institutions and other counterparties. | ||||||||||||||||||||||||||||||
Foreign Exchange Derivatives | ||||||||||||||||||||||||||||||
The Company holds certain positions that are denominated in a foreign currency, whereby movements in foreign currency exchange rates may impact earnings if the United States dollar significantly strengthens or weakens against foreign currencies. In an effort to minimize the effects of these fluctuations on earnings, the Company will from time to time enter into foreign exchange options or foreign exchange forward contracts related to the assets denominated in a foreign currency. As of September 30, 2014 and December 31, 2013, the net contractual notional balance of our foreign exchange options and forward contract liabilities totaled $372.0 million and $190.5 million, respectively, the majority of which related to certain of our foreign currency denominated assets. | ||||||||||||||||||||||||||||||
Free-Standing Derivatives Income (Loss) | ||||||||||||||||||||||||||||||
The following table presents the amounts recorded in net realized and unrealized gain (loss) on derivatives and foreign exchange on the condensed consolidated statements of operations for the three and five months ended September 30, 2014 and for the four months ended April 30, 2014 (amounts in thousands): | ||||||||||||||||||||||||||||||
Successor Company | Predecessor Company | |||||||||||||||||||||||||||||
Three months ended | Five months ended | Four months ended April 30, 2014 | ||||||||||||||||||||||||||||
September 30, 2014 | September 30, 2014 | |||||||||||||||||||||||||||||
Realized | Unrealized | Total | Realized | Unrealized | Total | Realized | Unrealized | Total | ||||||||||||||||||||||
gains | gains | gains | gains | gains | gains | |||||||||||||||||||||||||
(losses) | (losses) | (losses) | (losses) | (losses) | (losses) | |||||||||||||||||||||||||
Interest rate swaps | $ | — | $ | 2,892 | $ | 2,892 | $ | — | $ | 1,767 | $ | 1,767 | $ | — | $ | — | $ | — | ||||||||||||
Commodity swaps | 338 | 2,678 | 3,016 | (1,194 | ) | (672 | ) | (1,866 | ) | (2,515 | ) | (5,856 | ) | (8,371 | ) | |||||||||||||||
Credit default swaps(1) | — | — | — | — | — | — | (2,167 | ) | 1,986 | (181 | ) | |||||||||||||||||||
Foreign exchange forward contracts and options(2) | (11,489 | ) | 6,082 | (5,407 | ) | (13,129 | ) | 5,124 | (8,005 | ) | (2,068 | ) | 2,784 | 716 | ||||||||||||||||
Common stock warrants | 1,237 | (1,077 | ) | 160 | 1,237 | (1,082 | ) | 155 | — | 137 | 137 | |||||||||||||||||||
Total rate of return swaps | (765 | ) | 392 | (373 | ) | (596 | ) | 179 | (417 | ) | (2,349 | ) | 284 | (2,065 | ) | |||||||||||||||
Options | — | (136 | ) | (136 | ) | — | (646 | ) | (646 | ) | — | (19 | ) | (19 | ) | |||||||||||||||
Net realized and unrealized (losses) gains | $ | (10,679 | ) | $ | 10,831 | $ | 152 | $ | (13,682 | ) | $ | 4,670 | $ | (9,012 | ) | $ | (9,099 | ) | $ | (684 | ) | $ | (9,783 | ) | ||||||
-1 | Includes related income and expense on the derivatives. | |||||||||||||||||||||||||||||
-2 | Net of foreign exchange remeasurement gain or loss on foreign denominated assets. | |||||||||||||||||||||||||||||
The following table presents the amounts recorded in net realized and unrealized gain (loss) on derivatives and foreign exchange on the condensed consolidated statements of operations for three and nine months ended September 30, 2013 (amounts in thousands): | ||||||||||||||||||||||||||||||
Predecessor Company | ||||||||||||||||||||||||||||||
Three months ended September 30, 2013 | Nine months ended September 30, 2013 | |||||||||||||||||||||||||||||
Realized gains | Unrealized gains | Total | Realized gains | Unrealized gains | Total | |||||||||||||||||||||||||
(losses) | (losses) | (losses) | (losses) | |||||||||||||||||||||||||||
Commodity swaps | $ | (78 | ) | $ | (3,645 | ) | $ | (3,723 | ) | $ | 1,008 | $ | (2,725 | ) | $ | (1,717 | ) | |||||||||||||
Credit default swaps(1) | (365 | ) | (967 | ) | (1,332 | ) | (3,526 | ) | 552 | (2,974 | ) | |||||||||||||||||||
Foreign exchange forward contracts and options(2) | 502 | 1,444 | 1,946 | 2,770 | (4,929 | ) | (2,159 | ) | ||||||||||||||||||||||
Common stock warrants | — | (1,219 | ) | (1,219 | ) | — | 540 | 540 | ||||||||||||||||||||||
Total rate of return swaps | 447 | 729 | 1,176 | 447 | 729 | 1,176 | ||||||||||||||||||||||||
Options | — | 90 | 90 | (91 | ) | 213 | 122 | |||||||||||||||||||||||
Net realized and realized gains (losses) | $ | 506 | $ | (3,568 | ) | $ | (3,062 | ) | $ | 608 | $ | (5,620 | ) | $ | (5,012 | ) | ||||||||||||||
-1 | Includes related income and expense on the derivatives. | |||||||||||||||||||||||||||||
-2 | Net of foreign exchange remeasurement gain or loss on foreign denominated assets. | |||||||||||||||||||||||||||||
The Company is not subject to a master netting arrangement and the Company’s derivative instruments are presented on a gross basis on its condensed consolidated balance sheets. | ||||||||||||||||||||||||||||||
FAIR_VALUE_OF_FINANCIAL_INSTRU
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||||||||||||||||||||||||||||
NOTE 9. FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||||||||||||||||||||||||
Financial Instruments Not Carried at Estimated Fair Value | |||||||||||||||||||||||||||||
As described above in Note 2 to these condensed consolidated financial statements, as of the Effective Date, the Successor Company accounts for its investments, as well as its collateralized loan obligation secured notes at estimated fair value. Comparatively, the Predecessor Company accounted for certain of its corporate loans and its collateralized loan obligation secured notes at amortized cost. | |||||||||||||||||||||||||||||
The following table presents the carrying value and estimated fair value, as well as the respective hierarchy classifications, of the Company’s financial assets and liabilities that are not carried at estimated fair value on a recurring basis as of September 30, 2014 (amounts in thousands): | |||||||||||||||||||||||||||||
Successor Company | |||||||||||||||||||||||||||||
As of September 30, 2014 | Fair Value Hierarchy | ||||||||||||||||||||||||||||
Carrying | Estimated | Quoted Prices in | Significant Other | Significant | |||||||||||||||||||||||||
Amount | Fair Value | Active Markets | Observable | Unobservable | |||||||||||||||||||||||||
for Identical | Inputs (Level 2) | Inputs | |||||||||||||||||||||||||||
Assets (Level 1) | (Level 3) | ||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Cash, restricted cash, and cash equivalents | $ | 1,059,825 | $ | 1,059,825 | $ | 1,059,825 | $ | — | $ | — | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Senior notes | 414,905 | 412,571 | 412,571 | — | — | ||||||||||||||||||||||||
Junior subordinated notes | 246,484 | 243,394 | — | — | 243,394 | ||||||||||||||||||||||||
The following table presents the carrying value and estimated fair value, as well as the respective hierarchy classifications, of the Company’s financial assets and liabilities that are not carried at estimated fair value on a recurring basis as of December 31, 2013 (amounts in thousands): | |||||||||||||||||||||||||||||
Predecessor Company | |||||||||||||||||||||||||||||
As of December 31, 2013 | Fair Value Hierarchy | ||||||||||||||||||||||||||||
Carrying | Estimated | Quoted Prices in | Significant Other | Significant | |||||||||||||||||||||||||
Amount | Fair Value | Active Markets | Observable | Unobservable | |||||||||||||||||||||||||
for Identical | Inputs (Level 2) | Inputs | |||||||||||||||||||||||||||
Assets (Level 1) | (Level 3) | ||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Cash, restricted cash, and cash equivalents | $ | 507,552 | $ | 507,552 | $ | 507,552 | $ | — | $ | — | |||||||||||||||||||
Corporate loans, net of allowance for loan losses of $224,999 as of December 31, 2013(1) | 5,949,492 | 6,051,641 | — | 5,691,988 | 359,653 | ||||||||||||||||||||||||
Corporate loans held for sale(1) | 279,748 | 281,278 | — | 267,169 | 14,109 | ||||||||||||||||||||||||
Private equity investments, at cost(2) | 405 | 4,496 | — | — | 4,496 | ||||||||||||||||||||||||
Other assets | 5,763 | 5,513 | — | 5,513 | — | ||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Collateralized loan obligation secured debt | $ | 5,249,383 | $ | 5,179,207 | $ | — | $ | — | $ | 5,179,207 | |||||||||||||||||||
Credit facilities | 125,289 | 125,289 | — | — | 125,289 | ||||||||||||||||||||||||
Senior notes | 362,276 | 393,772 | 393,772 | — | — | ||||||||||||||||||||||||
Junior subordinated notes | 283,517 | 247,416 | — | — | 247,416 | ||||||||||||||||||||||||
-1 | Corporate loans held for investment are carried at amortized cost net of allowance for loan losses, while corporate loans held for sale are carried at the lower of cost or estimated fair value. Refer to “Fair Value Measurements” for a table presenting the corporate loans which are measured at fair value on a non-recurring basis. | ||||||||||||||||||||||||||||
-2 | Included within other assets on the condensed consolidated balance sheets. | ||||||||||||||||||||||||||||
Fair Value Measurements | |||||||||||||||||||||||||||||
The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2014, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (amounts in thousands): | |||||||||||||||||||||||||||||
Successor Company | |||||||||||||||||||||||||||||
Quoted Prices in | Significant | Significant | Balance as of | ||||||||||||||||||||||||||
Active Markets | Other | Unobservable Inputs | September 30, | ||||||||||||||||||||||||||
for Identical | Observable | (Level 3) | 2014 | ||||||||||||||||||||||||||
Assets (Level 1) | Inputs (Level 2) | ||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Securities: | |||||||||||||||||||||||||||||
Corporate debt securities | $ | — | $ | 317,471 | $ | 214,543 | $ | 532,014 | |||||||||||||||||||||
Residential mortgage-backed securities | — | — | 57,146 | 57,146 | |||||||||||||||||||||||||
Total securities | — | 317,471 | 271,689 | 589,160 | |||||||||||||||||||||||||
Corporate loans | — | 6,066,376 | 287,767 | 6,354,143 | |||||||||||||||||||||||||
Equity investments, at estimated fair value | 16,936 | 104,053 | 41,770 | 162,759 | |||||||||||||||||||||||||
Interests in joint ventures and partnerships | — | 7,684 | 737,321 | 745,005 | |||||||||||||||||||||||||
Other assets | — | 5,405 | — | 5,405 | |||||||||||||||||||||||||
Derivatives: | |||||||||||||||||||||||||||||
Interest rate swaps | — | 419 | — | 419 | |||||||||||||||||||||||||
Commodity swaps | — | 26 | — | 26 | |||||||||||||||||||||||||
Foreign exchange forward contracts | — | 19,061 | — | 19,061 | |||||||||||||||||||||||||
Total rate of return swaps | — | 233 | — | 233 | |||||||||||||||||||||||||
Options | — | — | 6,038 | 6,038 | |||||||||||||||||||||||||
Total derivatives | — | 19,739 | 6,038 | 25,777 | |||||||||||||||||||||||||
Total | $ | 16,936 | $ | 6,520,728 | $ | 1,344,585 | $ | 7,882,249 | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Collateralized loan obligation secured notes | $ | — | $ | — | $ | 5,443,586 | $ | 5,443,586 | |||||||||||||||||||||
Derivatives: | |||||||||||||||||||||||||||||
Interest rate swaps | — | 45,975 | — | 45,975 | |||||||||||||||||||||||||
Foreign exchange forward contracts | — | 1,813 | — | 1,813 | |||||||||||||||||||||||||
Total derivatives | — | 47,788 | — | 47,788 | |||||||||||||||||||||||||
Total | $ | — | $ | 47,788 | $ | 5,443,586 | $ | 5,491,374 | |||||||||||||||||||||
The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2013, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (amounts in thousands): | |||||||||||||||||||||||||||||
Predecessor Company | |||||||||||||||||||||||||||||
Quoted Prices in | Significant | Significant | Balance as of | ||||||||||||||||||||||||||
Active Markets | Other | Unobservable Inputs | December 31, | ||||||||||||||||||||||||||
for Identical | Observable | (Level 3) | 2013 | ||||||||||||||||||||||||||
Assets (Level 1) | Inputs (Level 2) | ||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Securities: | |||||||||||||||||||||||||||||
Securities available-for-sale | $ | — | $ | 326,940 | $ | 23,401 | $ | 350,341 | |||||||||||||||||||||
Other securities, at estimated fair value | — | 39,437 | 107,530 | 146,967 | |||||||||||||||||||||||||
Residential mortgage-backed securities | — | — | 76,004 | 76,004 | |||||||||||||||||||||||||
Total securities | — | 366,377 | 206,935 | 573,312 | |||||||||||||||||||||||||
Corporate loans, at estimated fair value | — | 84,680 | 152,800 | 237,480 | |||||||||||||||||||||||||
Equity investments, at estimated fair value | 39,515 | 3,638 | 138,059 | 181,212 | |||||||||||||||||||||||||
Interests in joint ventures and partnerships | 14,836 | — | 415,247 | 430,083 | |||||||||||||||||||||||||
Derivatives: | |||||||||||||||||||||||||||||
Interest rate swaps | — | 3,290 | — | 3,290 | |||||||||||||||||||||||||
Commodity swaps | — | 5,408 | — | 5,408 | |||||||||||||||||||||||||
Foreign exchange forward contracts | — | 4,846 | — | 4,846 | |||||||||||||||||||||||||
Foreign exchange options | — | — | 8,941 | 8,941 | |||||||||||||||||||||||||
Common stock warrants | — | 945 | — | 945 | |||||||||||||||||||||||||
Options | — | — | 6,794 | 6,794 | |||||||||||||||||||||||||
Total derivatives | — | 14,489 | 15,735 | 30,224 | |||||||||||||||||||||||||
Total | $ | 54,351 | $ | 469,184 | $ | 928,776 | $ | 1,452,311 | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Derivatives: | |||||||||||||||||||||||||||||
Interest rate swaps | — | 45,368 | — | 45,368 | |||||||||||||||||||||||||
Commodity swaps | — | 3,915 | — | 3,915 | |||||||||||||||||||||||||
Credit default swaps—protection purchased | — | 2,019 | — | 2,019 | |||||||||||||||||||||||||
Foreign exchange forward contracts | — | 30,104 | — | 30,104 | |||||||||||||||||||||||||
Total rate of return swaps | — | 229 | — | 229 | |||||||||||||||||||||||||
Total derivatives | — | 81,635 | — | 81,635 | |||||||||||||||||||||||||
Total | $ | — | $ | 81,635 | $ | — | $ | 81,635 | |||||||||||||||||||||
The following table presents information about the Company’s assets measured at fair value on a non-recurring basis as of December 31, 2013, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (amounts in thousands). There were no liabilities measured at fair value on a non-recurring basis: | |||||||||||||||||||||||||||||
Quoted Prices in | Significant Other | Significant | Balance as of | ||||||||||||||||||||||||||
Active Markets | Observable | Unobservable | December 31, | ||||||||||||||||||||||||||
for Identical | Inputs (Level 2) | Inputs (Level 3) | 2013 | ||||||||||||||||||||||||||
Assets (Level 1) | |||||||||||||||||||||||||||||
Corporate loans held for sale(1) | $ | — | $ | 90,485 | $ | 5,568 | $ | 96,053 | |||||||||||||||||||||
Total | $ | — | $ | 90,485 | $ | 5,568 | $ | 96,053 | |||||||||||||||||||||
-1 | As of December 31, 2013, total loans held for sale had a carrying value of $279.7 million of which $96.1 million was carried at estimated fair value and the remaining $183.6 million carried at amortized cost. | ||||||||||||||||||||||||||||
Whenever events or changes in circumstances indicate that the carrying amounts of the Company’s oil and gas properties may not be recoverable, the Company evaluates its proved oil and natural gas properties and related equipment and facilities for impairment on a field-by-field basis. For the year ended December 31, 2013, the Company recorded impairment charges totaling $10.4 million to write down certain of its oil and natural gas properties with a carrying amount of $16.1 million to an estimated fair value of $5.7 million. | |||||||||||||||||||||||||||||
Level 3 Fair Value Rollforward | |||||||||||||||||||||||||||||
The following table presents additional information about assets and liabilities, including derivatives, that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value, for the three and five months ended September 30, 2014 (amounts in thousands): | |||||||||||||||||||||||||||||
Successor Company | |||||||||||||||||||||||||||||
Assets | Liabilities | ||||||||||||||||||||||||||||
Corporate | Residential | Corporate | Equity | Interests in | Foreign | Options | Collateralized | ||||||||||||||||||||||
Debt | Mortgage- | Loans | Investments, | Joint | Exchange | Loan | |||||||||||||||||||||||
Securities | Backed | at Estimated | Ventures and | Options, | Obligation | ||||||||||||||||||||||||
Securities | Fair Value | Partnerships | Net | Secured Notes | |||||||||||||||||||||||||
Beginning balance as of May 1, 2014 | $ | 156,500 | $ | 59,623 | $ | 294,218 | $ | 157,765 | $ | 472,467 | $ | 8,854 | $ | 6,684 | $ | 5,663,665 | |||||||||||||
Total gains or losses (for the period): | |||||||||||||||||||||||||||||
Included in earnings(1) | 2,185 | 1,359 | 2,951 | 2,160 | 21,690 | (1,798 | ) | (509 | ) | 28,669 | |||||||||||||||||||
Transfers into Level 3 | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Transfers out of Level 3(2) | — | — | — | (1,230 | ) | — | — | — | — | ||||||||||||||||||||
Purchases | 20,000 | — | 1,261 | — | 27,466 | — | — | 52,594 | |||||||||||||||||||||
Sales | (3,966 | ) | — | (2,912 | ) | — | — | — | — | — | |||||||||||||||||||
Settlements | (5,127 | ) | (1,740 | ) | 4,764 | (17,535 | ) | (6,067 | ) | — | — | (197,014 | ) | ||||||||||||||||
Ending balance as of June 30, 2014 | $ | 169,592 | $ | 59,242 | $ | 300,282 | $ | 141,160 | $ | 515,556 | $ | 7,056 | $ | 6,175 | $ | 5,547,914 | |||||||||||||
Total gains or losses (for the period): | |||||||||||||||||||||||||||||
Included in earnings(1) | (7,751 | ) | 1,421 | (10,084 | ) | (3,265 | ) | 8,639 | (7,056 | ) | (137 | ) | 5,468 | ||||||||||||||||
Transfers into Level 3 | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Transfers out of Level 3 | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Purchases | 29,780 | — | 1,327 | — | 15,381 | — | — | 471,441 | |||||||||||||||||||||
Sales | (6,870 | ) | — | — | — | (13,795 | ) | — | — | — | |||||||||||||||||||
Settlements | 29,792 | (3,517 | ) | (3,758 | ) | (96,125 | ) | 211,540 | — | — | (581,237 | ) | |||||||||||||||||
Ending balance as of September 30, 2014 | $ | 214,543 | $ | 57,146 | $ | 287,767 | $ | 41,770 | $ | 737,321 | $ | — | $ | 6,038 | $ | 5,443,586 | |||||||||||||
Change in unrealized gains or losses for the three months ended September 30, 2014 included in earnings for assets held at the end of the reporting period(1) | $ | (7,751 | ) | $ | (185 | ) | $ | (10,084 | ) | $ | (3,265 | ) | $ | 8,639 | $ | — | $ | (137 | ) | $ | 5,324 | ||||||||
Change in unrealized gains or losses for the five months ended September 30, 2014 included in earnings for assets held at the end of the reporting period(1) | $ | (5,566 | ) | $ | 438 | $ | (7,092 | ) | $ | 109 | $ | 26,272 | $ | — | $ | (646 | ) | $ | 33,993 | ||||||||||
-1 | Amounts are included in net realized and unrealized (loss) gain on investments or net realized and unrealized gain (loss) on derivatives and foreign exchange in the condensed consolidated statements of operations. Amounts for collateralized loan obligation secured notes, which represent liabilities measured at fair value, are included in net realized and unrealized loss on debt in the condensed consolidated statements of operations. | ||||||||||||||||||||||||||||
The following table presents additional information about assets, including derivatives, that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value, for the four months ended April 30, 2014 (amounts in thousands): | |||||||||||||||||||||||||||||
Predecessor Company | |||||||||||||||||||||||||||||
Securities | Other | Residential | Corporate | Equity | Interests in | Foreign | Options | ||||||||||||||||||||||
Available- | Securities, | Mortgage- | Loans, at | Investments, | Joint | Exchange | |||||||||||||||||||||||
For-Sale | at Estimated | Backed | Estimated | at Estimated | Ventures and | Options, | |||||||||||||||||||||||
Fair Value | Securities | Fair Value | Fair Value | Partnerships | Net | ||||||||||||||||||||||||
Beginning balance as of January 1, 2014 | $ | 23,401 | $ | 107,530 | $ | 76,004 | $ | 152,800 | $ | 138,059 | $ | 415,247 | $ | 8,941 | $ | 6,794 | |||||||||||||
Total gains or losses (for the period): | |||||||||||||||||||||||||||||
Included in earnings(1) | 22 | 3,059 | 3,088 | (5,123 | ) | 9,076 | 22,377 | (813 | ) | (302 | ) | ||||||||||||||||||
Included in other comprehensive income | 121 | — | — | — | — | — | — | — | |||||||||||||||||||||
Transfers into Level 3 | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Transfers out of Level 3(3) | — | — | — | — | (8,751 | ) | — | — | — | ||||||||||||||||||||
Purchases | — | 25,000 | — | 8,822 | — | 42,683 | — | — | |||||||||||||||||||||
Sales | — | — | (17,810 | ) | — | — | — | — | — | ||||||||||||||||||||
Settlements | (16 | ) | (10,078 | ) | (2,529 | ) | (3,104 | ) | 120,593 | 14,113 | — | — | |||||||||||||||||
Ending balance as of March 31, 2014 | 23,528 | 125,511 | 58,753 | 153,395 | 258,977 | 494,420 | 8,128 | 6,492 | |||||||||||||||||||||
Total gains or losses (for the period): | |||||||||||||||||||||||||||||
Included in earnings(1) | 44 | 479 | 1,416 | 1,240 | 12,126 | (24,158 | ) | 726 | 192 | ||||||||||||||||||||
Included in other comprehensive income | 33 | — | — | — | — | — | — | — | |||||||||||||||||||||
Transfers into Level 3(2) | 6,937 | — | — | — | — | — | — | — | |||||||||||||||||||||
Transfers out of Level 3(3) | — | — | — | — | (119,033 | ) | — | — | — | ||||||||||||||||||||
Purchases | — | — | — | — | — | 1,615 | — | — | |||||||||||||||||||||
Sales | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Settlements | (32 | ) | — | (546 | ) | 2,272 | — | (1,184 | ) | — | — | ||||||||||||||||||
Ending balance as of April 30, 2014 | $ | 30,510 | $ | 125,990 | $ | 59,623 | $ | 156,907 | $ | 152,070 | $ | 470,693 | $ | 8,854 | $ | 6,684 | |||||||||||||
Change in unrealized gains or losses for the period included in earnings for the four months ended April 30, 2014 for assets held at the end of the reporting period(1) | $ | 66 | $ | 2,683 | $ | 5,242 | $ | 4,445 | $ | 20,499 | $ | (1,781 | ) | $ | (87 | ) | $ | (110 | ) | ||||||||||
-1 | Amounts are included in net realized and unrealized (loss) gain on investments or net realized and unrealized gain (loss) on derivatives and foreign exchange in the condensed consolidated statements of operations. | ||||||||||||||||||||||||||||
-2 | Securities available-for-sale were transferred into Level 3 because observable market data was no longer available as a result of an asset-restructure. | ||||||||||||||||||||||||||||
-3 | Equity investments, at estimated fair value were transferred out of Level 3 because observable market data became available as a result of asset-restructures. | ||||||||||||||||||||||||||||
Certain interests in joint ventures and partnerships were transferred from Level 1 to Level 2 during the five months ended September 30, 2014 due to illiquid market conditions. There were no transfers between Level 1 and Level 2 during the three months ended September 30, 2014 and four months ended April 30, 2014. | |||||||||||||||||||||||||||||
The following table presents additional information about assets, including derivatives that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value, for the three months ended September 30, 2013 (amounts in thousands): | |||||||||||||||||||||||||||||
Predecessor Company | |||||||||||||||||||||||||||||
Securities | Other | Residential | Corporate | Equity | Options | Common | Foreign | Interests in | |||||||||||||||||||||
Available- | Securities, | Mortgage- | Loans, at | Investments, | Stock | Exchange | Joint | ||||||||||||||||||||||
For-Sale | at Estimated | Backed | Estimated | at Estimated | Warrants | Options, | Ventures and | ||||||||||||||||||||||
Fair Value | Securities | Fair Value | Fair Value | Net | Partnerships | ||||||||||||||||||||||||
Beginning balance as of July 1, 2013 | $ | 37,380 | $ | 27,872 | $ | 82,973 | $ | 45,936 | $ | 100,294 | $ | — | $ | 3,561 | $ | 5,751 | $ | 235,024 | |||||||||||
Total gains or losses (for the period): | |||||||||||||||||||||||||||||
Included in earnings(1) | 297 | 1,384 | 1,747 | 497 | 5,558 | 90 | (1,475 | ) | 2,180 | 3,739 | |||||||||||||||||||
Included in other comprehensive income | 338 | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Transfers into Level 3 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Transfers out of Level 3 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Purchases | — | 8,100 | — | 37,959 | 5,000 | 8,790 | — | — | 132,198 | ||||||||||||||||||||
Sales | — | — | — | — | (198 | ) | — | — | — | — | |||||||||||||||||||
Settlements | 936 | (1,154 | ) | (5,334 | ) | 89 | — | — | — | — | (38,040 | ) | |||||||||||||||||
Ending balance as of September 30, 2013 | $ | 38,951 | $ | 36,202 | $ | 79,386 | $ | 84,841 | $ | 110,654 | $ | 8,880 | $ | 2,086 | $ | 7,931 | $ | 332,921 | |||||||||||
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period(1) | $ | 297 | $ | 1,384 | $ | 5,868 | $ | 497 | $ | 5,857 | $ | 90 | $ | (1,475 | ) | $ | 2,180 | $ | 3,739 | ||||||||||
-1 | Amounts are included in net realized and unrealized (loss) gain on investments or net realized and unrealized gain (loss) on derivatives and foreign exchange in the condensed consolidated statements of operations. | ||||||||||||||||||||||||||||
The following table presents additional information about assets, including derivatives that are measured at fair value on a recurring basis for which the Company has utilized level 3 inputs to determine fair value, for the nine months ended September 30, 2013 (amounts in thousands): | |||||||||||||||||||||||||||||
Predecessor Company | |||||||||||||||||||||||||||||
Securities | Other | Residential | Corporate | Equity | Options | Common | Foreign | Interests in | |||||||||||||||||||||
Available- | Securities, | Mortgage- | Loans, at | Investments, | Stock | Exchange | Joint | ||||||||||||||||||||||
For-Sale | at Estimated | Backed | Estimated | at Estimated | Warrants | Options, | Ventures and | ||||||||||||||||||||||
Fair Value | Securities | Fair Value | Fair Value | Net | Partnerships | ||||||||||||||||||||||||
Beginning balance as of January 1, 2013 | $ | 42,221 | $ | 2,909 | $ | 83,842 | $ | 16,141 | $ | 97,746 | $ | — | $ | 1,574 | $ | 8,277 | $ | 142,477 | |||||||||||
Total gains or losses (for the period): | |||||||||||||||||||||||||||||
Included in earnings(1) | 279 | 2,656 | 7,301 | (555 | ) | 8,648 | 90 | 512 | (346 | ) | 7,646 | ||||||||||||||||||
Included in other comprehensive income | 559 | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Transfers into Level 3 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Transfers out of Level 3 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Purchases | — | 31,791 | — | 69,727 | 5,003 | 8,790 | — | — | 229,862 | ||||||||||||||||||||
Sales | — | — | — | — | (198 | ) | — | — | — | — | |||||||||||||||||||
Settlements | (4,108 | ) | (1,154 | ) | (11,757 | ) | (832 | ) | (545 | ) | — | — | — | (47,064 | ) | ||||||||||||||
Ending balance as of September 30, 2013 | $ | 38,951 | $ | 36,202 | $ | 79,386 | $ | 84,841 | $ | 110,654 | $ | 8,880 | $ | 2,086 | $ | 7,931 | $ | 332,921 | |||||||||||
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period(1) | $ | 279 | $ | 2,656 | $ | 21,565 | $ | (851 | ) | $ | 8,947 | $ | 90 | $ | 513 | $ | (346 | ) | $ | 7,646 | |||||||||
-1 | Amounts are included in net realized and unrealized (loss) gain on investments or net realized and unrealized gain (loss) on derivatives and foreign exchange in the condensed consolidated statements of operations. | ||||||||||||||||||||||||||||
There were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2013. | |||||||||||||||||||||||||||||
Valuation Techniques and Inputs for Level 3 Fair Value Measurements | |||||||||||||||||||||||||||||
The following table presents additional information about valuation techniques and inputs used for assets and liabilities, including derivatives, that are measured at fair value and categorized within Level 3 as of September 30, 2014 (dollar amounts in thousands): | |||||||||||||||||||||||||||||
Successor Company | |||||||||||||||||||||||||||||
Balance as of | Valuation | Unobservable | Weighted | Range | Impact to | ||||||||||||||||||||||||
September 30, | Techniques(1) | Inputs(2) | Average(3) | Valuation | |||||||||||||||||||||||||
2014 | from an | ||||||||||||||||||||||||||||
Increase in | |||||||||||||||||||||||||||||
Input(4) | |||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Corporate debt securities | $ | 214,543 | Yield analysis | Yield | 12% | 3% - 14% | Decrease | ||||||||||||||||||||||
Net leverage | 12x | 12x | Decrease | ||||||||||||||||||||||||||
EBITDA multiple | 9x | 8x - 10x | Increase | ||||||||||||||||||||||||||
Discount margin | 890bps | 830bps – 950bps | Decrease | ||||||||||||||||||||||||||
Broker quotes | Offered quotes | 102 | 101-104 | Increase | |||||||||||||||||||||||||
Residential mortgage – backed | $ | 57,146 | Discounted cash flows | Probability of default | 7% | 0% - 21% | Decrease | ||||||||||||||||||||||
securities | Loss severity | 25% | 12% - 35% | Decrease | |||||||||||||||||||||||||
Constant prepayment rate | 12% | 2% - 15% | -5 | ||||||||||||||||||||||||||
Corporate loans | $ | 287,767 | Yield Analysis | Yield | 10% | 3% - 18% | Decrease | ||||||||||||||||||||||
Net leverage | 6x | 0x - 13x | Decrease | ||||||||||||||||||||||||||
EBITDA multiple | 9x | 5x - 12x | Increase | ||||||||||||||||||||||||||
Equity investments, at estimated fair value(6) | $ | 41,770 | Inputs to both market comparables and | Weight ascribed to market comparables | 95% | 0% - 100% | -7 | ||||||||||||||||||||||
discounted cash flow | Weight ascribed to | 74% | 0% - 100% | -8 | |||||||||||||||||||||||||
discounted cash flows | |||||||||||||||||||||||||||||
Market comparables | LTM EBITDA multiple | 8x | 5x - 12x | Increase | |||||||||||||||||||||||||
Forward EBITDA multiple | 8x | 4x - 10x | Increase | ||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 13% | 10% - 15% | Decrease | |||||||||||||||||||||||||
LTM EBITDA exit multiple | 5x | 5x | Increase | ||||||||||||||||||||||||||
Interests in joint ventures and partnerships(9) | $ | 737,321 | Inputs to both market comparables and | Weight ascribed to market comparables | 50% | 0% - 100% | -7 | ||||||||||||||||||||||
discounted cash flow | Weight ascribed to | 62% | 0% - 100% | -8 | |||||||||||||||||||||||||
discounted cash flows | |||||||||||||||||||||||||||||
Market comparables | Current capitalization rate | 7% | 6% - 10% | Decrease | |||||||||||||||||||||||||
LTM EBITDA multiple | 11x | 9x - 15x | Increase | ||||||||||||||||||||||||||
Forward EBITDA multiple | 9x | 9x | Increase | ||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 11% | 8% - 18% | Decrease | |||||||||||||||||||||||||
LTM EBITDA exit multiple | 10x | 10x | Increase | ||||||||||||||||||||||||||
Options | $ | 6,038 | Inputs to both market comparables and | Weight ascribed to market comparables | 50% | 50% | -7 | ||||||||||||||||||||||
discounted cash flow | Weight ascribed to | 50% | 50% | -8 | |||||||||||||||||||||||||
discounted cash flows | |||||||||||||||||||||||||||||
Market comparables | LTM EBITDA multiple | 10x | 10x | Increase | |||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 13% | 13% | Decrease | |||||||||||||||||||||||||
LTM EBITDA exit multiple | 11x | 11x | Increase | ||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Collateralized loan obligation secured notes | $ | 5,443,586 | Yield analysis | Discount margin | 270bps | 90bps - 1500bps | Decrease | ||||||||||||||||||||||
Discounted cash flows | Probability of default | 3% | 2% - 3% | Decrease | |||||||||||||||||||||||||
Loss severity | 33% | 30% - 38% | Decrease | ||||||||||||||||||||||||||
-1 | For the assets that have more than one valuation technique, the Company may rely on the techniques individually or in aggregate based on a weight ascribed to each one ranging from 0-100%. When determining the weighting ascribed to each valuation methodology, the Company considers, among other factors, the availability of direct market comparables, the applicability of a discounted cash flow analysis and the expected hold period and manner of realization for the investment. These factors can result in different weightings among the investments and in certain instances, may result in up to a 100% weighting to a single methodology. Broker quotes obtained for valuation purposes are reviewed by the Company through other valuation techniques. | ||||||||||||||||||||||||||||
-2 | In determining certain of these inputs, management evaluates a variety of factors including economic conditions, industry and market developments; market valuations of comparable companies; and company specific developments including exit strategies and realization opportunities. | ||||||||||||||||||||||||||||
-3 | Weighted average amounts are based on the estimated fair values. | ||||||||||||||||||||||||||||
-4 | Unless otherwise noted, this column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant increases and decreases in these inputs in isolation could result in significantly higher or lower fair value measurements. | ||||||||||||||||||||||||||||
-5 | The impact of changes in prepayment speeds may have differing impacts depending on the seniority of the instrument. Generally, an increase in the constant prepayment speed will positively impact the overall valuation of traditional mortgage assets. In contrast, an increase in the constant prepayment rate will negatively impact the overall valuation of interest-only strips. | ||||||||||||||||||||||||||||
-6 | When determining the illiquidity discount to be applied to equity investments, at estimated fair value, the Company seeks to take a uniform approach across its portfolio and generally applies a minimum 5% discount to all private equity investments carried at estimated fair value. The Company then evaluates such investments to determine if factors exist that could make it more challenging to monetize the investment and, therefore, justify applying a higher illiquidity discount. These factors generally include the salability of the investment, whether the issuer is undergoing significant restructuring activity or similar factors, as well as characteristics about the issuer including its size and/or whether it is experiencing, or expected to experience, a significant decline in earnings. Depending on the applicability of these factors, the Company determines the amount of any incremental illiquidity discount to be applied above the 5% minimum, and during the time the Company holds the investment, the illiquidity discount may be increased or decreased, from time to time, based on changes to these factors. The amount of illiquidity discount applied at any time requires considerable judgment about what a market participant would consider and is based on the facts and circumstances of each individual investment. Accordingly, the illiquidity discount ultimately considered by a market participant upon the realization of any investment may be higher or lower than that estimated by the Company in its valuations. | ||||||||||||||||||||||||||||
-7 | The directional change from an increase in the weight ascribed to the market comparables approach would increase the fair value of the Level 3 investments if the market comparables approach results in a higher valuation than the discounted cash flow approach. The opposite would be true if the market comparables approach results in a lower valuation than the discounted cash flow approach. | ||||||||||||||||||||||||||||
-8 | The directional change from an increase in the weight ascribed to the discounted cash flow approach would increase the fair value of the Level 3 investments if the discounted cash flow approach results in a higher valuation than the market comparables approach. The opposite would be true if the discounted cash flow approach results in a lower valuation than the market comparables approach. | ||||||||||||||||||||||||||||
-9 | Includes an asset that was valued using an independent third party valuation firm. | ||||||||||||||||||||||||||||
The following table presents additional information about valuation techniques and inputs used for assets, including derivatives, that are measured at fair value and categorized within Level 3 as of December 31, 2013 (dollar amounts in thousands): | |||||||||||||||||||||||||||||
Predecessor Company | |||||||||||||||||||||||||||||
Balance as of | Valuation | Unobservable | Weighted | Range | Impact to | ||||||||||||||||||||||||
December 31, | Techniques(1) | Inputs(2) | Average(3) | Valuation | |||||||||||||||||||||||||
2013 | from an | ||||||||||||||||||||||||||||
Increase in | |||||||||||||||||||||||||||||
Input(4) | |||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Securities available-for-sale | $ | 23,401 | Yield analysis | Yield | 10% | 6% - 12% | Decrease | ||||||||||||||||||||||
Net leverage | 12x | 11x - 12x | Decrease | ||||||||||||||||||||||||||
EBITDA multiple | 8x | 8x - 9x | Increase | ||||||||||||||||||||||||||
Broker quotes | Offered quotes | 105 | 104 - 105 | Increase | |||||||||||||||||||||||||
Other securities, at estimated fair | $ | 107,530 | Yield Analysis | Yield | 12% | 7% - 17% | Decrease | ||||||||||||||||||||||
value | EBITDA multiple | 8x | 7x - 8x | Increase | |||||||||||||||||||||||||
Illiquidity discount | 3% | 3% | Decrease | ||||||||||||||||||||||||||
Net leverage | 1x | 1x - 2x | Decrease | ||||||||||||||||||||||||||
Broker quotes | Offered quotes | 102 | 101 - 102 | Increase | |||||||||||||||||||||||||
Residential mortgage-backed | $ | 76,004 | Discounted cash flows | Probability of default | 7% | 0% - 21% | Decrease | ||||||||||||||||||||||
securities | Loss severity | 28% | 16% - 77% | Decrease | |||||||||||||||||||||||||
Constant prepayment rate | 15% | 3% - 35% | -5 | ||||||||||||||||||||||||||
Corporate loans, at estimated fair | $ | 152,800 | Yield Analysis | Yield | 16% | 14% - 23% | Decrease | ||||||||||||||||||||||
value | Net leverage | 7x | 4x - 12x | Decrease | |||||||||||||||||||||||||
EBITDA multiple | 8x | 6x - 11x | Increase | ||||||||||||||||||||||||||
Equity investments, at estimated fair value(6) | $ | 138,059 | Inputs to both market comparables and | Weight ascribed to market comparables | 50% | 33% - 100% | -7 | ||||||||||||||||||||||
discounted cash flow | Weight ascribed to discounted | 59% | 50% - 100% | -8 | |||||||||||||||||||||||||
cash flows | |||||||||||||||||||||||||||||
Market comparables | LTM EBITDA multiple | 12x | 6x - 16x | Increase | |||||||||||||||||||||||||
Forward EBITA multiple | 12x | 10x - 14x | Increase | ||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 11% | 8% - 14% | Decrease | |||||||||||||||||||||||||
LTM EBITDA exit multiple | 10x | 4x - 11x | Increase | ||||||||||||||||||||||||||
Interests in joint ventures and partnerships | $ | 415,247 | Inputs to both market comparables and | Weight ascribed to market comparables | 50% | 50% - 100% | -7 | ||||||||||||||||||||||
discounted cash flow | Weight ascribed to discounted | 50% | 50% - 100% | -8 | |||||||||||||||||||||||||
cash flows | |||||||||||||||||||||||||||||
Market comparables | Current capitalization rate | 7% | 6% - 9% | Decrease | |||||||||||||||||||||||||
LTM EBITDA multiple | 9x | 9x | Increase | ||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 12% | 8% - 24% | Decrease | |||||||||||||||||||||||||
Foreign exchange options | $ | 8,941 | Option pricing model | Forward and spot rates | 1 | 0 - 1 | -9 | ||||||||||||||||||||||
Options | $ | 6,794 | Inputs to both market | Weight ascribed to market | 50% | 50% | -7 | ||||||||||||||||||||||
comparables and | comparables | ||||||||||||||||||||||||||||
discounted cash flow | Weight ascribed to discounted | 50% | 50% | -8 | |||||||||||||||||||||||||
cash flows | |||||||||||||||||||||||||||||
Market comparables | LTM EBITDA multiple | 9x | 9x | Increase | |||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 12% | 12% | Decrease | |||||||||||||||||||||||||
LTM EBITDA exit multiple | 10x | 9x - 10x | Increase | ||||||||||||||||||||||||||
-1 | For the assets that have more than one valuation technique, the Company may rely on the techniques individually or in aggregate based on a weight ascribed to each one ranging from 0-100%. When determining the weighting ascribed to each valuation methodology, the Company considers, among other factors, the availability of direct market comparables, the applicability of a discounted cash flow analysis and the expected hold period and manner of realization for the investment. These factors can result in different weightings among the investments and in certain instances, may result in up to a 100% weighting to a single methodology. Broker quotes obtained for valuation purposes are reviewed by the Company through other valuation techniques. | ||||||||||||||||||||||||||||
-2 | In determining certain of these inputs, management evaluates a variety of factors including economic conditions, industry and market developments; market valuations of comparable companies; and company specific developments including exit strategies and realization opportunities. | ||||||||||||||||||||||||||||
-3 | Weighted average amounts are based on the estimated fair values. | ||||||||||||||||||||||||||||
-4 | Unless otherwise noted, this column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant increases and decreases in these inputs in isolation could result in significantly higher or lower fair value measurements. | ||||||||||||||||||||||||||||
-5 | The impact of changes in prepayment speeds may have differing impacts depending on the seniority of the instrument. Generally, an increase in the constant prepayment speed will positively impact the overall valuation of traditional mortgage assets. In contrast, an increase in the constant prepayment rate will negatively impact the overall valuation of interest-only strips. | ||||||||||||||||||||||||||||
-6 | When determining the illiquidity discount to be applied to equity investments, at estimated fair value, the Company seeks to take a uniform approach across its portfolio and generally applies a minimum 5% discount to all private equity investments carried at estimated fair value. The Company then evaluates such investments to determine if factors exist that could make it more challenging to monetize the investment and, therefore, justify applying a higher illiquidity discount. These factors generally include the salability of the investment, whether the issuer is undergoing significant restructuring activity or similar factors, as well as characteristics about the issuer including its size and/or whether it is experiencing, or expected to experience, a significant decline in earnings. Depending on the applicability of these factors, the Company determines the amount of any incremental illiquidity discount to be applied above the 5% minimum, and during the time the Company holds the investment, the illiquidity discount may be increased or decreased, from time to time, based on changes to these factors. The amount of illiquidity discount applied at any time requires considerable judgment about what a market participant would consider and is based on the facts and circumstances of each individual investment. Accordingly, the illiquidity discount ultimately considered by a market participant upon the realization of any investment may be higher or lower than that estimated by the Company in its valuations. | ||||||||||||||||||||||||||||
-7 | The directional change from an increase in the weight ascribed to the market comparables approach would increase the fair value of the Level 3 investments if the market comparables approach results in a higher valuation than the discounted cash flow approach. The opposite would be true if the market comparables approach results in a lower valuation than the discounted cash flow approach. | ||||||||||||||||||||||||||||
-8 | The directional change from an increase in the weight ascribed to the discounted cash flow approach would increase the fair value of the Level 3 investments if the discounted cash flow approach results in a higher valuation than the market comparables approach. The opposite would be true if the discounted cash flow approach results in a lower valuation than the market comparables approach. | ||||||||||||||||||||||||||||
-9 | The directional change from an increase in forward and spot rates varies and is dependent on the specific option. | ||||||||||||||||||||||||||||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2014 | |
COMMITMENTS AND CONTINGENCIES | ' |
COMMITMENTS AND CONTINGENCIES | ' |
NOTE 10. COMMITMENTS AND CONTINGENCIES | |
Commitments | |
As part of its strategy of investing in corporate loans, the Company commits to purchase interests in primary market loan syndications, which obligate the Company, subject to certain conditions, to acquire a predetermined interest in such loans at a specified price on a to-be-determined settlement date. Consistent with standard industry practices, once the Company has been informed of the amount of its syndication allocation in a particular loan by the syndication agent, the Company bears the risks and benefits of changes in the fair value of the syndicated loan from that date forward. In addition, the Company also commits to purchase corporate loans in the secondary market that similar to the above, the Company bears the risks and benefits of changes in the fair value from the trade date forward. As of December 31, 2013, the Company had committed to purchase corporate loans with aggregate par amounts totaling $62.7 million. As described above in Note 2 to these condensed consolidated financial statements, as of the Effective Date, the Company accounts for all corporate loans on trade date. As such, as of September 30, 2014, all corporate loans were included in the condensed consolidated balance sheets. In addition, the Company participates in certain contingent financing arrangements, whereby the Company is committed to provide funding of up to a specific predetermined amount at the discretion of the borrower or has entered into an agreement to acquire interests in certain assets. As of September 30, 2014 and December 31, 2013, the Company had unfunded financing commitments for corporate loans totaling $13.1 million and $17.4 million, respectively. The Company did not have any significant losses as of September 30, 2014, nor does it expect any significant losses related to those assets for which it committed to purchase and fund. | |
The Company participates in joint ventures and partnerships alongside KKR and its affiliates through which the Company contributes capital for assets, including development projects related to the Company’s interests in joint ventures and partnerships that hold commercial real estate and natural resources investments, as well as specialty lending focused businesses. The Company estimated these future contributions to total approximately $170.4 million as of September 30, 2014 and $325.5 million as of December 31, 2013. | |
Guarantees | |
As of September 30, 2014 and December 31, 2013, the Company had investments, held alongside KKR and its affiliates, in real estate entities that were financed with non-recourse debt totaling $331.5 million and $231.7 million, respectively. Under non-recourse debt, the lender generally does not have recourse against any other assets owned by the borrower or any related parties of the borrower, except for certain specified exceptions listed in the respective loan documents including customary “bad boy” acts. In connection with these investments, joint and several non-recourse “bad boy” guarantees were provided for losses relating solely to specified bad faith acts that damage the value of the real estate being used as collateral. The Company does not expect any related losses. As of September 30, 2014 and December 31, 2013, the Company also had financial guarantees related to its natural resources investments totaling zero and $17.9 million, respectively, for which the Company did not expect any significant losses. | |
Contingencies | |
From time to time, the Company is involved in various legal proceedings, lawsuits and claims incidental to the conduct of the Company’s business. The Company’s business is also subject to extensive regulation, which may result in regulatory proceedings against it. It is inherently difficult to predict the ultimate outcome, particularly in cases in which claimants seek substantial or unspecified damages, or where investigations or proceedings are at an early stage and the Company cannot predict with certainty the loss or range of loss that may be incurred. The Company has denied, or believes it has a meritorious defense and will deny liability in the significant cases pending against the Company. Based on current discussion and consultation with counsel, management believes that the resolution of these matters will not have a material impact on the Company’s condensed consolidated financial statements. | |
From December 19, 2013 to January 31, 2014, multiple putative class action lawsuits were filed in the Superior Court of California, County of San Francisco, the United States District Court of the District of Northern California, and the Court of Chancery of the State of Delaware by KFN shareholders against KFN, individual members of KFN’s board of directors, KKR & Co., and certain of KKR & Co.’s affiliates in connection with KFN’s entry into a merger agreement pursuant to which it would become a subsidiary of KKR & Co. The merger transaction was completed on April 30, 2014. The actions filed in California state court have been consolidated but an operative complaint has not been filed or designated. The complaint filed in the California federal court action, which was never served on the defendants, was voluntarily dismissed on May 6, 2014. Two of the Delaware actions were voluntarily dismissed, and the remaining Delaware actions were consolidated. On February 21, 2014, a consolidated complaint was filed in the consolidated Delaware action which all defendants moved to dismiss on March 7, 2014. On October 14, 2014, the Delaware Court of Chancery granted defendants’ motions to dismiss. | |
The complaints in these actions allege variously that the members of the KFN board of directors breached fiduciary duties owed to KFN shareholders by approving the proposed transaction for inadequate consideration; approving the proposed transaction in order to obtain benefits not equally shared by other KFN shareholders; entering into the merger agreement containing preclusive deal protection devices; failing to take steps to maximize the value to be paid to the KFN shareholders; and failing to disclose material information necessary for KFN shareholders to make a fully informed decision about the proposed transaction. The actions also allege variously that KKR & Co., and certain of KKR & Co.’s affiliates aided and abetted the alleged breaches of fiduciary duties and that KKR & Co. is a controlling shareholder of KFN by means of a management agreement between KFN and KKR Financial Advisors LLC, and KKR & Co. breached a fiduciary duty it allegedly owed to KFN shareholders by causing KFN to enter into the merger agreement. The relief sought in these actions includes, among other things, declaratory and injunctive relief concerning the alleged breaches of fiduciary duties and the proposed transaction, rescission, an accounting by defendants, damages and attorneys’ fees and costs and other relief. | |
SHAREHOLDERS_EQUITY
SHAREHOLDERS' EQUITY | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
SHAREHOLDERS' EQUITY | ' | ||||||||||
SHAREHOLDERS' EQUITY | ' | ||||||||||
NOTE 11. SHAREHOLDERS’ EQUITY | |||||||||||
Preferred Shares | |||||||||||
On January 17, 2013, the Company issued 14.95 million of Series A LLC Preferred Shares for gross proceeds of $373.8 million, and net proceeds of $362.0 million. The Series A LLC Preferred Shares trade on the NYSE under the ticker symbol “KFN.PR” and began trading on January 28, 2013. Distributions on the Series A LLC Preferred Shares are cumulative and are payable, when, as, and if declared by the Company’s board of directors, quarterly on January 15, April 15, July 15 and October 15 of each year at a rate per annum equal to 7.375%. | |||||||||||
Common Shares | |||||||||||
Pursuant to the merger agreement, on the date of the Merger Transaction (i) each outstanding option to purchase a KFN common share was cancelled, as the exercise price per share applicable to all outstanding options exceeded the cash value of the number of KKR & Co. common units that a holder of one KFN common share is entitled to in the merger, (ii) each outstanding restricted KFN common share (other than those held by the Company’s Manager) was converted into 0.51 KKR & Co. common units having the same terms and conditions as applied immediately prior to the effective time, and (iii) each phantom share under KFN’s Non-Employee Directors’ Deferred Compensation and Share Award Plan was converted into a phantom share in respect of 0.51 KKR & Co. common units and otherwise remains subject to the terms of the plan. In addition, on June 27, 2014, the Company’s board of directors approved a reverse stock split whereby the number of the Company’s issued and outstanding common shares was reduced to 100 common shares, all of which are held solely by the Parent. As such, disclosure related to common shares below pertains to the Predecessor Company. | |||||||||||
On May 4, 2007, the Company adopted an amended and restated share incentive plan (the “2007 Share Incentive Plan”) that provides for the grant of qualified incentive common share options that meet the requirements of Section 422 of the Code, non-qualified common share options, share appreciation rights, restricted common shares and other share-based awards. Share options and other share-based awards may be granted to the Manager, directors, officers and any key employees of the Manager and to any other individual or entity performing services for the Company, and no new awards are intended to be issued subsequent to the Effective Date. | |||||||||||
The exercise price for any share option granted under the 2007 Share Incentive Plan may not be less than 100% of the fair market value of the common shares at the time the common share option is granted. Each option to acquire a common share must terminate no more than ten years from the date it is granted. As of April 30, 2014, the 2007 Share Incentive Plan authorized a total of 8,964,625 shares that could be used to satisfy awards under the 2007 Share Incentive Plan. | |||||||||||
The following table summarizes the restricted common share transactions that occurred prior to the Merger Transaction: | |||||||||||
Predecessor Company | |||||||||||
Manager | Directors | Total | |||||||||
Unvested shares as January 1, 2014 | 584,634 | 85,194 | 669,828 | ||||||||
Issued | — | — | — | ||||||||
Vested | (243,648 | ) | — | (243,648 | ) | ||||||
Forfeited | — | — | — | ||||||||
Unvested shares as of April 30, 2014 | 340,986 | 85,194 | 426,180 | ||||||||
The Company was required to value any unvested restricted common shares granted to the Manager at the current market price. The Company valued the unvested restricted common shares granted to the Manager at $11.54 and $10.33 per share at April 30, 2014 and September 30, 2013, respectively. There were $2.2 million and $3.9 million of total unrecognized compensation costs related to unvested restricted common shares granted as of April 30, 2014 and September 30, 2013, respectively. These costs were expected to be recognized through 2016. | |||||||||||
The following table summarizes common share option transactions: | |||||||||||
Predecessor Company | |||||||||||
Number of | Weighted Average | ||||||||||
Options | Exercise Price | ||||||||||
Outstanding as of January 1, 2014 | 1,932,279 | $ | 20.00 | ||||||||
Granted | — | — | |||||||||
Exercised | — | — | |||||||||
Forfeited | — | — | |||||||||
Outstanding as of April 30, 2014 | 1,932,279 | $ | 20.00 | ||||||||
As of April 30, 2014 and September 30, 2013, 1,932,279 common share options were exercisable. As of April 30, 2014, the common share options were fully vested and expired in August 2014. | |||||||||||
For the four months ended April 30, 2014 and three and nine months ended September 30, 2013, the components of share-based compensation expense are as follows (amounts in thousands): | |||||||||||
Predecessor Company | |||||||||||
For the four | For the three | For the nine | |||||||||
months ended | months ended | months ended | |||||||||
April 30, 2014 | September 30, 2013 | September 30, 2013 | |||||||||
Restricted common shares granted to Manager | $ | 690 | $ | 690 | $ | 2,073 | |||||
Restricted common shares granted to certain directors | 328 | 256 | 769 | ||||||||
Total share-based compensation expense | $ | 1,018 | $ | 946 | $ | 2,842 | |||||
MANAGEMENT_AGREEMENT_AND_RELAT
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS | 9 Months Ended | |||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS | ' | |||||||||||||||||
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS | ' | |||||||||||||||||
NOTE 12. MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS | ||||||||||||||||||
The Manager manages the Company’s day-to-day operations, subject to the direction and oversight of the Company’s board of directors. The Management Agreement expires on December 31 of each year, but is automatically renewed for a one-year term each December 31 unless terminated upon the affirmative vote of at least two-thirds of the Company’s independent directors, or by a vote of the holders of a majority of the Company’s outstanding common shares, based upon (1) unsatisfactory performance by the Manager that is materially detrimental to the Company or (2) a determination that the management fee payable to the Manager is not fair, subject to the Manager’s right to prevent such a termination under this clause (2) by accepting a mutually acceptable reduction of management fees. The Manager must be provided 180 days prior notice of any such termination and will be paid a termination fee equal to four times the sum of the average annual base management fee and the average annual incentive fee for the two 12-month periods immediately preceding the date of termination, calculated as of the end of the most recently completed fiscal quarter prior to the date of termination. | ||||||||||||||||||
The Management Agreement contains certain provisions requiring the Company to indemnify the Manager with respect to all losses or damages arising from acts not constituting bad faith, willful misconduct, or gross negligence. The Company has evaluated the impact of these guarantees on its condensed consolidated financial statements and determined that they are not material. | ||||||||||||||||||
The following table summarizes the components of related party management compensation on the Company’s condensed consolidated statements of operations, which are described in further detail below (amounts in thousands): | ||||||||||||||||||
Successor Company | Predecessor Company | |||||||||||||||||
Three months ended | Five months ended | Four months ended | Three months ended | Nine months ended | ||||||||||||||
September 30, 2014 | September 30, 2014 | April 30, 2014 | September 30, 2013 | September 30, 2013 | ||||||||||||||
Base management fees, net | $ | 4,986 | $ | 10,927 | $ | 5,253 | $ | 4,314 | $ | 23,500 | ||||||||
CLO management fees | 7,558 | 12,023 | 11,016 | 5,916 | 8,429 | |||||||||||||
Incentive fees | — | — | 12,882 | — | 22,742 | |||||||||||||
Manager share-based compensation | — | — | 690 | 690 | 2,073 | |||||||||||||
Total related party management compensation | $ | 12,544 | $ | 22,950 | $ | 29,841 | $ | 10,920 | $ | 56,744 | ||||||||
Base Management Fees | ||||||||||||||||||
The Company pays its Manager a base management fee quarterly in arrears. During 2013 and 2014, certain related party fees received by affiliates of the Manager were credited to the Company via an offset to the base management fee (“Fee Credits”). Specifically, as described in further detail under “CLO Management Fees” below, a portion of the CLO management fees received by an affiliate of the Manager for certain of the Company’s CLOs were credited to the Company via an offset to the base management fee. | ||||||||||||||||||
In addition, during the second half of 2013, the Company invested in a transaction that generated placement fees paid to a minority-owned affiliate of KKR. In connection with this transaction, the Manager agreed to reduce the Company’s base management fee payable to the Manager for the portion of these placement fees that were earned by KKR as a result of this minority-ownership. Separately, certain third-party expenses accrued and paid by the Company in the fourth quarter of 2013 in connection with the merger with KKR & Co. were used to reduce the Company’s base management fees payable to the Manager in an amount equal to such third-party expenses. | ||||||||||||||||||
The table below summarizes the aggregate base management fees (amounts in thousands): | ||||||||||||||||||
Successor Company | Predecessor Company | |||||||||||||||||
Three months ended | Five months ended | Four months ended | Three months ended | Nine months ended | ||||||||||||||
September 30, 2014 | September 30, 2014 | April 30, 2014 | September 30, 2013 | September 30, 2013 | ||||||||||||||
Base management fees, gross | $ | 9,846 | $ | 16,534 | $ | 13,364 | $ | 9,799 | $ | 29,216 | ||||||||
CLO management fees credit(1) | (4,860 | ) | (5,607 | ) | (8,111 | ) | (3,684 | ) | (3,915 | ) | ||||||||
Other related party fees credit | — | — | — | (1,801 | ) | (1,801 | ) | |||||||||||
Total base management fees, net | $ | 4,986 | $ | 10,927 | $ | 5,253 | $ | 4,314 | $ | 23,500 | ||||||||
-1 | See “CLO Management Fees” for further discussion. | |||||||||||||||||
The Manager waived base management fees related to the $230.4 million common share offering and $270.0 million common share rights offering that occurred during the third quarter of 2007 until such time as the Company’s common share closing price on the NYSE was $20.00 or more for five consecutive trading days. Accordingly, the Manager permanently waived approximately $2.9 million during the four months ended April 30, 2014, and $2.2 million and $6.6 million of base management fees during the three and nine months ended September 30, 2013, respectively. | ||||||||||||||||||
CLO Management Fees | ||||||||||||||||||
An affiliate of the Manager entered into separate management agreements with the respective investment vehicles for all of the Company’s Cash Flow CLOs pursuant to which it is entitled to receive fees for the services it performs as collateral manager for all of these CLOs, except for CLO 2011-1. The collateral manager has the option to waive the fees it earns for providing management services for the CLO. | ||||||||||||||||||
Fees Waived | ||||||||||||||||||
The collateral manager waived CLO management fees totaling $1.4 million and $3.0 million for CLO 2005-2 and CLO 2006-1 during the three and five months ended September 30, 2014, respectively, and $1.6 million during the four months ended April 30, 2014. During the three and nine months ended September 30, 2013, the collateral manager waived CLO management fees totaling $3.0 million and $18.0 million, respectively, for all CLOs, except CLO 2005-1, CLO 2007-1 and CLO 2012-1. | ||||||||||||||||||
Fees Charged and Fee Credits | ||||||||||||||||||
The Company recorded management fees expense for CLO 2005-1, CLO 2007-1, CLO 2007-A, CLO 2012-1, CLO 2013-1 and CLO 2013-2 during the three and nine months ended September 30, 2014. The Company recorded management fees expense for CLO 2005-1, CLO 2007-1 and CLO 2012-1 during the three and nine months ended September 30, 2013. | ||||||||||||||||||
Beginning in June 2013, the Manager credited the Company for a portion of the CLO management fees received by an affiliate of the Manager from CLO 2007-1, CLO 2007-A and CLO 2012-1 via an offset to the base management fees payable to the Manager. As the Company owns less than 100% of the subordinated notes of these three CLOs (with the remaining subordinated notes held by third parties), the Company received a Fee Credit equal only to the Company’s pro rata share of the aggregate CLO management fees paid by these CLOs. Specifically, the amount of the reimbursement for each of these CLOs was calculated by taking the product of (x) the total CLO management fees received by an affiliate of the Manager during the period for such CLO multiplied by (y) the percentage of the subordinated notes of such CLO held by the Company. The remaining portion of the CLO management fees paid by each of these CLOs was not credited to the Company, but instead resulted in a dollar-for-dollar reduction in the interest expense paid by the Company to the third party holder of the CLO’s subordinated notes. Similarly, the Manager credited the Company the CLO management fees from CLO 2013-1 and CLO 2013-2 based on the Company’s 100% ownership of the subordinated notes in the CLO. | ||||||||||||||||||
The table below summarizes the aggregate CLO management fees, including the Fee Credits (amounts in thousands): | ||||||||||||||||||
Successor Company | Predecessor Company | |||||||||||||||||
Three months ended | Five months ended | Four months ended | Three months ended | Nine months ended | ||||||||||||||
September 30, 2014 | September 30, 2014 | April 30, 2014 | September 30, 2013 | September 30, 2013 | ||||||||||||||
Charged and retained CLO management fees(1) | $ | 12,418 | $ | 17,630 | $ | 2,905 | $ | 2,232 | $ | 4,514 | ||||||||
CLO management fees credit | (4,860 | ) | (5,607 | ) | 8,111 | 3,684 | 3,915 | |||||||||||
Total CLO management fees | $ | 7,558 | $ | 12,023 | $ | 11,016 | $ | 5,916 | $ | 8,429 | ||||||||
-1 | Represents management fees incurred by the senior and subordinated note holders of a CLO, excluding the Fee Credits received by the Company based on its ownership percentage in the CLO. | |||||||||||||||||
Subordinated note holders in CLOs have the first risk of loss and conversely, the residual value upside of the transactions. When CLO management fees are paid by a CLO, the residual economic interests in the CLO transaction are reduced by an amount commensurate with the CLO management fees paid. The Company records any residual proceeds due to subordinated note holders as interest expense on the condensed consolidated statements of operations. Accordingly, the increase in CLO management fees is directly offset by a decrease in interest expense. | ||||||||||||||||||
Incentive Fees | ||||||||||||||||||
The Manager earned incentive fees totaling zero for the three and five months ended September 30, 2014 and $12.9 million for the four months ended April 30, 2014. During the three and nine months ended September 30, 2013, the Manager earned zero and $22.7 million, respectively, of incentive fees. | ||||||||||||||||||
Manager Share-Based Compensation | ||||||||||||||||||
The Company recognized share-based compensation expense related to restricted common shares granted to the Manager of $0.7 million for the four months ended April 30, 2014. In addition, the Company recognized share-based compensation expense related to restricted common shares granted to the Manager of $0.7 million and $2.1 million for the three and nine months ended September 30, 2013, respectively. Refer to Note 11 to these condensed consolidated financial statements for further discussion on share-based compensation. | ||||||||||||||||||
Reimbursable General and Administrative Expenses | ||||||||||||||||||
Certain general and administrative expenses are incurred by the Company’s Manager on its behalf that are reimbursable to the Manager pursuant to the Management Agreement. The Company incurred reimbursable general and administrative expenses to its Manager totaling $0.8 million and $1.8 million for the three and five months ended September 30, 2014, respectively, and $2.8 million for the four months ended April 30, 2014. During the three and nine months ended September 30, 2013, the Company incurred reimbursable general and administrative expenses to its Manager of $2.3 million and $5.9 million, respectively. Expenses incurred by the Manager and reimbursed by the Company are reflected in general, administrative and directors expenses on the condensed consolidated statements of operations. | ||||||||||||||||||
Contributions and Distributions | ||||||||||||||||||
During the third quarter ended September 30, 2014, certain assets and cash were contributed from and distributed to the Parent. The table below summarizes the estimated fair value of contributions and distributions at the time of transfer, certain of which were different from the carrying value of assets transferred (amounts in thousands): | ||||||||||||||||||
Three months ended | ||||||||||||||||||
September 30, 2014 | ||||||||||||||||||
Cash | $ | 235,759 | ||||||||||||||||
Securities | 22,873 | |||||||||||||||||
Loans | 13,464 | |||||||||||||||||
Interests in joint ventures and partnerships | 19,433 | |||||||||||||||||
Total contributions from Parent | $ | 291,529 | ||||||||||||||||
Cash | $ | 14,370 | ||||||||||||||||
Equity investments, at estimated fair value | 101,042 | |||||||||||||||||
Oil and gas properties, net | 179,203 | |||||||||||||||||
Total distributions to Parent | $ | 294,615 | ||||||||||||||||
Affiliated Investments | ||||||||||||||||||
The Company has invested in corporate loans, debt securities and other investments of entities that are affiliates of KKR. As of September 30, 2014, the aggregate par amount of these affiliated investments totaled $1.7 billion, or approximately 21% of the total investment portfolio, and consisted of 19 issuers. The total $1.7 billion in affiliated investments was comprised of $1.6 billion of corporate loans, $9.5 million of corporate debt securities and $13.1 million of equity investments, at estimated fair value. As of December 31, 2013, the aggregate par amount of these affiliated investments totaled $2.1 billion, or approximately 27% of the total investment portfolio, and consisted of 28 issuers. The total $2.1 billion in affiliated investments was comprised of $1.9 billion of corporate loans, $52.8 million of corporate debt securities and $84.5 million of equity investments, at estimated fair value. | ||||||||||||||||||
In addition, the Company has invested in certain joint ventures and partnerships alongside KKR and its affiliates. As of September 30, 2014, the estimated fair value of these interests in joint ventures and partnerships totaled $525.8 million. As of December 31, 2013, the aggregate cost amount of these interests in joint ventures and partnerships totaled $400.3 million. | ||||||||||||||||||
SEGMENT_REPORTING
SEGMENT REPORTING | 9 Months Ended | |||||||||||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||||||||||
SEGMENT REPORTING | ' | |||||||||||||||||||||||||||||||
SEGMENT REPORTING | ' | |||||||||||||||||||||||||||||||
NOTE 13. SEGMENT REPORTING | ||||||||||||||||||||||||||||||||
Operating segments are defined as components of a company that engage in business activities that may earn revenues and incur expenses for which separate financial information is available and reviewed by the chief operating decision maker or group in determining how to allocate resources and assessing performance. The Company operates its business through the following reportable segments: credit (“Credit”), natural resources (“Natural Resources”) and Other (“Other”) segments. | ||||||||||||||||||||||||||||||||
The Company’s reportable segments are differentiated primarily by their investment focuses. The Credit segment consists primarily of below investment grade corporate debt comprised of senior secured and unsecured loans, mezzanine loans, high yield bonds, private and public equity investments, and distressed and stressed debt securities. The Natural Resources segment consists of non-operated working and overriding royalty interests in oil and natural gas properties. The Other segment includes all other portfolio holdings, consisting solely of commercial real estate. The segments currently reported are consistent with the way decisions regarding the allocation of resources are made, as well as how operating results are reviewed by the Company. | ||||||||||||||||||||||||||||||||
The Company evaluates the performance of its reportable segments based on several net (loss) income components. Net (loss) income includes (i) revenues, (ii) related investment costs and expenses, (iii) other (loss) income, which is comprised primarily of unrealized and realized gains and losses on investments, debt and derivatives, and (iv) other expenses, including related party management compensation and general and administrative expenses. Certain corporate assets and expenses that are not directly related to the individual segments, including interest expense and related costs on borrowings, base management fees and professional services are allocated to individual segments based on the investment portfolio balance in each respective segment as of the most recent period-end. Certain other corporate assets and expenses, including prepaid insurance, incentive fees, insurance expenses, directors’ expenses and share-based compensation expense are not allocated to individual segments in the Company’s assessment of segment performance. Collectively, these items are included as reconciling items between reported segment amounts and consolidated totals. | ||||||||||||||||||||||||||||||||
The following table presents the net (loss) income components of our reportable segments reconciled to amounts reflected in the condensed consolidated statements of operations for the three and five months ended September 30, 2014 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Successor Company | ||||||||||||||||||||||||||||||||
Credit | Natural Resources | Other | Reconciling Items(1) | Total Consolidated | ||||||||||||||||||||||||||||
Three | Five | Three | Five | Three | Five | Three | Five | Three | Five | |||||||||||||||||||||||
months | months | months | months | months | months | months | months | months | months | |||||||||||||||||||||||
ended | ended | ended | ended | ended | ended | ended | ended | ended | ended | |||||||||||||||||||||||
September | September | September | September | September | September | September | September | September | September | |||||||||||||||||||||||
30, 2014 | 30, 2014 | 30, 2014 | 30, 2014 | 30, 2014 | 30, 2014 | 30, 2014 | 30, 2014 | 30, 2014 | 30, 2014 | |||||||||||||||||||||||
Total revenues | $ | 98,413 | $ | 160,724 | $ | 17,929 | $ | 49,859 | $ | 8,414 | $ | 8,486 | $ | — | $ | — | $ | 124,756 | $ | 219,069 | ||||||||||||
Total investment costs and expenses | 46,412 | 81,822 | 14,617 | 34,674 | 311 | 508 | — | — | 61,340 | 117,004 | ||||||||||||||||||||||
Total other (loss) income | (132,098 | ) | (114,985 | ) | (1,514 | ) | (6,394 | ) | 7,927 | 16,581 | — | — | (125,685 | ) | (104,798 | ) | ||||||||||||||||
Total other expenses | 14,136 | 26,889 | 617 | 2,010 | 145 | 328 | — | 35 | 14,898 | 29,262 | ||||||||||||||||||||||
Income tax expense | 34 | 58 | — | — | — | 4 | — | — | 34 | 62 | ||||||||||||||||||||||
Net (loss) income | $ | (94,267 | ) | $ | (63,030 | ) | $ | 1,181 | $ | 6,781 | $ | 15,885 | $ | 24,227 | $ | — | $ | (35 | ) | $ | (77,201 | ) | $ | (32,057 | ) | |||||||
Net income attributable to noncontrolling interests | 816 | 816 | — | — | — | — | — | — | 816 | 816 | ||||||||||||||||||||||
Net (loss) income attributable to KKR Financial Holdings LLC and Subsidiaries | $ | (95,083 | ) | $ | (63,846 | ) | $ | 1,181 | $ | 6,781 | $ | 15,885 | $ | 24,227 | $ | — | $ | (35 | ) | $ | (78,017 | ) | $ | (32,873 | ) | |||||||
-1 | Consists of directors’ expenses which are not allocated to individual segments. | |||||||||||||||||||||||||||||||
The following table presents the net income (loss) components of our reportable segments reconciled to amounts reflected in the condensed consolidated statements of operations for the four months ended April 30, 2014 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Predecessor Company | ||||||||||||||||||||||||||||||||
Credit | Natural Resources | Other | Reconciling Items(1) | Total Consolidated | ||||||||||||||||||||||||||||
Four months ended | Four months ended | Four months ended | Four months ended | Four months ended | ||||||||||||||||||||||||||||
April 30, 2014 | April 30, 2014 | April 30, 2014 | April 30, 2014 | April 30, 2014 | ||||||||||||||||||||||||||||
Total revenues | $ | 134,255 | $ | 61,782 | $ | 21,205 | $ | — | $ | 217,242 | ||||||||||||||||||||||
Total investment costs and expenses | 62,485 | 38,915 | 425 | — | 101,825 | |||||||||||||||||||||||||||
Total other income (loss) | 76,046 | (8,123 | ) | (11,589 | ) | — | 56,334 | |||||||||||||||||||||||||
Total other expenses | 23,121 | 1,633 | 230 | 40,625 | 65,609 | |||||||||||||||||||||||||||
Income tax expense | 146 | — | 16 | — | 162 | |||||||||||||||||||||||||||
Net income (loss) | $ | 124,549 | $ | 13,111 | $ | 8,945 | $ | (40,625 | ) | $ | 105,980 | |||||||||||||||||||||
-1 | Consists of certain expenses not allocated to individual segments including other expenses comprised of incentive fees of $12.9 million and merger related transaction costs of $22.7 million for the four months ended April 30, 2014. The remaining reconciling items include insurance expenses, directors’ expenses and share-based compensation expense. | |||||||||||||||||||||||||||||||
The following table presents the net income (loss) components of our reportable segments reconciled to amounts reflected in the condensed consolidated statements of operations for the three and nine months ended September 30, 2013 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Predecessor Company | ||||||||||||||||||||||||||||||||
Credit | Natural Resources | Other | Reconciling Items(1) | Total Consolidated | ||||||||||||||||||||||||||||
Three | Nine | Three | Nine | Three | Nine | Three | Nine | Three | Nine | |||||||||||||||||||||||
months | months | months | months | months | months | months | months | months | months | |||||||||||||||||||||||
ended | ended | ended | ended | ended | ended | ended | ended | ended | ended | |||||||||||||||||||||||
September | September | September | September | September | September | September | September | September | September | |||||||||||||||||||||||
30, 2013 | 30, 2013 | 30, 2013 | 30, 2013 | 30, 2013 | 30, 2013 | 30, 2013 | 30, 2013 | 30, 2013 | 30, 2013 | |||||||||||||||||||||||
Total revenues | $ | 96,243 | $ | 320,769 | $ | 32,446 | $ | 84,118 | $ | 13 | $ | 1,509 | $ | — | $ | — | $ | 128,702 | $ | 406,396 | ||||||||||||
Total investment costs and expenses | 55,253 | 162,097 | 22,386 | 61,355 | 238 | 667 | — | — | 77,877 | 224,119 | ||||||||||||||||||||||
Total other income (loss) | 6,969 | 132,853 | (3,437 | ) | (918 | ) | 2,694 | 6,015 | — | (20,269 | ) | 6,226 | 117,681 | |||||||||||||||||||
Total other expenses | 14,155 | 43,151 | 1,269 | 3,698 | 116 | 484 | 1,607 | 27,837 | 17,147 | 75,170 | ||||||||||||||||||||||
Income tax (benefit) expense | 9 | 420 | — | — | 9 | 14 | — | — | 18 | 434 | ||||||||||||||||||||||
Net income (loss) | $ | 33,795 | $ | 247,954 | $ | 5,354 | $ | 18,147 | $ | 2,344 | $ | 6,359 | $ | (1,607 | ) | $ | (48,106 | ) | $ | 39,886 | $ | 224,354 | ||||||||||
-1 | Consists of certain expenses not allocated to individual segments including (i) other income (loss) comprised of losses on restructuring and extinguishment of debt of zero and $20.3 million for the three and nine months ended September 30, 2013, respectively, and (ii) other expenses comprised of incentive fees of zero and $22.7 million for the three and nine months ended September 30, 2013, respectively. The remaining reconciling items include insurance expenses, directors’ expenses and share-based compensation expense. | |||||||||||||||||||||||||||||||
The following table shows total assets of reportable segments reconciled to amounts reflected in the condensed consolidated | ||||||||||||||||||||||||||||||||
balance sheets as of September 30, 2014 and December 31, 2013 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Credit | Natural Resources | Other | Reconciling | Total Consolidated | ||||||||||||||||||||||||||||
Items | ||||||||||||||||||||||||||||||||
As of | September 30, | December 31, | September 30, | December 31, | September 30, | December 31, | September 30, | December 31, | September 30, | December 31, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||
Total assets | $ | 8,654,153 | $ | 8,020,353 | $ | 326,841 | $ | 505,029 | $ | 228,595 | $ | 190,946 | $ | 111 | $ | 870 | $ | 9,209,700 | $ | 8,717,198 | ||||||||||||
EARNINGS_PER_COMMON_SHARE
EARNINGS PER COMMON SHARE | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
EARNINGS PER COMMON SHARE | ' | ||||||||||
EARNINGS PER COMMON SHARE | ' | ||||||||||
NOTE 14. EARNINGS PER COMMON SHARE | |||||||||||
Earnings per common share is not provided for the three and five months ended September 30, 2014 as the Company is now a subsidiary of KKR Fund Holdings, which owns 100 common shares of the Company constituting all of the Company’s outstanding common shares. The following table presents a reconciliation of basic and diluted net income per common share for the Predecessor Company (amounts in thousands, except per share information): | |||||||||||
Predecessor Company | |||||||||||
Four months | Three months | Nine months | |||||||||
ended | ended | ended | |||||||||
April 30, 2014 | September 30, 2013 | September 30, 2013 | |||||||||
Net income | $ | 105,980 | $ | 39,886 | $ | 224,354 | |||||
Less: Preferred share distributions | 6,891 | 6,891 | 20,520 | ||||||||
Net income available to common shares | $ | 99,089 | $ | 32,995 | $ | 203,834 | |||||
Less: Dividends and undistributed earnings allocated to participating securities | 292 | 109 | 701 | ||||||||
Net income allocated to common shares | $ | 98,797 | $ | 32,886 | $ | 203,133 | |||||
Basic: | |||||||||||
Basic weighted average common shares outstanding | 204,276 | 204,134 | 201,824 | ||||||||
Net income per common share | $ | 0.48 | $ | 0.16 | $ | 1.01 | |||||
Diluted: | |||||||||||
Diluted weighted average common shares outstanding(1) | 204,276 | 204,134 | 201,824 | ||||||||
Net income per common share | $ | 0.48 | $ | 0.16 | $ | 1.01 | |||||
(1) Potential anti-dilutive common shares excluded from diluted earnings per share related to common share options were 1,932,279 for all periods presented. | |||||||||||
ACCUMULATED_OTHER_COMPREHENSIV
ACCUMULATED OTHER COMPREHENSIVE LOSS | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS. | ' | |||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | ' | |||||||||||||||||||
NOTE 15. ACCUMULATED OTHER COMPREHENSIVE LOSS | ||||||||||||||||||||
In connection with the Merger Transaction, accumulated other comprehensive loss is not provided for the three and five months ended September 30, 2014, as changes in the estimated fair value of all securities and cash flow hedges are recorded in the condensed consolidated statements of operations, within net realized and unrealized (loss) gain on investments and net realized and unrealized gain (loss) on derivatives and foreign exchange, respectively. The components of changes in accumulated other comprehensive loss for the Predecessor Company were as follows (amounts in thousands): | ||||||||||||||||||||
Predecessor Company | ||||||||||||||||||||
Four months ended April 30, 2014 (1) | ||||||||||||||||||||
Net unrealized | Net unrealized | Total | ||||||||||||||||||
gains on | losses on cash | |||||||||||||||||||
available-for-sale | flow hedges | |||||||||||||||||||
securities | ||||||||||||||||||||
Beginning balance | $ | 23,567 | $ | (39,219 | ) | $ | (15,652 | ) | ||||||||||||
Other comprehensive loss before reclassifications | (2,614 | ) | (5,442 | ) | (8,056 | ) | ||||||||||||||
Amounts reclassified from accumulated other comprehensive loss(2) | (2,639 | ) | — | (2,639 | ) | |||||||||||||||
Net current-period other comprehensive loss | (5,253 | ) | (5,442 | ) | (10,695 | ) | ||||||||||||||
Ending balance | $ | 18,314 | $ | (44,661 | ) | $ | (26,347 | ) | ||||||||||||
-1 | The Company’s gross and net of tax amounts are the same. | |||||||||||||||||||
-2 | Includes an impairment charge of $4.4 million for investments which were determined to be other-than-temporary for the four months ended April 30, 2014. These reclassified amounts are included in net realized and unrealized (loss) gain on investments on the condensed consolidated statements of operations. | |||||||||||||||||||
Predecessor Company | ||||||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||||||
September 30, 2013(1) | September 30, 2013(1) | |||||||||||||||||||
Net unrealized | Net unrealized | Total | Net unrealized | Net unrealized | Total | |||||||||||||||
gains on | losses on cash | gains on | losses on cash | |||||||||||||||||
available-for-sale | flow hedges | available-for-sale | flow hedges | |||||||||||||||||
securities | securities | |||||||||||||||||||
Beginning balance | $ | 16,657 | $ | (56,300 | ) | $ | (39,643 | ) | $ | 17,472 | $ | (87,698 | ) | $ | (70,226 | ) | ||||
Other comprehensive (loss) income before reclassifications | (1,871 | ) | 6,813 | 4,942 | (11,580 | ) | 38,211 | 26,631 | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss(2) | 5,008 | — | 5,008 | 13,902 | — | 13,902 | ||||||||||||||
Net current-period other comprehensive income | 3,137 | 6,813 | 9,950 | 2,322 | 38,211 | 40,533 | ||||||||||||||
Ending balance | $ | 19,794 | $ | (49,487 | ) | $ | (29,693 | ) | $ | 19,794 | $ | (49,487 | ) | $ | (29,693 | ) | ||||
-1 | The Company’s gross and net of tax amounts are the same. | |||||||||||||||||||
-2 | Includes an impairment charge of $5.0 million and $17.5 million for investments which were determined to be other-than-temporary for the three and nine months ended September 30, 2013, respectively. These reclassified amounts are included in net realized and unrealized gain on investments on the condensed consolidated statements of operations. | |||||||||||||||||||
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2014 | |
SUBSEQUENT EVENTS | ' |
SUBSEQUENT EVENTS | ' |
NOTE 16. SUBSEQUENT EVENTS | |
On September 25, 2014, the Company’s board of directors declared a cash distribution of $0.460938 per share on its Series A LLC Preferred Shares. The distribution was paid on October 15, 2014 to preferred shareholders as of the close of business on October 8, 2014. | |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
Basis of Presentation | ' |
Basis of Presentation | |
The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The condensed consolidated financial statements include the accounts of the Company and entities established to complete secured financing transactions that are considered to be variable interest entities (“VIEs”) and for which the Company is the primary beneficiary. Also included in the condensed consolidated financial statements are the financial results of a certain entity, which is not considered a VIE, but in which the Company is presumed to have control. The ownership interests held by third parties are reflected as noncontrolling interests in the accompanying financial statements. | |
As further described in Note 3 to these condensed consolidated financial statements, the Merger Transaction was accounted for using the acquisition method of accounting, which required that the assets purchased and the liabilities assumed all be reported in the acquirer’s financial statements at their fair value, with any excess of net assets over the purchase price being reported as a bargain purchase gain. The application of the acquisition method of accounting represented a push down of accounting basis to the Company, whereby it was also required to record the assets and liabilities at fair value as of the date of the Merger Transaction. This change in accounting basis resulted in the termination of the prior reporting entity and a corresponding creation of a new reporting entity. | |
Accordingly, the Company’s condensed consolidated financial statements and transactional records prior to the effective date, or May 1, 2014 (the “Effective Date”), reflect the historical accounting basis of assets and liabilities and are labeled “Predecessor Company,” while such records subsequent to the Effective Date are labeled “Successor Company” and reflect the push down basis of accounting for the new estimated fair values in the Company’s condensed consolidated financial statements. This change in accounting basis is represented in the condensed consolidated financial statements by a vertical black line which appears between the columns entitled “Predecessor Company” and “Successor Company” on the statements and in the relevant notes. The black line signifies that the amounts shown for the periods prior to and subsequent to the Merger Transaction are not comparable. | |
In addition to the new accounting basis established for assets and liabilities, purchase accounting also required the reclassification of any retained earnings or accumulated deficit from periods prior to the acquisition and the elimination of any accumulated other comprehensive income or loss to be recognized within the Company’s shareholders’ equity section of the Company’s condensed consolidated financial statements. Accordingly, the Company’s accumulated deficit at September 30, 2014 represents only the results of operations subsequent to April 30, 2014, the date of the Merger Transaction. | |
For the following assets not carried at fair value, as presented under the Predecessor Company, the Company adopted the fair value option of accounting as of the Effective Date: (i) corporate loans held for investment at amortized cost, net of an allowance for loan losses, (ii) corporate loans held for sale at lower of cost or estimated fair value and (iii) certain other investments at cost. In addition, the Company elected the fair value option of accounting for its collateralized loan obligation secured notes. As such, the accounting policies followed by the Company in the preparation of its condensed consolidated financial statements for the Successor period present all financial assets and CLO secured notes at estimated fair value. The Company’s adoption of fair value accounting was for the primary purpose of reporting values that more closely aligned with KKR & Co.’s method of accounting. | |
Unrealized gains and losses for the financial assets and liabilities carried at estimated fair value are reported in net realized and unrealized (loss) gain on investments and net realized and unrealized loss on debt, respectively, in the condensed consolidated statements of operations. Unrealized gains or losses primarily reflect the change in instrument values, including the reversal of previously recorded unrealized gains or losses when gains or losses are realized. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized cost basis of the asset without regard to unrealized gains or losses previously recognized. For the Successor period, upon the sale of a corporate loan or debt security, the net realized gain or loss is computed using the specific identification method. Comparatively, for the Predecessor period, the realized net gain or loss was computed on a weighted average cost basis. | |
In addition, for the Successor period, all purchases and sales of assets are recorded on the trade date. Comparatively, for the Predecessor periods, corporate loans were recorded on the settlement date. | |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company uses historical experience and various other assumptions and information that are believed to be reasonable under the circumstances in developing its estimates and judgments. Estimates and assumptions about future events and their effects cannot be predicted with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. While the Company believes that the estimates and assumptions used in the preparation of the condensed consolidated financial statements are appropriate, actual results could differ from those estimates. | |
Estimates of oil, natural gas and natural gas liquid (“NGL”) reserves and their values, future production rates and future costs and expenses are inherently uncertain, including many factors beyond the Company’s control. Reservoir engineering is a subjective process of estimating underground accumulations of oil, natural gas and NGL that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of many factors including the following: the quality and quantity of available data, the interpretation of that data, the accuracy of various mandated economic assumptions and the judgments of the individuals preparing the estimates. In addition, reserve estimates are a function of many assumptions, all of which could deviate significantly from actual results. As such, reserve estimates may materially vary from the ultimate quantities of oil, natural gas and NGL eventually recovered, and could materially affect the Company’s future depreciation, depletion and amortization expense (“DD&A”), its asset retirement obligations or impairment considerations. | |
Consolidation | ' |
Consolidation | |
KKR Financial CLO 2005-1, Ltd. (“CLO 2005-1”), KKR Financial CLO 2005-2, Ltd. (“CLO 2005-2”), KKR Financial CLO 2006-1, Ltd. (“CLO 2006-1”), KKR Financial CLO 2007-1, Ltd. (“CLO 2007-1”), KKR Financial CLO 2007-A, Ltd. (“CLO 2007-A”), KKR Financial CLO 2011-1, Ltd. (“CLO 2011-1”), KKR Financial CLO 2012-1, Ltd. (“CLO 2012-1”), KKR Financial CLO 2013-1, Ltd. (“CLO 2013-1”), KKR Financial CLO 2013-2, Ltd. (“CLO 2013-2”) and KKR CLO 9, Ltd. (“CLO 9”) (collectively the “Cash Flow CLOs”) are entities established to complete secured financing transactions. These entities are VIEs which the Company consolidates as the Company has determined it has the power to direct the activities that most significantly impact these entities’ economic performance and the Company has both the obligation to absorb losses of these entities and the right to receive benefits from these entities that could potentially be significant to these entities. In CLO transactions, subordinated notes have the first risk of loss and conversely, the residual value upside of the transactions. | |
The Company finances the majority of its corporate debt investments through its CLOs. As of September 30, 2014, the Company’s CLOs held $6.6 billion par amount, or $6.4 billion estimated fair value, of corporate debt investments. As of December 31, 2013, the Company had eight CLOs that held $6.7 billion par amount, or $6.4 billion estimated fair value, of corporate debt investments. The assets in each CLO can be used only to settle the debt of the related CLO. As of September 30, 2014 and December 31, 2013, the aggregate par amount of CLO debt totaled $5.5 billion and $5.3 billion, respectively, held by unaffiliated third parties. | |
The Company consolidates all non-VIEs in which it holds a greater than 50 percent voting interest. Specifically, the Company consolidates KKR Nautilus Aggregator Limited (“Nautilus Aggregator”), a majority owned entity, which it is presumed to have control and for which the ownership interests held by third parties are reflected as noncontrolling interests in the accompanying financial statements. Nautilus Aggregator holds the Company’s investment focused on maritime lending. | |
In addition, the Company has noncontrolling interests in joint ventures and partnerships that do not qualify as VIEs and do not meet the control requirements for consolidation as defined by GAAP. | |
All inter-company balances and transactions have been eliminated in consolidation. | |
Fair Value Option | ' |
Fair Value Option | |
In connection with the application of acquisition accounting related to the Merger Transaction, the Successor Company elected the fair value option of accounting for its financial assets and CLO secured notes for the primary purpose of reporting values that more closely aligned with KKR & Co.’s method of accounting. Related unrealized gains and losses are reported in net realized and unrealized (loss) gain on investments in the condensed consolidated statements of operations. | |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments | |
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation techniques are applied. These valuation techniques involve varying levels of management estimation and judgment, the degree of which is dependent on a variety of factors including the price transparency for the instruments or market and the instruments’ complexity for disclosure purposes. Assets and liabilities in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined under GAAP, are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets and liabilities, and are as follows: | |
Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. | |
Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability. | |
Level 3: Inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. | |
A significant decrease in the volume and level of activity for the asset or liability is an indication that transactions or quoted prices may not be representative of fair value because in such market conditions there may be increased instances of transactions that are not orderly. In those circumstances, further analysis of transactions or quoted prices is needed, and a significant adjustment to the transactions or quoted prices may be necessary to estimate fair value. | |
The availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors, including, for example, the type of instrument, whether the instrument is new, whether the instrument is traded on an active exchange or in the secondary market, and the current market condition. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the asset. The variability and availability of the observable inputs affected by the factors described above may cause transfers between Levels 1, 2, and/or 3, which the Company recognizes at the end of the reporting period. | |
Many financial assets and liabilities have bid and ask prices that can be observed in the marketplace. Bid prices reflect the highest price that the Company and others are willing to pay for an asset. Ask prices represent the lowest price that the Company and others are willing to accept for an asset. For financial assets and liabilities whose inputs are based on bid-ask prices, the Company does not require that fair value always be a predetermined point in the bid-ask range. The Company’s policy is to allow for mid-market pricing and adjusting to the point within the bid-ask range that meets the Company’s best estimate of fair value. | |
Depending on the relative liquidity in the markets for certain assets, the Company may transfer assets to Level 3 if it determines that observable quoted prices, obtained directly or indirectly, are not available. The valuation techniques used for the assets and liabilities that are valued using Level 3 of the fair value hierarchy are described below. | |
Securities and Corporate Loans, at Estimated Fair Value: Securities and corporate loans, at estimated fair value are initially valued at transaction price and are subsequently valued using market data for similar instruments (e.g., recent transactions or broker quotes), comparisons to benchmark derivative indices or valuation models. Valuation models are based on yield analysis techniques, where the key inputs are based on relative value analyses, which incorporate similar instruments from similar issuers. In addition, an illiquidity discount is applied where appropriate. | |
Equity Investments, at Estimated Fair Value: Equity investments, at estimated fair value, are initially valued at transaction price and are subsequently valued using observable market prices, if available, or internally developed models in the absence of readily observable market prices. Valuation models are generally based on market and income (discounted cash flow) approaches, in which various internal and external factors are considered. Factors include key financial inputs and recent public and private transactions for comparable investments. Key inputs used for the discounted cash flow approach, which incorporates significant assumptions and judgment, include the weighted average cost of capital and assumed inputs used to calculate terminal values, such as earnings before interest, taxes, depreciation and amortization (“EBITDA”) exit multiples. Upon completion of the valuations conducted using these approaches, a weighting is ascribed to each approach and an illiquidity discount is applied where appropriate. The ultimate fair value recorded for a particular investment will generally be within the range suggested by the two approaches. | |
Interests in Joint Ventures and Partnerships: Interests in joint ventures and partnerships include certain equity investments related to the oil and gas, commercial real estate and specialty lending sectors. Interests in joint ventures and partnerships are initially valued at transaction price and are subsequently valued using observable market prices, if available, or internally developed models in the absence of readily observable market prices. Valuation models are generally based on market and income (discounted cash flow) approaches, in which various internal and external factors are considered. Key inputs include the weighted average cost of capital and EBITDA multiples. In addition, an illiquidity discount is applied where appropriate. | |
Over-the-counter (“OTC”) Derivative Contracts: OTC derivative contracts include forward, swap and option contracts related to interest rates, foreign currencies, credit standing of reference entities and equity prices. OTC derivatives are initially valued using quoted market prices, if available, or models using a series of techniques, including closed-form analytic formulae, such as the Black-Scholes option-pricing model, and/or simulation models in the absence of quoted market prices. Many pricing models employ methodologies that have pricing inputs observed from actively quoted markets, as is the case for generic interest rate swap and option contracts. | |
Residential Mortgage-Backed Securities, at Estimated Fair Value: RMBS are initially valued at transaction price and are subsequently valued using a third party valuation servicer. The most significant inputs to the valuation of these instruments are default and loss expectations and constant prepayment rates. | |
Collateralized Loan Obligation Secured Notes: Collateralized loan obligation secured notes are initially valued at transaction price and are subsequently valued using a third party valuation servicer. The most significant inputs to the valuation of these instruments are default and loss expectations and discount margins. | |
Key unobservable inputs that have a significant impact on the Company’s Level 3 valuations as described above are included in Note 9 to these condensed consolidated financial statements. The Company utilizes several unobservable pricing inputs and assumptions in determining the fair value of its Level 3 investments. These unobservable pricing inputs and assumptions may differ by asset and in the application of the Company’s valuation methodologies. The reported fair value estimates could vary materially if the Company had chosen to incorporate different unobservable pricing inputs and other assumptions or, for applicable investments, if the Company only used either the discounted cash flow methodology or the market comparables methodology instead of assigning a weighting to both methodologies. | |
Valuation Process | |
The valuation process involved in Level 3 measurements for assets and liabilities is completed on a quarterly basis and is designed to subject the valuation of Level 3 investments to an appropriate level of consistency, oversight and review. The Company utilizes a valuation committee, whose members consist of the Company’s Chief Financial Officer, General Counsel and certain other employees of the Manager. The valuation committee is responsible for coordinating and implementing the Company’s quarterly valuation process. | |
Investments are generally valued based on quotations from third party pricing services, unless such a quotation is unavailable or is determined to be unreliable or inadequately representing the fair value of the particular assets. In that case, valuations are based on either valuation data obtained from one or more other third party pricing sources, including broker dealers, or will reflect the valuation committee’s good faith determination of estimated fair value based on other factors considered relevant. For assets classified as Level 3, the investment professionals are responsible for documenting preliminary valuations based on various factors including their evaluation of financial and operating data, company specific developments, market valuations of comparable companies and model projections discussed above. All valuations are approved by the valuation committee. | |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents | |
Cash and cash equivalents include cash on hand, cash held in banks and highly liquid investments with original maturities of three months or less. Interest income earned on cash and cash equivalents is recorded in other within total revenues on the condensed consolidated statements of operations. | |
Restricted Cash and Cash Equivalents | ' |
Restricted Cash and Cash Equivalents | |
Restricted cash and cash equivalents represent amounts that are held by third parties under certain of the Company’s financing and derivative transactions. Interest income earned on restricted cash and cash equivalents is recorded in other within total revenues on the condensed consolidated statements of operations. | |
On the condensed consolidated statements of cash flows, net additions or reductions to restricted cash and cash equivalents are classified as an investing activity as restricted cash and cash equivalents reflect the receipts from collections or sales of investments, as well as payments made to acquire investments held by third parties. | |
Securities Available-for-Sale | ' |
Securities Available-for-Sale | |
The Predecessor and Successor Company both classify certain of their investments in securities as available-for-sale as the Companies may sell them prior to maturity and do not hold them principally for the purpose of selling them in the near term. These investments are carried at estimated fair value. The Successor Company elected the fair value option of accounting for its securities, with changes in estimated fair value reported in net realized and unrealized (loss) gain on investments in the condensed consolidated statements of operations. Comparatively, the Predecessor Company reported all unrealized gains and losses in accumulated other comprehensive loss on the condensed consolidated balance sheets. | |
The Predecessor Company monitored its available-for-sale securities portfolio for impairments. A loss was recognized when it was determined that a decline in the estimated fair value of a security below its amortized cost was other-than-temporary. The Company considered many factors in determining whether the impairment of a security was deemed to be other-than-temporary, including, but not limited to, the length of time the security had a decline in estimated fair value below its amortized cost and the severity of the decline, the amount of the unrealized loss, recent events specific to the issuer or industry, external credit ratings and recent changes in such ratings. In addition, for debt securities, the Company considered its intent to sell the debt security, the Company’s estimation of whether or not it expected to recover the debt security’s entire amortized cost if it intended to hold the debt security, and whether it was more likely than not that the Company was required to sell the debt security before its anticipated recovery. For equity securities, the Company also considered its intent and ability to hold the equity security for a period of time sufficient for a recovery in value. | |
The amount of the loss that was recognized when it was determined that a decline in the estimated fair value of a security below its amortized cost was other-than-temporary was dependent on certain factors. If the security was an equity security or if the security was a debt security that the Company intended to sell or estimated that it was more likely than not that the Company would be required to sell before recovery of its amortized cost, then the impairment amount recognized in earnings was the entire difference between the estimated fair value of the security and its amortized cost. For debt securities that the Company did not intend to sell or estimated that it was not more likely than not to be required to sell before recovery, the impairment was separated into the estimated amount relating to credit loss and the estimated amount relating to all other factors. Only the estimated credit loss amount was recognized in earnings, with the remainder of the loss amount recognized in accumulated other comprehensive loss. | |
Unamortized premiums and unaccreted discounts on securities available-for-sale were recognized in interest income over the contractual life, adjusted for actual prepayments, of the securities using the effective interest method. | |
Other Securities, at Estimated Fair Value | ' |
Other Securities, at Estimated Fair Value | |
The Predecessor and Successor Company both elected the fair value option of accounting for certain of their securities for the purpose of enhancing the transparency of their financial condition as fair value is consistent with how the Companies manage the risks of these securities. All securities, at estimated fair value are included within securities on the condensed consolidated balance sheets. | |
Estimated fair values are based on quoted market prices, when available, on estimates provided by independent pricing sources or dealers who make markets in such securities, or internal valuation models when external sources of fair value are not available. In accounting for the Merger Transaction, the difference between the estimated fair value, as of the Effective Date, and the par amount became the new premium or discount to be amortized or accreted over the remaining terms, adjusted for actual prepayments, of the securities using the effective interest method. | |
Residential Mortgage-Backed Securities, at Estimated Fair Value | ' |
Residential Mortgage-Backed Securities, at Estimated Fair Value | |
The Predecessor and Successor Company both elected the fair value option of accounting for their residential mortgage investments for the purpose of enhancing the transparency of their financial condition as fair value is consistent with how the Companies manage the risks of these investments. RMBS, at estimated fair value are included within securities on the condensed consolidated balance sheets. | |
Equity Investments, at Estimated Fair Value | ' |
Equity Investments, at Estimated Fair Value | |
The Predecessor and Successor Company both elected the fair value option of accounting for certain of their equity investments, at estimated fair value, including private equity investments received through restructuring debt transactions or issued by an entity in which the Company may have significant influence. The Companies elected the fair value option for certain of their equity investments for the purpose of enhancing the transparency of their financial condition as fair value is consistent with how the Companies manage the risks of these investments. Equity investments carried at estimated fair value are presented separately on the condensed consolidated balance sheets. | |
Interests in Joint Ventures and Partnerships | ' |
Interests in Joint Ventures and Partnerships | |
The Predecessor and Successor Company both elected the fair value option of accounting for certain of their interests in joint ventures and partnerships. The Companies elected the fair value option of accounting for certain of their noncontrolling interests in joint ventures and partnerships for the purpose of enhancing the transparency of their financial condition as fair value is consistent with how the Companies manage the risks of these interests. Interests in joint ventures and partnerships are presented separately on the condensed consolidated balance sheets. | |
Corporate Loans | ' |
Corporate Loans, Net | |
In connection with the Company’s application of acquisition accounting related to the Merger Transaction and to align more closely with KKR & Co.’s method of accounting, the Company elected to carry all of its corporate loans at estimated fair value as of the Effective Date, with changes in estimated fair value recorded in net realized and unrealized (loss) gain on investments in the condensed consolidated statements of operations. As presented under the Predecessor Company, corporate loans had previously been accounted for based on the following three categories: (i) corporate loans held for investment, which were measured based on their principal plus or minus unaccreted purchase discounts and unamortized purchase premiums, net of an allowance for loan losses; (ii) corporate loans held for sale, which were measured at lower of cost or estimated fair value; and (iii) corporate loans at estimated fair value, which were measured at fair value. As such, the disclosures related to loans held for investment and loans held for sale pertain to the Predecessor Company. | |
Corporate Loans | |
Prior to the Effective Date, corporate loans were generally held for investment and the Company initially recorded corporate loans at their purchase prices. The Company subsequently accounted for corporate loans based on their outstanding principal plus or minus unaccreted purchase discounts and unamortized purchase premiums and corporate loans that the Company transferred to held for sale were transferred at the lower of cost or estimated fair value. As of the Effective Date, the Company initially recorded corporate loans at their purchase prices and subsequently accounts for all corporate loans at estimated fair value. | |
Interest income on corporate loans includes interest at stated coupon rates adjusted for accretion of purchase discounts and the amortization of purchase premiums. Unamortized premiums and unaccreted discounts are recognized in interest income over the contractual life, adjusted for actual prepayments, of the corporate loans using the effective interest method. | |
Other than corporate loans measured at estimated fair value, corporate loans acquired with deteriorated credit quality are recorded at initial cost and interest income is recognized as the difference between the Company’s estimate of all cash flows that it will receive from the loan in excess of its initial investment on a level-yield basis over the life of the corporate loan (accretable yield) using the effective interest method. | |
A corporate loan is typically placed on non-accrual status at such time as: (i) management believes that scheduled debt service payments may not be paid when contractually due; (ii) the corporate loan becomes 90 days delinquent; (iii) management determines the borrower is incapable of, or has ceased efforts toward, curing the cause of the impairment; or (iv) the net realizable value of the collateral securing the corporate loan decreases below the Company’s carrying value of such corporate loan. As such, corporate loans placed on non-accrual status may or may not be contractually past due at the time of such determination. While on non-accrual status, previously recognized accrued interest is reversed if it is determined that such amounts are not collectible and interest income is recognized using the cost-recovery method, cash-basis method or some combination of the two methods. A corporate loan is placed back on accrual status when the ultimate collectability of the principal and interest is not in doubt. | |
Prior to the Effective Date, the Company may have modified corporate loans in transactions where the borrower was experiencing financial difficulty and a concession was granted to the borrower as part of the modification. These concessions may have included one or a combination of the following: a reduction of the stated interest rate; payment extensions; forgiveness of principal; or an exchange of assets. Such modifications typically qualified as troubled debt restructurings (“TDRs”). In order to determine whether the borrower was experiencing financial difficulty, an evaluation was performed including the following considerations: whether the borrower was or would have been in payment default on any of its debt in the foreseeable future without the modification; whether there was a potential for a bankruptcy filing; whether there was a going-concern issue; or whether the borrower was unable to secure financing elsewhere. | |
Corporate loans whose terms had been modified in a TDR were considered impaired, unless accounted for at fair value or the lower of cost or estimated fair value, and were typically placed on non-accrual status, but could have been moved to accrual status when, among other criteria, payment in full of all amounts due under the restructured terms was expected and the borrower demonstrated a sustained period of repayment performance, typically six months. | |
TDRs were separately identified for impairment disclosures and were measured at either the estimated fair value or the present value of estimated future cash flows using the respective corporate loan’s effective rate at inception. Impairments associated with TDRs were included within the allocated component of the Company’s allowance for loan losses. | |
The Company may have also identified receivables that were newly considered impaired and disclosed the total amount of receivables and the allowance for credit losses as of the end of the period of adoption related to those receivables that were newly considered impaired. | |
The corporate loans the Company invested in were generally deemed in default upon the non-payment of a single interest payment or as a result of the violation of a covenant in the respective corporate loan agreement. The Company charged-off a portion or all of its amortized cost basis in a corporate loan when it determined that it was uncollectible due to either: (i) the estimation based on a recovery value analysis of a defaulted corporate loan that less than the amortized cost amount would have been recovered through the agreed upon restructuring of the corporate loan or as a result of a bankruptcy process of the issuer of the corporate loan or (ii) the determination by the Company to transfer a corporate loan to held for sale with the corporate loan having an estimated fair value below the amortized cost basis of the corporate loan. | |
In addition to TDRs, the Company may have also modified corporate loans which usually involved changes in existing interest rates combined with changes of existing maturities to prevailing market rates/maturities for similar instruments at the time of modification. Such modifications typically did not meet the definition of a TDR since the respective borrowers were neither experiencing financial difficulty nor were seeking a concession as part of the modification. | |
Allowance for Loan Losses | ' |
Allowance for Loan Losses | |
As a result of the Merger Transaction, the acquisition method of accounting and adoption of fair value for corporate loans eliminated the need for an allowance for loan losses. The reevaluation of assets required by the acquisition method of accounting resulted in all loans being reported at their estimated fair values as of the Effective Date. The estimated fair value took into account the contractual payments on loans that were not expected to be received and consequently, no allowance for loan losses was carried over for the Successor Company. As of the Effective Date, no allowance for loan losses will be recorded as all corporate loans are carried at estimated fair value. As such, the disclosure related to the allowance for loan losses pertains to the Predecessor Company. | |
The Company’s corporate loan portfolio is comprised of a single portfolio segment which includes one class of financing receivables, that is, high yield loans that are typically purchased via assignment or participation in either the primary or secondary market. High yield loans are generally characterized as having below investment grade ratings or being unrated. | |
Prior to the Effective Date, the Company’s allowance for loan losses represented its estimate of probable credit losses inherent in its corporate loan portfolio held for investment as of the balance sheet date. Estimating the Company’s allowance for loan losses involved a high degree of management judgment and was based upon a comprehensive review of the Company’s corporate loan portfolio that was performed on a quarterly basis. The Company’s allowance for loan losses consisted of two components, an allocated component and an unallocated component. The allocated component of the allowance for loan losses pertained to specific corporate loans that the Company had determined were impaired. The Company determined a corporate loan was impaired when management estimated that it was probable that the Company would be unable to collect all amounts due according to the contractual terms of the corporate loan agreement. On a quarterly basis the Company performed a comprehensive review of its entire corporate loan portfolio and identified certain corporate loans that it had determined were impaired. Once a corporate loan was identified as being impaired, the Company placed the corporate loan on non-accrual status, unless the corporate loan was already on non-accrual status, and recorded an allowance that reflected management’s best estimate of the loss that the Company expected to recognize from the corporate loan. The expected loss was estimated as being the difference between the Company’s current cost basis of the corporate loan, including accrued interest receivable, and the present value of expected future cash flows discounted at the corporate loan’s effective interest rate, except as a practical expedient, the corporate loan’s observable estimated fair value may have been used. The Company also estimated the probable credit losses inherent in its unfunded loan commitments as of the balance sheet date. Any credit loss reserve for unfunded loan commitments was recorded in accounts payable, accrued expenses and other liabilities on the Company’s condensed consolidated balance sheets. | |
The unallocated component of the Company’s allowance for loan losses represented its estimate of probable losses inherent in the corporate loan portfolio as of the balance sheet date where the specific loan that the loan loss relates to was indeterminable. The Company estimated the unallocated component of the allowance for loan losses through a comprehensive review of its corporate loan portfolio and identified certain corporate loans that demonstrated possible indicators of impairment, including internally assigned credit quality indicators. This assessment excluded all corporate loans that were determined to be impaired and as a result, an allocated reserve had been recorded as described in the preceding paragraph. Such indicators included the current and/or forecasted financial performance, liquidity profile of the issuer, specific industry or economic conditions that may have impacted the issuer, and the observable trading price of the corporate loan if available. All corporate loans were first categorized based on their assigned risk grade and further stratified based on the seniority of the corporate loan in the issuer’s capital structure. The seniority classifications assigned to corporate loans were senior secured, second lien and subordinate. Senior secured consisted of corporate loans that were the most senior debt in an issuer’s capital structure and therefore had a lower estimated loss severity than other debt that was subordinate to the senior secured loan. Senior secured corporate loans often had a first lien on some or all of the issuer’s assets. Second lien consisted of corporate loans that were secured by a second lien interest on some or all of the issuer’s assets; however, the corporate loan was subordinate to the first lien debt in the issuer’s capital structure. Subordinate consisted of corporate loans that were generally unsecured and subordinate to other debt in the issuer’s capital structure. | |
There were three internally assigned risk grades that were applied to loans that have not been identified as being impaired: high, moderate and low. High risk meant that there was evidence of possible loss due to the current and/or forecasted financial performance, liquidity profile of the issuer, specific industry or economic conditions that may have impacted the issuer, observable trading price of the corporate loan if available, or other factors that indicated that the breach of a covenant contained in the related loan agreement was possible. Moderate risk meant that while there was not observable evidence of possible loss, there were issuer and/or industry specific trends that indicated a loss may have occurred. Low risk meant that while there was no identified evidence of loss, there was the risk of loss inherent in the loan that had not been identified. All loans held for investment, with the exception of loans that had been identified as impaired, were assigned a risk grade of high, moderate or low. | |
The Company applied a range of default and loss severity estimates in order to estimate a range of loss outcomes upon which to base its estimate of probable losses that resulted in the determination of the unallocated component of the Company’s allowance for loan losses. | |
Corporate Loans Held for Sale | ' |
Corporate Loans Held for Sale | |
As described above, corporate loans held for sale related to the Predecessor Company. From time to time the Company made the determination to transfer certain of its corporate loans from held for investment to held for sale. The decision to transfer a loan to held for sale was generally as a result of the Company determining that the respective loan’s credit quality in relation to the loan’s expected risk-adjusted return no longer met the Company’s investment objective and/or the Company deciding to reduce or eliminate its exposure to a particular loan for risk management purposes. Corporate loans held for sale were stated at lower of cost or estimated fair value and were assessed on an individual basis. Prior to transferring a loan to held for sale, any difference between the carrying amount of the loan and its outstanding principal balance was recognized as an adjustment to the yield by the effective interest method. The loan was transferred from held for investment to held for sale at the lower of its cost or estimated fair value and was carried at the lower of its cost or estimated fair value thereafter. Subsequent to transfer and while the loan was held for sale, recognition as an adjustment to yield by the effective interest method was discontinued for any difference between the carrying amount of the loan and its outstanding principal balance. | |
From time to time the Company also made the determination to transfer certain of its corporate loans from held for sale back to held for investment. The decision to transfer a loan back to held for investment was generally as a result of the circumstances that led to the initial transfer to held for sale no longer being present. Such circumstances may have included deteriorated market conditions often resulting in price depreciation or assets becoming illiquid, changes in restrictions on sales and certain loans amending their terms to extend the maturity, whereby the Company determined that selling the asset no longer met its investment objective and strategy. The loan was transferred from held for sale back to held for investment at the lower of its cost or estimated fair value, whereby a new cost basis was established based on this amount. | |
Interest income on corporate loans held for sale was recognized through accrual of the stated coupon rate for the loans, unless the loans were placed on non-accrual status, at which point previously recognized accrued interest was reversed if it was determined that such amounts were not collectible and interest income was recognized using either the cost-recovery method or on a cash-basis. | |
Corporate Loans, at Estimated Fair Value | ' |
Corporate Loans, at Estimated Fair Value | |
The Predecessor and Successor Company both elected the fair value option of accounting for certain of their corporate loans for the purpose of enhancing the transparency of their financial condition as fair value is consistent with how the Companies manage the risks of these corporate loans. All corporate loans carried at estimated fair value are included within corporate loans, net on the condensed consolidated balance sheets. | |
Estimated fair values are based on quoted prices for similar instruments in active markets and inputs other than observable quoted prices, or internal valuation models when external sources of fair value are not available. In accounting for the Merger Transaction, the difference between the estimated fair value, as of the Effective Date, and the par amount became the new premium or discount to be amortized or accreted over the remaining terms, adjusted for actual prepayments, of the corporate loans using the effective interest method. | |
As described above under “Basis of Presentation,” as of the Effective Date, purchases and sales of corporate loans are recorded on the trade date. | |
Oil and Natural Gas Properties | ' |
Oil and Natural Gas Properties | |
Oil and natural gas producing activities are accounted for under the successful efforts method of accounting. Under this method, exploration costs, other than the costs of drilling exploratory wells, are charged to expense as incurred. Costs that are associated with the drilling of successful exploration wells are capitalized if proved reserves are found. Lease acquisition costs are capitalized when incurred. Costs associated with the drilling of exploratory wells that do not find proved reserves, geological and geophysical costs and costs of certain nonproducing leasehold costs are expensed as incurred. | |
Expenditures for repairs and maintenance, including workovers, are charged to expense as incurred. | |
The capitalized costs of producing oil and natural gas properties were depleted on a field-by-field basis using the units-of production method based on the ratio of current production to estimated total net proved oil, natural gas and NGL reserves. Proved developed reserves were used in computing depletion rates for drilling and development costs and total proved reserves were used for depletion rates of leasehold costs. | |
Estimated dismantlement and abandonment costs for oil and natural gas properties, net of salvage value, are capitalized at their estimated net present value and amortized on a unit-of-production basis over the remaining life of the related proved developed reserves. | |
Oil And Gas Revenue Recognition | ' |
Oil and Gas Revenue Recognition | |
Oil, natural gas and NGL revenues are recognized when production is sold to a purchaser at fixed or determinable prices, when delivery has occurred and title has transferred and collectability of the revenue is reasonably assured. The Company follows the sales method of accounting for natural gas revenues. Under this method of accounting, revenues are recognized based on volumes sold, which may differ from the volume to which the Company is entitled based on the Company’s working interest. An imbalance is recognized as a liability only when the estimated remaining reserves will not be sufficient to enable the under-produced owners to recoup their entitled share through future production. Under the sales method, no receivables are recorded when the Company has taken less than its share of production and no payables are recorded when the Company has taken more than its share of production. | |
Long-Lived Assets | ' |
Long-Lived Assets | |
Whenever events or changes in circumstances indicate that the carrying amounts of such properties may not be recoverable, the Company evaluates its proved oil and natural gas properties and related equipment and facilities for impairment on a field-by-field basis. The determination of recoverability is made based upon estimated undiscounted future net cash flows. The amount of impairment loss, if any, is determined by comparing the fair value, as determined by a discounted cash flow analysis, with the carrying value of the related asset. The factors used to determine fair value include, but are not limited to, estimates of proved reserves, future commodity pricing, future production estimates, anticipated capital expenditures, future operating costs and a discount rate commensurate with the risk on the properties and cost of capital. Unproved oil and natural gas properties were assessed periodically and, at a minimum, annually on a property-by-property basis, and any impairment in value was recognized when incurred. | |
Borrowings | ' |
Borrowings | |
The Company finances the majority of its investments through the use of secured borrowings in the form of securitization transactions structured as non-recourse secured financings and other secured and unsecured borrowings. In addition, the Company financed certain of its oil and gas asset acquisitions through borrowings. The Company recognizes interest expense on all borrowings on an accrual basis. | |
In connection with the Company’s application of acquisition accounting related to the Merger Transaction and to align more closely with KKR & Co.’s method of accounting, the Company elected to carry its collateralized loan obligation secured notes at estimated fair value as of the Effective Date, with changes in estimated fair value recorded in net realized and unrealized loss on debt in the condensed consolidated statements of operations. Prior to the Effective Date, collateralized loan obligation secured notes were carried at amortized cost. | |
Trust Preferred Securities | ' |
Trust Preferred Securities | |
Trusts formed by the Company for the sole purpose of issuing trust preferred securities are not consolidated by the Company as the Company has determined that it is not the primary beneficiary of such trusts. The Company’s investment in the common securities of such trusts is included within other assets on the condensed consolidated balance sheets. | |
Preferred Shares | ' |
Preferred Shares | |
Distributions on the Company’s Series A LLC Preferred Shares are cumulative and payable quarterly when and if declared by the Company’s board of directors at a 7.375% rate per annum. The Company accrues for the distribution upon declaration and is included within accounts payable, accrued expenses and other liabilities on the condensed consolidated balance sheets. | |
Derivative Instruments | ' |
Derivative Instruments | |
The Company recognizes all derivatives on the condensed consolidated balance sheet at estimated fair value. On the date the Company enters into a derivative contract, the Company designates and documents each derivative contract as one of the following at the time the contract is executed: (i) a hedge of a recognized asset or liability (“fair value” hedge); (ii) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow” hedge); (iii) a hedge of a net investment in a foreign operation; or (iv) a derivative instrument not designated as a hedging instrument (“free-standing derivative”). For a fair value hedge, the Company records changes in the estimated fair value of the derivative instrument and, to the extent that it is effective, changes in the fair value of the hedged asset or liability in the current period earnings in the same financial statement category as the hedged item. For a cash flow hedge, the Company records changes in the estimated fair value of the derivative to the extent that it is effective in accumulated other comprehensive loss and subsequently reclassifies these changes in estimated fair value to net income in the same period(s) that the hedged transaction affects earnings. The effective portion of the cash flow hedges is recorded in the same financial statement category as the hedged item. For free-standing derivatives, the Company reports changes in the fair values in net realized and unrealized gain (loss) on derivatives and foreign exchange on the condensed consolidated statements of operations. | |
The Company formally documents at inception its hedge relationships, including identification of the hedging instruments and the hedged items, its risk management objectives, strategy for undertaking the hedge transaction and the Company’s evaluation of effectiveness of its hedged transactions. Periodically, the Company also formally assesses whether the derivative it designated in each hedging relationship is expected to be and has been highly effective in offsetting changes in estimated fair values or cash flows of the hedged item using either the dollar offset or the regression analysis method. If the Company determines that a derivative is not highly effective as a hedge, it discontinues hedge accounting. | |
In connection with the Merger Transaction, the Company discontinued hedge accounting for its cash flow hedges and, as of the Effective Date, classifies all derivative instruments as free-standing derivatives. As a result, the Company records changes in the estimated fair value of the derivative instruments in net realized and unrealized gain (loss) on derivatives and foreign exchange on the condensed consolidated statements of operations. | |
Foreign Currency | ' |
Foreign Currency | |
The Company makes investments in non-United States dollar denominated assets including securities, loans, equity investments and interests in joint ventures and partnerships. As a result, the Company is subject to the risk of fluctuation in the exchange rate between the United States dollar and the foreign currency in which it makes an investment. In order to reduce the currency risk, the Company may hedge the applicable foreign currency. All investments denominated in a foreign currency are converted to the United States dollar using prevailing exchange rates on the balance sheet date. | |
Income, expenses, gains and losses on investments denominated in a foreign currency are converted to the United States dollar using the prevailing exchange rates on the dates when they are recorded. Foreign exchange gains and losses are recorded in net realized and unrealized gain (loss) on derivatives and foreign exchange on the condensed consolidated statements of operations. | |
Noncontrolling Interests | ' |
Noncontrolling Interests | |
Noncontrolling interests represent noncontrolling interests in consolidated entities held by third party investors. Income (loss) is allocated to noncontrolling interests based on the relative ownership interests of third party investors and is presented as net income attributable to noncontrolling interests on the condensed consolidated statements of operations. Noncontrolling interests are also presented separately within equity in the condensed consolidated balance sheets. | |
Manager Compensation | ' |
Manager Compensation | |
The Management Agreement provides for the payment of a base management fee to the Manager, as well as an incentive fee if the Company’s financial performance exceeds certain benchmarks. Additionally, the Management Agreement provides for the Manager to be reimbursed for certain expenses incurred on the Company’s behalf. The base management fee and the incentive fee are accrued and expensed during the period for which they are earned by the Manager. | |
Share-Based Compensation | ' |
Share-Based Compensation | |
In connection with the Merger Transaction, the Predecessor Company’s common shares were converted into 0.51 KKR & Co. common units. Prior to the Effective Date, the Company accounted for share-based compensation issued to its directors and to its Manager using the fair value based methodology in accordance with relevant accounting guidance. Compensation cost related to restricted common shares issued to the Company’s directors was measured at its estimated fair value at the grant date, and was amortized and expensed over the vesting period on a straight-line basis. Compensation cost related to restricted common shares and common share options issued to the Manager was initially measured at estimated fair value at the grant date, and was remeasured on subsequent dates to the extent the awards were unvested. The Company elected to use the graded vesting attribution method to amortize compensation expense for the restricted common shares and common share options granted to the Manager. | |
Income Taxes | ' |
Income Taxes | |
The Company intends to continue to operate so as to qualify, for United States federal income tax purposes, as a partnership and not as an association or publicly traded partnership taxable as a corporation. Therefore, the Company generally is not subject to United States federal income tax at the entity level, but is subject to limited state and foreign taxes. Holders of the Company’s preferred shares will be allocated a share of the Company’s gross ordinary income for the taxable year of the Company ending within or with their taxable year. Holders of the Company’s preferred shares will not be allocated any gains or losses from the sale of the Company’s assets. | |
The Company owns equity interests in entities that have elected or intend to elect to be taxed as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”). A REIT generally is not subject to United States federal income tax to the extent that it currently distributes its income and satisfies certain asset, income and ownership tests, and recordkeeping requirements, but it may be subject to some amount of federal, state, local and foreign taxes based on its taxable income. | |
The Company has wholly-owned domestic and foreign subsidiaries that are taxable as corporations for United States federal income tax purposes and thus are not consolidated with the Company for United States federal income tax purposes. For financial reporting purposes, current and deferred taxes are provided for on the portion of earnings recognized by the Company with respect to its interest in the domestic taxable corporate subsidiaries, because each is taxed as a regular corporation under the Code. Deferred income tax assets and liabilities are computed based on temporary differences between the GAAP consolidated financial statements and the United States federal income tax basis of assets and liabilities as of each consolidated balance sheet date. The foreign corporate subsidiaries were formed to make certain foreign and domestic investments from time to time. The foreign corporate subsidiaries are organized as exempted companies incorporated with limited liability under the laws of the Cayman Islands, and are anticipated to be exempt from United States federal and state income tax at the corporate entity level because they restrict their activities in the United States to trading in stock and securities for their own account. However, the Company will be required to include their current taxable income in the Company’s calculation of its gross ordinary income allocable to shareholders. | |
The Company must recognize the tax impact from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax impact recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. Penalties and interest related to uncertain tax positions are recorded as tax expense. Significant judgment is required in the identification of uncertain tax positions and in the estimation of penalties and interest on uncertain tax positions. If it is determined that recognition for an uncertain tax provision is necessary, the Company would record a liability for an unrecognized tax expense from an uncertain tax position taken or expected to be taken. | |
Earnings Per Common Share | ' |
Earnings Per Common Share | |
In connection with the Merger Transaction, as of the Effective Date, the Company is now a subsidiary of KKR Fund Holdings, which owns 100 common shares of the Company constituting all of the Company’s outstanding common shares. As KKR Fund Holdings is the Company’s sole shareholder, earnings per common share is not reported for the Successor Company. Prior to the Effective Date, the Company presented both basic and diluted earnings per common share (“EPS”) in its condensed consolidated financial statements and footnotes thereto. Basic earnings per common share (“Basic EPS”) excluded dilution and was computed by dividing net income or loss available to common shareholders by the weighted average number of common shares, including vested restricted common shares, outstanding for the period. The Company calculated EPS using the more dilutive of the two-class method or the if-converted method. The two-class method was an earnings allocation formula that determined EPS for common shares and participating securities. Unvested share-based payment awards that contained non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) were participating securities and were included in the computation of EPS using the two-class method. Accordingly, all earnings (distributed and undistributed) were allocated to common shares, preferred shares and participating securities based on their respective rights to receive dividends. Diluted earnings per common share (“Diluted EPS”) reflected the potential dilution of common share options and unvested restricted common shares using the treasury method or if-converted method. | |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
Consolidation | |
In August 2014, the FASB amended existing standards to provide an entity that consolidates a collateralized financing entity (“CFE”) that had elected the fair value option for the financial assets and financial liabilities of such CFE an alternative to current fair value measurement guidance. If elected, the Company could measure both the financial assets and the financial liabilities of the CFE by using the fair value of the financial assets or the fair value of the financial liabilities, whichever is more observable. The election would effectively eliminate any measurement difference previously reflected in earnings and attributed to the reporting entity in the condensed consolidated statements of operations. The guidance is effective for annual reporting periods beginning on or after January 1, 2016, and interim periods within those annual periods, with a modified retrospective approach. The Company is currently evaluating the impact of this accounting update on its financial statements should it elect adoption. | |
MERGER_TRANSACTION_Tables
MERGER TRANSACTION (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
MERGER TRANSACTION | ' | ||||
Summary of the estimated fair values assigned to the assets purchased and liabilities assumed | ' | ||||
The following table summarizes the estimated fair values assigned to the assets purchased and liabilities assumed (amounts in thousands): | |||||
Assets acquired: | |||||
Cash and cash equivalents | $ | 210,413 | |||
Restricted cash and cash equivalents | 649,967 | ||||
Securities | 541,149 | ||||
Corporate loans | 6,649,054 | ||||
Equity investments | 297,054 | ||||
Oil and gas properties, net | 505,238 | ||||
Interests in joint ventures and partnerships | 491,324 | ||||
Derivative assets | 26,383 | ||||
Interest and principal receivable | 35,992 | ||||
Other assets | 208,144 | ||||
Total assets | 9,614,718 | ||||
Liabilities assumed: | |||||
Collateralized loan obligation secured notes | 5,663,666 | ||||
Credit facilities | 63,189 | ||||
Senior notes | 415,538 | ||||
Junior subordinated notes | 245,782 | ||||
Accounts payable, accrued expenses and other liabilities | 357,084 | ||||
Accrued interest payable | 17,647 | ||||
Derivative liabilities | 88,356 | ||||
Total liabilities | 6,851,262 | ||||
Fair value of preferred shares | 378,983 | ||||
Fair value of net assets acquired | 2,384,473 | ||||
Less: Purchase price | 2,369,559 | ||||
Bargain purchase gain(1) | $ | 14,914 | |||
-1 | Represents the excess of the fair value of the net assets acquired over the purchase price and value of the preferred shares, which constitute noncontrolling interests in the Company. This difference was recorded as an adjustment to the Company’s additional paid-in-capital as of the Effective Date. | ||||
SECURITIES_Tables
SECURITIES (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Successor Company | ' | |||||||||||||||||||
Securities | ' | |||||||||||||||||||
Summary of the company's securities which are carried at estimated fair value | ' | |||||||||||||||||||
The following table summarizes the Company’s securities as of September 30, 2014, which are carried at estimated fair value (amounts in thousands): | ||||||||||||||||||||
September 30, 2014 | ||||||||||||||||||||
Par | Amortized Cost | Estimated | ||||||||||||||||||
Fair Value | ||||||||||||||||||||
Securities, at estimated fair value | $ | 647,189 | $ | 586,052 | $ | 589,160 | ||||||||||||||
Total | $ | 647,189 | $ | 586,052 | $ | 589,160 | ||||||||||||||
Schedule of realized and unrealized gains from securities | ' | |||||||||||||||||||
The following table presents the Company’s realized and unrealized (losses) gains from securities for the three and five months ended September 30, 2014 (amounts in thousands): | ||||||||||||||||||||
Three months ended | Five months ended | |||||||||||||||||||
September 30, 2014 | September 30, 2014 | |||||||||||||||||||
Net realized (losses) gains | $ | (103 | ) | $ | 632 | |||||||||||||||
Net change in unrealized (losses) gains | (4,645 | ) | 6,178 | |||||||||||||||||
Net realized and unrealized (losses) gains | $ | (4,748 | ) | $ | 6,810 | |||||||||||||||
Schedule of estimated fair value of securities pledged as collateral | ' | |||||||||||||||||||
The following table summarizes the estimated fair value of securities pledged as collateral as of September 30, 2014 (amounts in thousands): | ||||||||||||||||||||
As of | ||||||||||||||||||||
September 30, 2014 | ||||||||||||||||||||
Pledged as collateral for collateralized loan obligation secured debt | $ | 315,462 | ||||||||||||||||||
Total | $ | 315,462 | ||||||||||||||||||
Predecessor Company | ' | |||||||||||||||||||
Securities | ' | |||||||||||||||||||
Summary of the company's securities which are carried at estimated fair value | ' | |||||||||||||||||||
The following table summarizes the Company’s securities as of December 31, 2013, which were carried at estimated fair value (amounts in thousands): | ||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Amortized | Gross | Gross | Estimated | |||||||||||||||||
Cost | Unrealized | Unrealized | Fair | |||||||||||||||||
Gains | Losses | Value | ||||||||||||||||||
Securities available-for-sale | $ | 326,775 | $ | 24,791 | $ | (1,225 | ) | $ | 350,341 | |||||||||||
Other securities, at estimated fair value(1) | 135,968 | 12,436 | (1,437 | ) | 146,967 | |||||||||||||||
Residential mortgage-backed securities, at estimated fair value(1) | 138,284 | 2,809 | (65,089 | ) | 76,004 | |||||||||||||||
Total securities | $ | 601,027 | $ | 40,036 | $ | (67,751 | ) | $ | 573,312 | |||||||||||
(1) Unrealized gains and losses presented represent amounts as of period-end. Unrealized gains and losses recognized during the year for these securities are recorded in earnings. | ||||||||||||||||||||
Schedule of gross unrealized losses and estimated fair value of securities classified as available-for-sale aggregated by length of time the securities have been in a continuous unrealized loss position | ' | |||||||||||||||||||
The following table shows the gross unrealized losses and estimated fair value of the Company’s available-for-sale securities, aggregated by length of time that the individual securities had been in a continuous unrealized loss position as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||||
Less Than 12 months | 12 Months or More | Total | ||||||||||||||||||
Estimated | Unrealized | Estimated | Unrealized | Estimated | Unrealized | |||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Securities available-for-sale | $ | 25,543 | $ | (658 | ) | $ | 30,034 | $ | (567 | ) | $ | 55,577 | $ | (1,225 | ) | |||||
Schedule of net realized gains on the sales of available-for-sale securities | ' | |||||||||||||||||||
The following table shows the net realized gains on the sales of securities available-for-sale (amounts in thousands): | ||||||||||||||||||||
For the four | For the three | For the nine | ||||||||||||||||||
months ended | months ended | months ended | ||||||||||||||||||
April 30, 2014 | September 30, 2013 | September 30, 2013 | ||||||||||||||||||
Gross realized gains | $ | 2,516 | $ | — | $ | 2,829 | ||||||||||||||
Gross realized losses | — | — | (6 | ) | ||||||||||||||||
Net realized gains | $ | 2,516 | $ | — | $ | 2,823 | ||||||||||||||
Schedule of estimated fair value of securities pledged as collateral | ' | |||||||||||||||||||
The following table summarizes the estimated fair value of securities pledged as collateral as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||||
As of | ||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Pledged as collateral for collateralized loan obligation secured debt | $ | 324,830 | ||||||||||||||||||
Total | $ | 324,830 | ||||||||||||||||||
CORPORATE_LOANS_AND_ALLOWANCE_1
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables) | 9 Months Ended | |||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||
Successor Company | ' | |||||||||||||||||
Summary of corporate loans | ' | |||||||||||||||||
Schedule of corporate loans | ' | |||||||||||||||||
The following table summarizes the Company’s corporate loans, at estimated fair value as of September 30, 2014 (amounts in thousands): | ||||||||||||||||||
September 30, 2014 | ||||||||||||||||||
Par | Amortized Cost | Estimated | ||||||||||||||||
Fair Value | ||||||||||||||||||
Corporate loans, at estimated fair value | $ | 6,651,027 | $ | 6,457,031 | $ | 6,354,143 | ||||||||||||
Total | $ | 6,651,027 | $ | 6,457,031 | $ | 6,354,143 | ||||||||||||
Schedule of realized and unrealized (losses) gains from corporate loans | ' | |||||||||||||||||
The following tables present the Company’s realized and unrealized losses from corporate loans for the three and five months ended September 30, 2014 (amounts in thousands): | ||||||||||||||||||
Three months ended | Five months ended | |||||||||||||||||
September 30, 2014 | September 30, 2014 | |||||||||||||||||
Net realized gains | $ | 6,353 | $ | 1,637 | ||||||||||||||
Net change in unrealized losses | (128,749 | ) | (102,888 | ) | ||||||||||||||
Net realized and unrealized losses | $ | (122,396 | ) | $ | (101,251 | ) | ||||||||||||
Schedule of corporate loans pledged as collateral | ' | |||||||||||||||||
The following table summarizes the corporate loans pledged as collateral as of September 30, 2014 (amounts in thousands): | ||||||||||||||||||
As of | ||||||||||||||||||
September 30, 2014 | ||||||||||||||||||
Estimated Fair Value | ||||||||||||||||||
Pledged as collateral for collateralized loan obligation secured debt | $ | 6,046,310 | ||||||||||||||||
Total | $ | 6,046,310 | ||||||||||||||||
Predecessor Company | ' | |||||||||||||||||
Summary of corporate loans | ' | |||||||||||||||||
Schedule of corporate loans | ' | |||||||||||||||||
The following table summarizes the Company’s corporate loans as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||
December 31, 2013 | ||||||||||||||||||
Corporate | Corporate Loans | Corporate Loans, at | Total | |||||||||||||||
Loans Held | Held for Sale | Estimated Fair Value | Corporate Loans | |||||||||||||||
for Investment | ||||||||||||||||||
Principal(1) | $ | 6,280,470 | $ | 315,738 | $ | 277,458 | $ | 6,873,666 | ||||||||||
Net unamortized discount | (105,979 | ) | (20,070 | ) | (54,997 | ) | (181,046 | ) | ||||||||||
Total amortized cost | 6,174,491 | 295,668 | 222,461 | 6,692,620 | ||||||||||||||
Lower of cost or fair value adjustment | — | (15,920 | ) | — | (15,920 | ) | ||||||||||||
Allowance for loan losses | (224,999 | ) | — | — | (224,999 | ) | ||||||||||||
Unrealized gains | — | — | 15,019 | 15,019 | ||||||||||||||
Net carrying value | $ | 5,949,492 | $ | 279,748 | $ | 237,480 | $ | 6,466,720 | ||||||||||
(1) Principal amounts of corporate loans and corporate loans held for sale were net of cumulative charge-offs and other adjustments totaling $18.1 million as of December 31, 2013. | ||||||||||||||||||
Schedule of changes in the allowance for loan losses | ' | |||||||||||||||||
The following table summarizes the changes in the allowance for loan losses for the Company’s corporate loan portfolio during the four months ended April 30, 2014 and three and nine months ended September 30, 2013 (amounts in thousands): | ||||||||||||||||||
For the four | For the three | For the nine | ||||||||||||||||
months ended | months ended | months ended | ||||||||||||||||
April 30, 2014 | September 30, 2013 | September 30, 2013 | ||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||
Beginning balance | $ | 224,999 | $ | 203,255 | $ | 223,472 | ||||||||||||
Provision for loan losses | — | 9,339 | 20,407 | |||||||||||||||
Charge-offs | (1,458 | ) | — | (31,285 | ) | |||||||||||||
Ending balance | $ | 223,541 | $ | 212,594 | $ | 212,594 | ||||||||||||
Schedule of ending balances of allowances for loan losses by basis of impairment method | ' | |||||||||||||||||
The following table summarizes the ending balances of the allowance and corporate loans portfolio by basis of impairment method as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||
December 31, 2013 | ||||||||||||||||||
Allowance for loan losses: | ||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 142,682 | ||||||||||||||||
Ending balance: collectively evaluated for impairment | 82,317 | |||||||||||||||||
$ | 224,999 | |||||||||||||||||
Corporate loans (recorded investment)(1): | ||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 554,442 | ||||||||||||||||
Ending balance: collectively evaluated for impairment | 5,638,790 | |||||||||||||||||
$ | 6,193,232 | |||||||||||||||||
(1) Recorded investment is defined as amortized cost plus accrued interest. | ||||||||||||||||||
Schedule of investment and unpaid principal balance in impaired loans, as well as the related allowance for credit losses | ' | |||||||||||||||||
The following table summarizes the Company’s recorded investment and unpaid principal balance in impaired loans, as well as the related allowance for credit losses as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||
December 31, 2013 | ||||||||||||||||||
Recorded | Unpaid | Related | ||||||||||||||||
Investment(1) | Principal | Allowance | ||||||||||||||||
Balance | ||||||||||||||||||
With no related allowance recorded | $ | — | $ | — | $ | — | ||||||||||||
With an allowance recorded | 554,442 | 594,416 | 142,682 | |||||||||||||||
Total | $ | 554,442 | $ | 594,416 | $ | 142,682 | ||||||||||||
(1) Recorded investment is defined as amortized cost plus accrued interest. | ||||||||||||||||||
Schedule of average recorded investment in impaired loans and interest income recognized | ' | |||||||||||||||||
The following table summarizes the Company’s average recorded investment in impaired loans and interest income recognized for the three and nine months ended September 30, 2013 (amounts in thousands): | ||||||||||||||||||
For the three months ended | For the nine months ended | |||||||||||||||||
September 30, 2013 | September 30, 2013 | |||||||||||||||||
Average | Interest | Average | Interest | |||||||||||||||
Recorded | Income | Recorded | Income | |||||||||||||||
Investment(1) | Recognized | Investment(1) | Recognized | |||||||||||||||
With no related allowance recorded | $ | — | $ | — | $ | 1,623 | $ | — | ||||||||||
With an allowance recorded | 554,554 | 4,471 | 517,544 | 14,740 | ||||||||||||||
Total | $ | 554,554 | $ | 4,471 | $ | 519,167 | $ | 14,740 | ||||||||||
-1 | Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||
Schedule of recorded investment in non-accrual loans | ' | |||||||||||||||||
The following table summarizes the Company’s recorded investment in non-accrual loans as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||
December 31, 2013 | ||||||||||||||||||
Loans held for investment | $ | 554,442 | ||||||||||||||||
Loans held for sale | 44,823 | |||||||||||||||||
Loans at estimated fair value | 24,883 | |||||||||||||||||
Total non-accrual loans | $ | 624,148 | ||||||||||||||||
Schedule of recorded investment in corporate loans by internally assigned grades | ' | |||||||||||||||||
The following table summarizes how the Company determined internally assigned grades related to credit quality based on a combination of concern as to probability of default and the seniority of the loan in the issuer’s capital structure as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||
Internally Assigned Grade | Capital Hierarchy | Recorded Investment | ||||||||||||||||
December 31, 2013 (1) | ||||||||||||||||||
High | Senior Secured Loan | $ | 26,886 | |||||||||||||||
Second Lien Loan | 286,996 | |||||||||||||||||
Subordinated | 11,643 | |||||||||||||||||
$ | 325,525 | |||||||||||||||||
Moderate | Senior Secured Loan | $ | 1,033,065 | |||||||||||||||
Second Lien Loan | 27,504 | |||||||||||||||||
Subordinated | 39,329 | |||||||||||||||||
$ | 1,099,898 | |||||||||||||||||
Low | Senior Secured Loan | $ | 4,148,913 | |||||||||||||||
Second Lien Loan | 25,864 | |||||||||||||||||
Subordinated | 38,590 | |||||||||||||||||
$ | 4,213,367 | |||||||||||||||||
Total Unallocated | $ | 5,638,790 | ||||||||||||||||
Total Allocated | 554,442 | |||||||||||||||||
Total Loans Held for Investment | $ | 6,193,232 | ||||||||||||||||
-1 | Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||
Schedule of loans by class modified as troubled debt restructurings | ' | |||||||||||||||||
The following table presents the aggregate balance of loans whose terms had been modified in a TDR during the four months ended April 30, 2014 (dollar amounts in thousands): | ||||||||||||||||||
Four months ended | ||||||||||||||||||
April 30, 2014 | ||||||||||||||||||
Number | Pre-modification | Post-modification | ||||||||||||||||
of TDRs | outstanding recorded | outstanding recorded | ||||||||||||||||
investment(1) | investment(1)(2) | |||||||||||||||||
Troubled debt restructurings: | ||||||||||||||||||
Loans held for investment | 1 | $ | 154,075 | $ | — | |||||||||||||
Loans at estimated fair value | 2 | 41,347 | 24,571 | |||||||||||||||
Total | $ | 195,422 | $ | 24,571 | ||||||||||||||
-1 | Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||
-2 | Excludes equity securities received from the loans held for investment and/or loans at estimated fair value TDRs with an estimated fair value of $92.0 million and $12.3 million, from the two issuers, respectively. | |||||||||||||||||
The following table presents the aggregate balance of loans whose terms had been modified in a TDR during the three and nine months ended September 30, 2013 (dollar amounts in thousands): | ||||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||||
September 30, 2013 | September 30, 2013 | |||||||||||||||||
Number | Pre-modification | Post-modification | Number | Pre-modification | Post-modification | |||||||||||||
of TDRs | outstanding | outstanding recorded | of TDRs | outstanding | outstanding recorded | |||||||||||||
recorded | investment(1) | recorded | investment(1)(2) | |||||||||||||||
investment(1) | investment(1) | |||||||||||||||||
Troubled debt restructurings: | ||||||||||||||||||
Loans held for investment | — | $ | — | $ | — | 2 | $ | 68,358 | $ | 39,430 | ||||||||
Loans held for sale | — | — | — | — | — | — | ||||||||||||
Loans at estimated fair value | — | — | — | 1 | 1,670 | 1,229 | ||||||||||||
Total | $ | — | $ | — | $ | 70,028 | $ | 40,659 | ||||||||||
-1 | Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||
-2 | Excludes equity securities received from the loans held for investment TDRs with an estimated fair value of $2.1 million. | |||||||||||||||||
Schedule of corporate loans pledged as collateral | ' | |||||||||||||||||
The following table summarizes the corporate loans pledged as collateral as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||
As of | ||||||||||||||||||
December 31, 2013 | ||||||||||||||||||
Amortized Cost | ||||||||||||||||||
Pledged as collateral for collateralized loan obligation secured debt | $ | 6,231,541 | ||||||||||||||||
Total | $ | 6,231,541 | ||||||||||||||||
NATURAL_RESOURCES_ASSETS_Table
NATURAL RESOURCES ASSETS (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
NATURAL RESOURCES ASSETS | ' | |||||||
Summary of the company's oil and gas properties | ' | |||||||
The following table summarizes the Company’s oil and gas properties as of September 30, 2014 and December 31, 2013 (amounts in thousands): | ||||||||
As of | As of | |||||||
September 30, 2014 | December 31, 2013 | |||||||
Proved oil and natural gas properties (successful efforts method) | $ | 128,800 | $ | 451,909 | ||||
Unproved oil and natural gas properties | — | 16,913 | ||||||
Less: Accumulated depreciation, depletion and amortization | (6,170 | ) | (68,453 | ) | ||||
Oil and gas properties, net | $ | 122,630 | $ | 400,369 | ||||
BORROWINGS_Tables
BORROWINGS (Tables) | 9 Months Ended | ||||||||||||||
Sep. 30, 2014 | |||||||||||||||
Successor Company | ' | ||||||||||||||
Borrowings | ' | ||||||||||||||
Schedule of Company's borrowings | ' | ||||||||||||||
Certain information with respect to the Company’s borrowings as of September 30, 2014 is summarized in the following table (dollar amounts in thousands): | |||||||||||||||
Par | Carrying | Weighted | Weighted | Collateral(2) | |||||||||||
Value(1) | Average | Average | |||||||||||||
Borrowing | Remaining | ||||||||||||||
Rate | Maturity | ||||||||||||||
(in days) | |||||||||||||||
CLO 2005-1 senior secured notes | $ | 200,058 | $ | 199,895 | 1.79 | % | 939 | $ | 243,376 | ||||||
CLO 2005-2 senior secured notes | 258,369 | 256,965 | 0.67 | 1,153 | 400,937 | ||||||||||
CLO 2006-1 senior secured notes | 224,947 | 224,303 | 1.10 | 1,425 | 460,164 | ||||||||||
CLO 2007-1 senior secured notes | 2,024,737 | 2,008,230 | 0.79 | 2,419 | 2,335,665 | ||||||||||
CLO 2007-1 mezzanine notes | 489,723 | 483,296 | 3.84 | 2,419 | 564,927 | ||||||||||
CLO 2007-1 subordinated notes(3) | 134,468 | 128,592 | 13.30 | 2,419 | 155,117 | ||||||||||
CLO 2007-A mezzanine notes | 63,902 | 63,895 | 7.73 | 1,111 | 62,924 | ||||||||||
CLO 2007-A subordinated notes(3) | 15,096 | 39,850 | 10.35 | 1,111 | 14,865 | ||||||||||
CLO 2011-1 senior debt | 405,239 | 405,239 | 1.58 | 1,415 | 515,671 | ||||||||||
CLO 2012-1 senior secured notes | 367,500 | 366,269 | 2.33 | 3,729 | 366,628 | ||||||||||
CLO 2012-1 subordinated notes(3) | 18,000 | 14,586 | 15.40 | 3,729 | 17,957 | ||||||||||
CLO 2013-1 senior secured notes | 458,500 | 446,590 | 1.97 | 3,941 | 479,944 | ||||||||||
CLO 2013-2 senior secured notes | 339,250 | 334,435 | 2.22 | 4,133 | 350,048 | ||||||||||
CLO 9 senior secured notes | 463,750 | 457,730 | 2.24 | 4,398 | 458,018 | ||||||||||
CLO 9 subordinated notes(3) | 15,000 | 13,711 | — | 4,398 | 14,815 | ||||||||||
Total collateralized loan obligation secured debt | 5,478,539 | 5,443,586 | 6,441,056 | ||||||||||||
8.375% Senior notes | 258,750 | 291,163 | 8.38 | 9,908 | — | ||||||||||
7.500% Senior notes | 115,043 | 123,742 | 7.50 | 10,033 | — | ||||||||||
Junior subordinated notes | 283,517 | 246,484 | 5.39 | 8,041 | — | ||||||||||
Total borrowings | $ | 6,135,849 | $ | 6,104,975 | $ | 6,441,056 | |||||||||
-1 | Carrying value represents estimated fair value for the collateralized loan obligation secured debt and amortized cost for all other borrowings. | ||||||||||||||
-2 | Collateral for borrowings consists of the estimated fair value of certain corporate loans, securities and equity investments at estimated fair value. For purposes of this table, collateral for CLO senior, mezzanine and subordinated notes are calculated pro rata based on the par amount for each respective CLO. | ||||||||||||||
-3 | Subordinated notes do not have a contractual coupon rate, but instead receive a pro rata amount of the net distributions from each respective CLO. Accordingly, weighted average borrowing rates for the subordinated notes were calculated based on annualized distributions during the quarter, if any. | ||||||||||||||
Predecessor Company | ' | ||||||||||||||
Borrowings | ' | ||||||||||||||
Schedule of Company's borrowings | ' | ||||||||||||||
Certain information with respect to the Company’s borrowings as of December 31, 2013 is summarized in the following table (dollar amounts in thousands): | |||||||||||||||
Outstanding | Weighted | Weighted | Collateral(1) | ||||||||||||
Borrowings | Average | Average | |||||||||||||
Borrowing | Remaining | ||||||||||||||
Rate | Maturity | ||||||||||||||
(in days) | |||||||||||||||
CLO 2005-1 senior secured notes | $ | 193,909 | 0.73 | % | 1,212 | $ | 303,104 | ||||||||
CLO 2005-2 senior secured notes | 335,570 | 0.63 | 1,426 | 496,917 | |||||||||||
CLO 2006-1 senior secured notes | 384,925 | 0.69 | 1,698 | 649,894 | |||||||||||
CLO 2007-1 senior secured notes | 2,075,040 | 0.79 | 2,692 | 2,354,938 | |||||||||||
CLO 2007-1 mezzanine notes | 406,428 | 3.65 | 2,692 | 461,250 | |||||||||||
CLO 2007-1 subordinated notes(2) | 136,097 | 18.15 | 2,692 | 154,456 | |||||||||||
CLO 2007-A senior secured notes | 428,152 | 1.57 | 1,384 | 540,677 | |||||||||||
CLO 2007-A mezzanine notes | 55,327 | 7.44 | 1,384 | 69,867 | |||||||||||
CLO 2007-A subordinated notes(2) | 15,096 | 42.22 | 1,384 | 19,063 | |||||||||||
CLO 2011-1 senior debt | 388,703 | 1.25 | 1,688 | 517,597 | |||||||||||
CLO 2012-1 senior secured notes | 362,727 | 2.34 | 4,002 | 376,603 | |||||||||||
CLO 2012-1 subordinated notes(2) | 18,000 | 11.67 | 4,002 | 18,689 | |||||||||||
CLO 2013-1 senior secured notes | 449,409 | 1.98 | 4,214 | 468,915 | |||||||||||
Total collateralized loan obligation secured debt | 5,249,383 | 6,431,970 | |||||||||||||
Senior secured credit facility(3) | 75,000 | 1.39 | 699 | — | |||||||||||
2015 Asset-based borrowing facility | 50,289 | 2.42 | 674 | 213,935 | |||||||||||
2018 Asset-based borrowing facility(4) | — | — | 1,519 | — | |||||||||||
Total credit facilities | 125,289 | 213,935 | |||||||||||||
8.375% Senior notes | 250,800 | 8.38 | 10,181 | — | |||||||||||
7.500% Senior notes | 111,476 | 7.50 | 10,306 | — | |||||||||||
Junior subordinated notes | 283,517 | 5.39 | 8,347 | — | |||||||||||
Total borrowings | $ | 6,020,465 | $ | 6,645,905 | |||||||||||
-1 | Collateral for borrowings consists of the estimated fair value of certain corporate loans, securities available-for-sale and equity investments at estimated fair value. Also includes the carrying value of oil and gas assets. For purposes of this table, collateral for CLO senior, mezzanine and subordinated notes are calculated pro rata based on the outstanding borrowings for each respective CLO. | ||||||||||||||
-2 | Subordinated notes do not have a contractual coupon rate, but instead receive a pro rata amount of the net distributions from each respective CLO. Accordingly, weighted average borrowing rates for the subordinated notes were calculated based on year-to-date estimated distributions, if any. | ||||||||||||||
-3 | Capital stock of material domestic and foreign subsidiaries, as defined by the senior secured credit facility agreement, are eligible to be pledged as collateral. As of December 31, 2013, the total investments held within these eligible subsidiaries exceeded the amount of the outstanding debt. | ||||||||||||||
-4 | Borrowing rates range from 1.75% to 3.25% plus London interbank offered rate (“LIBOR”) per annum based on the amount outstanding. | ||||||||||||||
DERIVATIVE_INSTRUMENTS_Tables
DERIVATIVE INSTRUMENTS (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||||||||
Derivative Instruments | ' | |||||||||||||||||||||||||||||
Schedule of aggregate notional amount and estimated net fair value of the derivative instruments | ' | |||||||||||||||||||||||||||||
The table below summarizes the aggregate notional amount and estimated net fair value of the derivative instruments as of September 30, 2014 and December 31, 2013 (amounts in thousands): | ||||||||||||||||||||||||||||||
As of | As of | |||||||||||||||||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||
Notional | Estimated | Notional | Estimated | |||||||||||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||||||||||||
Interest rate swaps | $ | — | $ | — | $ | 478,333 | $ | (42,078 | ) | |||||||||||||||||||||
Free-Standing Derivatives: | ||||||||||||||||||||||||||||||
Interest rate swaps | 442,833 | (45,556 | ) | — | — | |||||||||||||||||||||||||
Commodity swaps | — | 26 | — | 1,493 | ||||||||||||||||||||||||||
Credit default swaps—protection purchased | — | — | (100,000 | ) | (2,019 | ) | ||||||||||||||||||||||||
Foreign exchange forward contracts | (372,015 | ) | 17,248 | (320,380 | ) | (25,258 | ) | |||||||||||||||||||||||
Foreign exchange options | — | — | 129,900 | 8,941 | ||||||||||||||||||||||||||
Common stock warrants | — | — | — | 945 | ||||||||||||||||||||||||||
Total rate of return swaps | — | 233 | — | (229 | ) | |||||||||||||||||||||||||
Options | — | 6,038 | — | 6,794 | ||||||||||||||||||||||||||
Total | $ | (22,011 | ) | $ | (51,411 | ) | ||||||||||||||||||||||||
Schedule of effect on income from free-standing derivatives by derivative instrument type | ' | |||||||||||||||||||||||||||||
The following table presents the amounts recorded in net realized and unrealized gain (loss) on derivatives and foreign exchange on the condensed consolidated statements of operations for the three and five months ended September 30, 2014 and for the four months ended April 30, 2014 (amounts in thousands): | ||||||||||||||||||||||||||||||
Successor Company | Predecessor Company | |||||||||||||||||||||||||||||
Three months ended | Five months ended | Four months ended April 30, 2014 | ||||||||||||||||||||||||||||
September 30, 2014 | September 30, 2014 | |||||||||||||||||||||||||||||
Realized | Unrealized | Total | Realized | Unrealized | Total | Realized | Unrealized | Total | ||||||||||||||||||||||
gains | gains | gains | gains | gains | gains | |||||||||||||||||||||||||
(losses) | (losses) | (losses) | (losses) | (losses) | (losses) | |||||||||||||||||||||||||
Interest rate swaps | $ | — | $ | 2,892 | $ | 2,892 | $ | — | $ | 1,767 | $ | 1,767 | $ | — | $ | — | $ | — | ||||||||||||
Commodity swaps | 338 | 2,678 | 3,016 | (1,194 | ) | (672 | ) | (1,866 | ) | (2,515 | ) | (5,856 | ) | (8,371 | ) | |||||||||||||||
Credit default swaps(1) | — | — | — | — | — | — | (2,167 | ) | 1,986 | (181 | ) | |||||||||||||||||||
Foreign exchange forward contracts and options(2) | (11,489 | ) | 6,082 | (5,407 | ) | (13,129 | ) | 5,124 | (8,005 | ) | (2,068 | ) | 2,784 | 716 | ||||||||||||||||
Common stock warrants | 1,237 | (1,077 | ) | 160 | 1,237 | (1,082 | ) | 155 | — | 137 | 137 | |||||||||||||||||||
Total rate of return swaps | (765 | ) | 392 | (373 | ) | (596 | ) | 179 | (417 | ) | (2,349 | ) | 284 | (2,065 | ) | |||||||||||||||
Options | — | (136 | ) | (136 | ) | — | (646 | ) | (646 | ) | — | (19 | ) | (19 | ) | |||||||||||||||
Net realized and unrealized (losses) gains | $ | (10,679 | ) | $ | 10,831 | $ | 152 | $ | (13,682 | ) | $ | 4,670 | $ | (9,012 | ) | $ | (9,099 | ) | $ | (684 | ) | $ | (9,783 | ) | ||||||
-1 | Includes related income and expense on the derivatives. | |||||||||||||||||||||||||||||
-2 | Net of foreign exchange remeasurement gain or loss on foreign denominated assets. | |||||||||||||||||||||||||||||
Predecessor Company | ' | |||||||||||||||||||||||||||||
Derivative Instruments | ' | |||||||||||||||||||||||||||||
Schedule of net (losses) gains recognized in accumulated other comprehensive loss related to derivatives in cash flow hedging relationships | ' | |||||||||||||||||||||||||||||
The following table presents the net (losses) gains recognized in other comprehensive loss related to derivatives in cash flow hedging relationships for the four months ended April 30, 2014 and three and nine months ended September 30, 2013 (amounts in thousands): | ||||||||||||||||||||||||||||||
For the four | For the three | For the nine | ||||||||||||||||||||||||||||
months ended | months ended | months ended | ||||||||||||||||||||||||||||
April 30, 2014 | September 30, 2013 | September 30, 2013 | ||||||||||||||||||||||||||||
Net (losses) gains recognized in accumulated other comprehensive loss on cash flow hedges | $ | (5,442 | ) | $ | 6,813 | $ | 38,211 | |||||||||||||||||||||||
Schedule of effect on income from free-standing derivatives by derivative instrument type | ' | |||||||||||||||||||||||||||||
The following table presents the amounts recorded in net realized and unrealized gain (loss) on derivatives and foreign exchange on the condensed consolidated statements of operations for three and nine months ended September 30, 2013 (amounts in thousands): | ||||||||||||||||||||||||||||||
Predecessor Company | ||||||||||||||||||||||||||||||
Three months ended September 30, 2013 | Nine months ended September 30, 2013 | |||||||||||||||||||||||||||||
Realized gains | Unrealized gains | Total | Realized gains | Unrealized gains | Total | |||||||||||||||||||||||||
(losses) | (losses) | (losses) | (losses) | |||||||||||||||||||||||||||
Commodity swaps | $ | (78 | ) | $ | (3,645 | ) | $ | (3,723 | ) | $ | 1,008 | $ | (2,725 | ) | $ | (1,717 | ) | |||||||||||||
Credit default swaps(1) | (365 | ) | (967 | ) | (1,332 | ) | (3,526 | ) | 552 | (2,974 | ) | |||||||||||||||||||
Foreign exchange forward contracts and options(2) | 502 | 1,444 | 1,946 | 2,770 | (4,929 | ) | (2,159 | ) | ||||||||||||||||||||||
Common stock warrants | — | (1,219 | ) | (1,219 | ) | — | 540 | 540 | ||||||||||||||||||||||
Total rate of return swaps | 447 | 729 | 1,176 | 447 | 729 | 1,176 | ||||||||||||||||||||||||
Options | — | 90 | 90 | (91 | ) | 213 | 122 | |||||||||||||||||||||||
Net realized and realized gains (losses) | $ | 506 | $ | (3,568 | ) | $ | (3,062 | ) | $ | 608 | $ | (5,620 | ) | $ | (5,012 | ) | ||||||||||||||
-1 | Includes related income and expense on the derivatives. | |||||||||||||||||||||||||||||
-2 | Net of foreign exchange remeasurement gain or loss on foreign denominated assets. | |||||||||||||||||||||||||||||
FAIR_VALUE_OF_FINANCIAL_INSTRU1
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||||||||||
Successor Company | ' | ||||||||||||||||||||||||||||
Carrying value and the estimated fair value of the financial instruments | ' | ||||||||||||||||||||||||||||
Schedule of carrying value and estimated fair value, as well as the respective hierarchy classifications, of the financial assets and liabilities that are not carried at estimated fair value | ' | ||||||||||||||||||||||||||||
The following table presents the carrying value and estimated fair value, as well as the respective hierarchy classifications, of the Company’s financial assets and liabilities that are not carried at estimated fair value on a recurring basis as of September 30, 2014 (amounts in thousands): | |||||||||||||||||||||||||||||
Successor Company | |||||||||||||||||||||||||||||
As of September 30, 2014 | Fair Value Hierarchy | ||||||||||||||||||||||||||||
Carrying | Estimated | Quoted Prices in | Significant Other | Significant | |||||||||||||||||||||||||
Amount | Fair Value | Active Markets | Observable | Unobservable | |||||||||||||||||||||||||
for Identical | Inputs (Level 2) | Inputs | |||||||||||||||||||||||||||
Assets (Level 1) | (Level 3) | ||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Cash, restricted cash, and cash equivalents | $ | 1,059,825 | $ | 1,059,825 | $ | 1,059,825 | $ | — | $ | — | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Senior notes | 414,905 | 412,571 | 412,571 | — | — | ||||||||||||||||||||||||
Junior subordinated notes | 246,484 | 243,394 | — | — | 243,394 | ||||||||||||||||||||||||
Schedule of fair value of financial assets and liabilities measured on a recurring basis | ' | ||||||||||||||||||||||||||||
The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2014, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (amounts in thousands): | |||||||||||||||||||||||||||||
Successor Company | |||||||||||||||||||||||||||||
Quoted Prices in | Significant | Significant | Balance as of | ||||||||||||||||||||||||||
Active Markets | Other | Unobservable Inputs | September 30, | ||||||||||||||||||||||||||
for Identical | Observable | (Level 3) | 2014 | ||||||||||||||||||||||||||
Assets (Level 1) | Inputs (Level 2) | ||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Securities: | |||||||||||||||||||||||||||||
Corporate debt securities | $ | — | $ | 317,471 | $ | 214,543 | $ | 532,014 | |||||||||||||||||||||
Residential mortgage-backed securities | — | — | 57,146 | 57,146 | |||||||||||||||||||||||||
Total securities | — | 317,471 | 271,689 | 589,160 | |||||||||||||||||||||||||
Corporate loans | — | 6,066,376 | 287,767 | 6,354,143 | |||||||||||||||||||||||||
Equity investments, at estimated fair value | 16,936 | 104,053 | 41,770 | 162,759 | |||||||||||||||||||||||||
Interests in joint ventures and partnerships | — | 7,684 | 737,321 | 745,005 | |||||||||||||||||||||||||
Other assets | — | 5,405 | — | 5,405 | |||||||||||||||||||||||||
Derivatives: | |||||||||||||||||||||||||||||
Interest rate swaps | — | 419 | — | 419 | |||||||||||||||||||||||||
Commodity swaps | — | 26 | — | 26 | |||||||||||||||||||||||||
Foreign exchange forward contracts | — | 19,061 | — | 19,061 | |||||||||||||||||||||||||
Total rate of return swaps | — | 233 | — | 233 | |||||||||||||||||||||||||
Options | — | — | 6,038 | 6,038 | |||||||||||||||||||||||||
Total derivatives | — | 19,739 | 6,038 | 25,777 | |||||||||||||||||||||||||
Total | $ | 16,936 | $ | 6,520,728 | $ | 1,344,585 | $ | 7,882,249 | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Collateralized loan obligation secured notes | $ | — | $ | — | $ | 5,443,586 | $ | 5,443,586 | |||||||||||||||||||||
Derivatives: | |||||||||||||||||||||||||||||
Interest rate swaps | — | 45,975 | — | 45,975 | |||||||||||||||||||||||||
Foreign exchange forward contracts | — | 1,813 | — | 1,813 | |||||||||||||||||||||||||
Total derivatives | — | 47,788 | — | 47,788 | |||||||||||||||||||||||||
Total | $ | — | $ | 47,788 | $ | 5,443,586 | $ | 5,491,374 | |||||||||||||||||||||
Schedule of additional information about assets and liabilities, including derivatives, that are measured at fair value on a recurring basis | ' | ||||||||||||||||||||||||||||
The following table presents additional information about assets and liabilities, including derivatives, that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value, for the three and five months ended September 30, 2014 (amounts in thousands): | |||||||||||||||||||||||||||||
Successor Company | |||||||||||||||||||||||||||||
Assets | Liabilities | ||||||||||||||||||||||||||||
Corporate | Residential | Corporate | Equity | Interests in | Foreign | Options | Collateralized | ||||||||||||||||||||||
Debt | Mortgage- | Loans | Investments, | Joint | Exchange | Loan | |||||||||||||||||||||||
Securities | Backed | at Estimated | Ventures and | Options, | Obligation | ||||||||||||||||||||||||
Securities | Fair Value | Partnerships | Net | Secured Notes | |||||||||||||||||||||||||
Beginning balance as of May 1, 2014 | $ | 156,500 | $ | 59,623 | $ | 294,218 | $ | 157,765 | $ | 472,467 | $ | 8,854 | $ | 6,684 | $ | 5,663,665 | |||||||||||||
Total gains or losses (for the period): | |||||||||||||||||||||||||||||
Included in earnings(1) | 2,185 | 1,359 | 2,951 | 2,160 | 21,690 | (1,798 | ) | (509 | ) | 28,669 | |||||||||||||||||||
Transfers into Level 3 | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Transfers out of Level 3(2) | — | — | — | (1,230 | ) | — | — | — | — | ||||||||||||||||||||
Purchases | 20,000 | — | 1,261 | — | 27,466 | — | — | 52,594 | |||||||||||||||||||||
Sales | (3,966 | ) | — | (2,912 | ) | — | — | — | — | — | |||||||||||||||||||
Settlements | (5,127 | ) | (1,740 | ) | 4,764 | (17,535 | ) | (6,067 | ) | — | — | (197,014 | ) | ||||||||||||||||
Ending balance as of June 30, 2014 | $ | 169,592 | $ | 59,242 | $ | 300,282 | $ | 141,160 | $ | 515,556 | $ | 7,056 | $ | 6,175 | $ | 5,547,914 | |||||||||||||
Total gains or losses (for the period): | |||||||||||||||||||||||||||||
Included in earnings(1) | (7,751 | ) | 1,421 | (10,084 | ) | (3,265 | ) | 8,639 | (7,056 | ) | (137 | ) | 5,468 | ||||||||||||||||
Transfers into Level 3 | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Transfers out of Level 3 | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Purchases | 29,780 | — | 1,327 | — | 15,381 | — | — | 471,441 | |||||||||||||||||||||
Sales | (6,870 | ) | — | — | — | (13,795 | ) | — | — | — | |||||||||||||||||||
Settlements | 29,792 | (3,517 | ) | (3,758 | ) | (96,125 | ) | 211,540 | — | — | (581,237 | ) | |||||||||||||||||
Ending balance as of September 30, 2014 | $ | 214,543 | $ | 57,146 | $ | 287,767 | $ | 41,770 | $ | 737,321 | $ | — | $ | 6,038 | $ | 5,443,586 | |||||||||||||
Change in unrealized gains or losses for the three months ended September 30, 2014 included in earnings for assets held at the end of the reporting period(1) | $ | (7,751 | ) | $ | (185 | ) | $ | (10,084 | ) | $ | (3,265 | ) | $ | 8,639 | $ | — | $ | (137 | ) | $ | 5,324 | ||||||||
Change in unrealized gains or losses for the five months ended September 30, 2014 included in earnings for assets held at the end of the reporting period(1) | $ | (5,566 | ) | $ | 438 | $ | (7,092 | ) | $ | 109 | $ | 26,272 | $ | — | $ | (646 | ) | $ | 33,993 | ||||||||||
(1) Amounts are included in net realized and unrealized (loss) gain on investments or net realized and unrealized gain (loss) on derivatives and foreign exchange in the condensed consolidated statements of operations. Amounts for collateralized loan obligation secured notes, which represent liabilities measured at fair value, are included in net realized and unrealized loss on debt in the condensed consolidated statements of operations. | |||||||||||||||||||||||||||||
Summary of valuation techniques used for assets and liabilities, measured at fair value and categorized within level 3 | ' | ||||||||||||||||||||||||||||
The following table presents additional information about valuation techniques and inputs used for assets and liabilities, including derivatives, that are measured at fair value and categorized within Level 3 as of September 30, 2014 (dollar amounts in thousands): | |||||||||||||||||||||||||||||
Successor Company | |||||||||||||||||||||||||||||
Balance as of | Valuation | Unobservable | Weighted | Range | Impact to | ||||||||||||||||||||||||
September 30, | Techniques(1) | Inputs(2) | Average(3) | Valuation | |||||||||||||||||||||||||
2014 | from an | ||||||||||||||||||||||||||||
Increase in | |||||||||||||||||||||||||||||
Input(4) | |||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Corporate debt securities | $ | 214,543 | Yield analysis | Yield | 12% | 3% - 14% | Decrease | ||||||||||||||||||||||
Net leverage | 12x | 12x | Decrease | ||||||||||||||||||||||||||
EBITDA multiple | 9x | 8x - 10x | Increase | ||||||||||||||||||||||||||
Discount margin | 890bps | 830bps – 950bps | Decrease | ||||||||||||||||||||||||||
Broker quotes | Offered quotes | 102 | 101-104 | Increase | |||||||||||||||||||||||||
Residential mortgage – backed | $ | 57,146 | Discounted cash flows | Probability of default | 7% | 0% - 21% | Decrease | ||||||||||||||||||||||
securities | Loss severity | 25% | 12% - 35% | Decrease | |||||||||||||||||||||||||
Constant prepayment rate | 12% | 2% - 15% | -5 | ||||||||||||||||||||||||||
Corporate loans | $ | 287,767 | Yield Analysis | Yield | 10% | 3% - 18% | Decrease | ||||||||||||||||||||||
Net leverage | 6x | 0x - 13x | Decrease | ||||||||||||||||||||||||||
EBITDA multiple | 9x | 5x - 12x | Increase | ||||||||||||||||||||||||||
Equity investments, at estimated fair value(6) | $ | 41,770 | Inputs to both market comparables and | Weight ascribed to market comparables | 95% | 0% - 100% | -7 | ||||||||||||||||||||||
discounted cash flow | Weight ascribed to | 74% | 0% - 100% | -8 | |||||||||||||||||||||||||
discounted cash flows | |||||||||||||||||||||||||||||
Market comparables | LTM EBITDA multiple | 8x | 5x - 12x | Increase | |||||||||||||||||||||||||
Forward EBITDA multiple | 8x | 4x - 10x | Increase | ||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 13% | 10% - 15% | Decrease | |||||||||||||||||||||||||
LTM EBITDA exit multiple | 5x | 5x | Increase | ||||||||||||||||||||||||||
Interests in joint ventures and partnerships(9) | $ | 737,321 | Inputs to both market comparables and | Weight ascribed to market comparables | 50% | 0% - 100% | -7 | ||||||||||||||||||||||
discounted cash flow | Weight ascribed to | 62% | 0% - 100% | -8 | |||||||||||||||||||||||||
discounted cash flows | |||||||||||||||||||||||||||||
Market comparables | Current capitalization rate | 7% | 6% - 10% | Decrease | |||||||||||||||||||||||||
LTM EBITDA multiple | 11x | 9x - 15x | Increase | ||||||||||||||||||||||||||
Forward EBITDA multiple | 9x | 9x | Increase | ||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 11% | 8% - 18% | Decrease | |||||||||||||||||||||||||
LTM EBITDA exit multiple | 10x | 10x | Increase | ||||||||||||||||||||||||||
Options | $ | 6,038 | Inputs to both market comparables and | Weight ascribed to market comparables | 50% | 50% | -7 | ||||||||||||||||||||||
discounted cash flow | Weight ascribed to | 50% | 50% | -8 | |||||||||||||||||||||||||
discounted cash flows | |||||||||||||||||||||||||||||
Market comparables | LTM EBITDA multiple | 10x | 10x | Increase | |||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 13% | 13% | Decrease | |||||||||||||||||||||||||
LTM EBITDA exit multiple | 11x | 11x | Increase | ||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Collateralized loan obligation secured notes | $ | 5,443,586 | Yield analysis | Discount margin | 270bps | 90bps - 1500bps | Decrease | ||||||||||||||||||||||
Discounted cash flows | Probability of default | 3% | 2% - 3% | Decrease | |||||||||||||||||||||||||
Loss severity | 33% | 30% - 38% | Decrease | ||||||||||||||||||||||||||
-1 | For the assets that have more than one valuation technique, the Company may rely on the techniques individually or in aggregate based on a weight ascribed to each one ranging from 0-100%. When determining the weighting ascribed to each valuation methodology, the Company considers, among other factors, the availability of direct market comparables, the applicability of a discounted cash flow analysis and the expected hold period and manner of realization for the investment. These factors can result in different weightings among the investments and in certain instances, may result in up to a 100% weighting to a single methodology. Broker quotes obtained for valuation purposes are reviewed by the Company through other valuation techniques. | ||||||||||||||||||||||||||||
-2 | In determining certain of these inputs, management evaluates a variety of factors including economic conditions, industry and market developments; market valuations of comparable companies; and company specific developments including exit strategies and realization opportunities. | ||||||||||||||||||||||||||||
-3 | Weighted average amounts are based on the estimated fair values. | ||||||||||||||||||||||||||||
-4 | Unless otherwise noted, this column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant increases and decreases in these inputs in isolation could result in significantly higher or lower fair value measurements. | ||||||||||||||||||||||||||||
-5 | The impact of changes in prepayment speeds may have differing impacts depending on the seniority of the instrument. Generally, an increase in the constant prepayment speed will positively impact the overall valuation of traditional mortgage assets. In contrast, an increase in the constant prepayment rate will negatively impact the overall valuation of interest-only strips. | ||||||||||||||||||||||||||||
-6 | When determining the illiquidity discount to be applied to equity investments, at estimated fair value, the Company seeks to take a uniform approach across its portfolio and generally applies a minimum 5% discount to all private equity investments carried at estimated fair value. The Company then evaluates such investments to determine if factors exist that could make it more challenging to monetize the investment and, therefore, justify applying a higher illiquidity discount. These factors generally include the salability of the investment, whether the issuer is undergoing significant restructuring activity or similar factors, as well as characteristics about the issuer including its size and/or whether it is experiencing, or expected to experience, a significant decline in earnings. Depending on the applicability of these factors, the Company determines the amount of any incremental illiquidity discount to be applied above the 5% minimum, and during the time the Company holds the investment, the illiquidity discount may be increased or decreased, from time to time, based on changes to these factors. The amount of illiquidity discount applied at any time requires considerable judgment about what a market participant would consider and is based on the facts and circumstances of each individual investment. Accordingly, the illiquidity discount ultimately considered by a market participant upon the realization of any investment may be higher or lower than that estimated by the Company in its valuations. | ||||||||||||||||||||||||||||
-7 | The directional change from an increase in the weight ascribed to the market comparables approach would increase the fair value of the Level 3 investments if the market comparables approach results in a higher valuation than the discounted cash flow approach. The opposite would be true if the market comparables approach results in a lower valuation than the discounted cash flow approach. | ||||||||||||||||||||||||||||
-8 | The directional change from an increase in the weight ascribed to the discounted cash flow approach would increase the fair value of the Level 3 investments if the discounted cash flow approach results in a higher valuation than the market comparables approach. The opposite would be true if the discounted cash flow approach results in a lower valuation than the market comparables approach. | ||||||||||||||||||||||||||||
-9 | Includes an asset that was valued using an independent third party valuation firm. | ||||||||||||||||||||||||||||
Predecessor Company | ' | ||||||||||||||||||||||||||||
Carrying value and the estimated fair value of the financial instruments | ' | ||||||||||||||||||||||||||||
Schedule of carrying value and estimated fair value, as well as the respective hierarchy classifications, of the financial assets and liabilities that are not carried at estimated fair value | ' | ||||||||||||||||||||||||||||
The following table presents the carrying value and estimated fair value, as well as the respective hierarchy classifications, of the Company’s financial assets and liabilities that are not carried at estimated fair value on a recurring basis as of December 31, 2013 (amounts in thousands): | |||||||||||||||||||||||||||||
Predecessor Company | |||||||||||||||||||||||||||||
As of December 31, 2013 | Fair Value Hierarchy | ||||||||||||||||||||||||||||
Carrying | Estimated | Quoted Prices in | Significant Other | Significant | |||||||||||||||||||||||||
Amount | Fair Value | Active Markets | Observable | Unobservable | |||||||||||||||||||||||||
for Identical | Inputs (Level 2) | Inputs | |||||||||||||||||||||||||||
Assets (Level 1) | (Level 3) | ||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Cash, restricted cash, and cash equivalents | $ | 507,552 | $ | 507,552 | $ | 507,552 | $ | — | $ | — | |||||||||||||||||||
Corporate loans, net of allowance for loan losses of $224,999 as of December 31, 2013(1) | 5,949,492 | 6,051,641 | — | 5,691,988 | 359,653 | ||||||||||||||||||||||||
Corporate loans held for sale(1) | 279,748 | 281,278 | — | 267,169 | 14,109 | ||||||||||||||||||||||||
Private equity investments, at cost(2) | 405 | 4,496 | — | — | 4,496 | ||||||||||||||||||||||||
Other assets | 5,763 | 5,513 | — | 5,513 | — | ||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Collateralized loan obligation secured debt | $ | 5,249,383 | $ | 5,179,207 | $ | — | $ | — | $ | 5,179,207 | |||||||||||||||||||
Credit facilities | 125,289 | 125,289 | — | — | 125,289 | ||||||||||||||||||||||||
Senior notes | 362,276 | 393,772 | 393,772 | — | — | ||||||||||||||||||||||||
Junior subordinated notes | 283,517 | 247,416 | — | — | 247,416 | ||||||||||||||||||||||||
-1 | Corporate loans held for investment are carried at amortized cost net of allowance for loan losses, while corporate loans held for sale are carried at the lower of cost or estimated fair value. Refer to “Fair Value Measurements” for a table presenting the corporate loans which are measured at fair value on a non-recurring basis. | ||||||||||||||||||||||||||||
-2 | Included within other assets on the condensed consolidated balance sheets. | ||||||||||||||||||||||||||||
Schedule of fair value of financial assets and liabilities measured on a recurring basis | ' | ||||||||||||||||||||||||||||
The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2013, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (amounts in thousands): | |||||||||||||||||||||||||||||
Predecessor Company | |||||||||||||||||||||||||||||
Quoted Prices in | Significant | Significant | Balance as of | ||||||||||||||||||||||||||
Active Markets | Other | Unobservable Inputs | December 31, | ||||||||||||||||||||||||||
for Identical | Observable | (Level 3) | 2013 | ||||||||||||||||||||||||||
Assets (Level 1) | Inputs (Level 2) | ||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Securities: | |||||||||||||||||||||||||||||
Securities available-for-sale | $ | — | $ | 326,940 | $ | 23,401 | $ | 350,341 | |||||||||||||||||||||
Other securities, at estimated fair value | — | 39,437 | 107,530 | 146,967 | |||||||||||||||||||||||||
Residential mortgage-backed securities | — | — | 76,004 | 76,004 | |||||||||||||||||||||||||
Total securities | — | 366,377 | 206,935 | 573,312 | |||||||||||||||||||||||||
Corporate loans, at estimated fair value | — | 84,680 | 152,800 | 237,480 | |||||||||||||||||||||||||
Equity investments, at estimated fair value | 39,515 | 3,638 | 138,059 | 181,212 | |||||||||||||||||||||||||
Interests in joint ventures and partnerships | 14,836 | — | 415,247 | 430,083 | |||||||||||||||||||||||||
Derivatives: | |||||||||||||||||||||||||||||
Interest rate swaps | — | 3,290 | — | 3,290 | |||||||||||||||||||||||||
Commodity swaps | — | 5,408 | — | 5,408 | |||||||||||||||||||||||||
Foreign exchange forward contracts | — | 4,846 | — | 4,846 | |||||||||||||||||||||||||
Foreign exchange options | — | — | 8,941 | 8,941 | |||||||||||||||||||||||||
Common stock warrants | — | 945 | — | 945 | |||||||||||||||||||||||||
Options | — | — | 6,794 | 6,794 | |||||||||||||||||||||||||
Total derivatives | — | 14,489 | 15,735 | 30,224 | |||||||||||||||||||||||||
Total | $ | 54,351 | $ | 469,184 | $ | 928,776 | $ | 1,452,311 | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Derivatives: | |||||||||||||||||||||||||||||
Interest rate swaps | — | 45,368 | — | 45,368 | |||||||||||||||||||||||||
Commodity swaps | — | 3,915 | — | 3,915 | |||||||||||||||||||||||||
Credit default swaps—protection purchased | — | 2,019 | — | 2,019 | |||||||||||||||||||||||||
Foreign exchange forward contracts | — | 30,104 | — | 30,104 | |||||||||||||||||||||||||
Total rate of return swaps | — | 229 | — | 229 | |||||||||||||||||||||||||
Total derivatives | — | 81,635 | — | 81,635 | |||||||||||||||||||||||||
Total | $ | — | $ | 81,635 | $ | — | $ | 81,635 | |||||||||||||||||||||
Schedule of fair value of assets measured on a non-recurring basis | ' | ||||||||||||||||||||||||||||
The following table presents information about the Company’s assets measured at fair value on a non-recurring basis as of December 31, 2013, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (amounts in thousands). | |||||||||||||||||||||||||||||
Quoted Prices in | Significant Other | Significant | Balance as of | ||||||||||||||||||||||||||
Active Markets | Observable | Unobservable | December 31, | ||||||||||||||||||||||||||
for Identical | Inputs (Level 2) | Inputs (Level 3) | 2013 | ||||||||||||||||||||||||||
Assets (Level 1) | |||||||||||||||||||||||||||||
Corporate loans held for sale(1) | $ | — | $ | 90,485 | $ | 5,568 | $ | 96,053 | |||||||||||||||||||||
Total | $ | — | $ | 90,485 | $ | 5,568 | $ | 96,053 | |||||||||||||||||||||
(1) As of December 31, 2013, total loans held for sale had a carrying value of $279.7 million of which $96.1 million was carried at estimated fair value and the remaining $183.6 million carried at amortized cost. | |||||||||||||||||||||||||||||
Schedule of additional information of assets measured on level 3 basis | ' | ||||||||||||||||||||||||||||
The following table presents additional information about assets, including derivatives, that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value, for the four months ended April 30, 2014 (amounts in thousands): | |||||||||||||||||||||||||||||
Predecessor Company | |||||||||||||||||||||||||||||
Securities | Other | Residential | Corporate | Equity | Interests in | Foreign | Options | ||||||||||||||||||||||
Available- | Securities, | Mortgage- | Loans, at | Investments, | Joint | Exchange | |||||||||||||||||||||||
For-Sale | at Estimated | Backed | Estimated | at Estimated | Ventures and | Options, | |||||||||||||||||||||||
Fair Value | Securities | Fair Value | Fair Value | Partnerships | Net | ||||||||||||||||||||||||
Beginning balance as of January 1, 2014 | $ | 23,401 | $ | 107,530 | $ | 76,004 | $ | 152,800 | $ | 138,059 | $ | 415,247 | $ | 8,941 | $ | 6,794 | |||||||||||||
Total gains or losses (for the period): | |||||||||||||||||||||||||||||
Included in earnings(1) | 22 | 3,059 | 3,088 | (5,123 | ) | 9,076 | 22,377 | (813 | ) | (302 | ) | ||||||||||||||||||
Included in other comprehensive income | 121 | — | — | — | — | — | — | — | |||||||||||||||||||||
Transfers into Level 3 | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Transfers out of Level 3(3) | — | — | — | — | (8,751 | ) | — | — | — | ||||||||||||||||||||
Purchases | — | 25,000 | — | 8,822 | — | 42,683 | — | — | |||||||||||||||||||||
Sales | — | — | (17,810 | ) | — | — | — | — | — | ||||||||||||||||||||
Settlements | (16 | ) | (10,078 | ) | (2,529 | ) | (3,104 | ) | 120,593 | 14,113 | — | — | |||||||||||||||||
Ending balance as of March 31, 2014 | 23,528 | 125,511 | 58,753 | 153,395 | 258,977 | 494,420 | 8,128 | 6,492 | |||||||||||||||||||||
Total gains or losses (for the period): | |||||||||||||||||||||||||||||
Included in earnings(1) | 44 | 479 | 1,416 | 1,240 | 12,126 | (24,158 | ) | 726 | 192 | ||||||||||||||||||||
Included in other comprehensive income | 33 | — | — | — | — | — | — | — | |||||||||||||||||||||
Transfers into Level 3(2) | 6,937 | — | — | — | — | — | — | — | |||||||||||||||||||||
Transfers out of Level 3(3) | — | — | — | — | (119,033 | ) | — | — | — | ||||||||||||||||||||
Purchases | — | — | — | — | — | 1,615 | — | — | |||||||||||||||||||||
Sales | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Settlements | (32 | ) | — | (546 | ) | 2,272 | — | (1,184 | ) | — | — | ||||||||||||||||||
Ending balance as of April 30, 2014 | $ | 30,510 | $ | 125,990 | $ | 59,623 | $ | 156,907 | $ | 152,070 | $ | 470,693 | $ | 8,854 | $ | 6,684 | |||||||||||||
Change in unrealized gains or losses for the period included in earnings for the four months ended April 30, 2014 for assets held at the end of the reporting period(1) | $ | 66 | $ | 2,683 | $ | 5,242 | $ | 4,445 | $ | 20,499 | $ | (1,781 | ) | $ | (87 | ) | $ | (110 | ) | ||||||||||
-1 | Amounts are included in net realized and unrealized (loss) gain on investments or net realized and unrealized gain (loss) on derivatives and foreign exchange in the condensed consolidated statements of operations. | ||||||||||||||||||||||||||||
-2 | Securities available-for-sale were transferred into Level 3 because observable market data was no longer available as a result of an asset-restructure. | ||||||||||||||||||||||||||||
-3 | Equity investments, at estimated fair value were transferred out of Level 3 because observable market data became available as a result of asset-restructures. | ||||||||||||||||||||||||||||
The following table presents additional information about assets, including derivatives that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value, for the three months ended September 30, 2013 (amounts in thousands): | |||||||||||||||||||||||||||||
Predecessor Company | |||||||||||||||||||||||||||||
Securities | Other | Residential | Corporate | Equity | Options | Common | Foreign | Interests in | |||||||||||||||||||||
Available- | Securities, | Mortgage- | Loans, at | Investments, | Stock | Exchange | Joint | ||||||||||||||||||||||
For-Sale | at Estimated | Backed | Estimated | at Estimated | Warrants | Options, | Ventures and | ||||||||||||||||||||||
Fair Value | Securities | Fair Value | Fair Value | Net | Partnerships | ||||||||||||||||||||||||
Beginning balance as of July 1, 2013 | $ | 37,380 | $ | 27,872 | $ | 82,973 | $ | 45,936 | $ | 100,294 | $ | — | $ | 3,561 | $ | 5,751 | $ | 235,024 | |||||||||||
Total gains or losses (for the period): | |||||||||||||||||||||||||||||
Included in earnings(1) | 297 | 1,384 | 1,747 | 497 | 5,558 | 90 | (1,475 | ) | 2,180 | 3,739 | |||||||||||||||||||
Included in other comprehensive income | 338 | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Transfers into Level 3 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Transfers out of Level 3 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Purchases | — | 8,100 | — | 37,959 | 5,000 | 8,790 | — | — | 132,198 | ||||||||||||||||||||
Sales | — | — | — | — | (198 | ) | — | — | — | — | |||||||||||||||||||
Settlements | 936 | (1,154 | ) | (5,334 | ) | 89 | — | — | — | — | (38,040 | ) | |||||||||||||||||
Ending balance as of September 30, 2013 | $ | 38,951 | $ | 36,202 | $ | 79,386 | $ | 84,841 | $ | 110,654 | $ | 8,880 | $ | 2,086 | $ | 7,931 | $ | 332,921 | |||||||||||
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period(1) | $ | 297 | $ | 1,384 | $ | 5,868 | $ | 497 | $ | 5,857 | $ | 90 | $ | (1,475 | ) | $ | 2,180 | $ | 3,739 | ||||||||||
-1 | Amounts are included in net realized and unrealized (loss) gain on investments or net realized and unrealized gain (loss) on derivatives and foreign exchange in the condensed consolidated statements of operations. | ||||||||||||||||||||||||||||
The following table presents additional information about assets, including derivatives that are measured at fair value on a recurring basis for which the Company has utilized level 3 inputs to determine fair value, for the nine months ended September 30, 2013 (amounts in thousands): | |||||||||||||||||||||||||||||
Predecessor Company | |||||||||||||||||||||||||||||
Securities | Other | Residential | Corporate | Equity | Options | Common | Foreign | Interests in | |||||||||||||||||||||
Available- | Securities, | Mortgage- | Loans, at | Investments, | Stock | Exchange | Joint | ||||||||||||||||||||||
For-Sale | at Estimated | Backed | Estimated | at Estimated | Warrants | Options, | Ventures and | ||||||||||||||||||||||
Fair Value | Securities | Fair Value | Fair Value | Net | Partnerships | ||||||||||||||||||||||||
Beginning balance as of January 1, 2013 | $ | 42,221 | $ | 2,909 | $ | 83,842 | $ | 16,141 | $ | 97,746 | $ | — | $ | 1,574 | $ | 8,277 | $ | 142,477 | |||||||||||
Total gains or losses (for the period): | |||||||||||||||||||||||||||||
Included in earnings(1) | 279 | 2,656 | 7,301 | (555 | ) | 8,648 | 90 | 512 | (346 | ) | 7,646 | ||||||||||||||||||
Included in other comprehensive income | 559 | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Transfers into Level 3 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Transfers out of Level 3 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Purchases | — | 31,791 | — | 69,727 | 5,003 | 8,790 | — | — | 229,862 | ||||||||||||||||||||
Sales | — | — | — | — | (198 | ) | — | — | — | — | |||||||||||||||||||
Settlements | (4,108 | ) | (1,154 | ) | (11,757 | ) | (832 | ) | (545 | ) | — | — | — | (47,064 | ) | ||||||||||||||
Ending balance as of September 30, 2013 | $ | 38,951 | $ | 36,202 | $ | 79,386 | $ | 84,841 | $ | 110,654 | $ | 8,880 | $ | 2,086 | $ | 7,931 | $ | 332,921 | |||||||||||
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period(1) | $ | 279 | $ | 2,656 | $ | 21,565 | $ | (851 | ) | $ | 8,947 | $ | 90 | $ | 513 | $ | (346 | ) | $ | 7,646 | |||||||||
-1 | Amounts are included in net realized and unrealized (loss) gain on investments or net realized and unrealized gain (loss) on derivatives and foreign exchange in the condensed consolidated statements of operations. | ||||||||||||||||||||||||||||
Summary of valuation techniques used for assets and liabilities, measured at fair value and categorized within level 3 | ' | ||||||||||||||||||||||||||||
The following table presents additional information about valuation techniques and inputs used for assets, including derivatives, that are measured at fair value and categorized within Level 3 as of December 31, 2013 (dollar amounts in thousands): | |||||||||||||||||||||||||||||
Predecessor Company | |||||||||||||||||||||||||||||
Balance as of | Valuation | Unobservable | Weighted | Range | Impact to | ||||||||||||||||||||||||
December 31, | Techniques(1) | Inputs(2) | Average(3) | Valuation | |||||||||||||||||||||||||
2013 | from an | ||||||||||||||||||||||||||||
Increase in | |||||||||||||||||||||||||||||
Input(4) | |||||||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Securities available-for-sale | $ | 23,401 | Yield analysis | Yield | 10% | 6% - 12% | Decrease | ||||||||||||||||||||||
Net leverage | 12x | 11x - 12x | Decrease | ||||||||||||||||||||||||||
EBITDA multiple | 8x | 8x - 9x | Increase | ||||||||||||||||||||||||||
Broker quotes | Offered quotes | 105 | 104 - 105 | Increase | |||||||||||||||||||||||||
Other securities, at estimated fair | $ | 107,530 | Yield Analysis | Yield | 12% | 7% - 17% | Decrease | ||||||||||||||||||||||
value | EBITDA multiple | 8x | 7x - 8x | Increase | |||||||||||||||||||||||||
Illiquidity discount | 3% | 3% | Decrease | ||||||||||||||||||||||||||
Net leverage | 1x | 1x - 2x | Decrease | ||||||||||||||||||||||||||
Broker quotes | Offered quotes | 102 | 101 - 102 | Increase | |||||||||||||||||||||||||
Residential mortgage-backed | $ | 76,004 | Discounted cash flows | Probability of default | 7% | 0% - 21% | Decrease | ||||||||||||||||||||||
securities | Loss severity | 28% | 16% - 77% | Decrease | |||||||||||||||||||||||||
Constant prepayment rate | 15% | 3% - 35% | -5 | ||||||||||||||||||||||||||
Corporate loans, at estimated fair | $ | 152,800 | Yield Analysis | Yield | 16% | 14% - 23% | Decrease | ||||||||||||||||||||||
value | Net leverage | 7x | 4x - 12x | Decrease | |||||||||||||||||||||||||
EBITDA multiple | 8x | 6x - 11x | Increase | ||||||||||||||||||||||||||
Equity investments, at estimated fair value(6) | $ | 138,059 | Inputs to both market comparables and | Weight ascribed to market comparables | 50% | 33% - 100% | -7 | ||||||||||||||||||||||
discounted cash flow | Weight ascribed to discounted | 59% | 50% - 100% | -8 | |||||||||||||||||||||||||
cash flows | |||||||||||||||||||||||||||||
Market comparables | LTM EBITDA multiple | 12x | 6x - 16x | Increase | |||||||||||||||||||||||||
Forward EBITA multiple | 12x | 10x - 14x | Increase | ||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 11% | 8% - 14% | Decrease | |||||||||||||||||||||||||
LTM EBITDA exit multiple | 10x | 4x - 11x | Increase | ||||||||||||||||||||||||||
Interests in joint ventures and partnerships | $ | 415,247 | Inputs to both market comparables and | Weight ascribed to market comparables | 50% | 50% - 100% | -7 | ||||||||||||||||||||||
discounted cash flow | Weight ascribed to discounted | 50% | 50% - 100% | -8 | |||||||||||||||||||||||||
cash flows | |||||||||||||||||||||||||||||
Market comparables | Current capitalization rate | 7% | 6% - 9% | Decrease | |||||||||||||||||||||||||
LTM EBITDA multiple | 9x | 9x | Increase | ||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 12% | 8% - 24% | Decrease | |||||||||||||||||||||||||
Foreign exchange options | $ | 8,941 | Option pricing model | Forward and spot rates | 1 | 0 - 1 | -9 | ||||||||||||||||||||||
Options | $ | 6,794 | Inputs to both market | Weight ascribed to market | 50% | 50% | -7 | ||||||||||||||||||||||
comparables and | comparables | ||||||||||||||||||||||||||||
discounted cash flow | Weight ascribed to discounted | 50% | 50% | -8 | |||||||||||||||||||||||||
cash flows | |||||||||||||||||||||||||||||
Market comparables | LTM EBITDA multiple | 9x | 9x | Increase | |||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 12% | 12% | Decrease | |||||||||||||||||||||||||
LTM EBITDA exit multiple | 10x | 9x - 10x | Increase | ||||||||||||||||||||||||||
-1 | For the assets that have more than one valuation technique, the Company may rely on the techniques individually or in aggregate based on a weight ascribed to each one ranging from 0-100%. When determining the weighting ascribed to each valuation methodology, the Company considers, among other factors, the availability of direct market comparables, the applicability of a discounted cash flow analysis and the expected hold period and manner of realization for the investment. These factors can result in different weightings among the investments and in certain instances, may result in up to a 100% weighting to a single methodology. Broker quotes obtained for valuation purposes are reviewed by the Company through other valuation techniques. | ||||||||||||||||||||||||||||
-2 | In determining certain of these inputs, management evaluates a variety of factors including economic conditions, industry and market developments; market valuations of comparable companies; and company specific developments including exit strategies and realization opportunities. | ||||||||||||||||||||||||||||
-3 | Weighted average amounts are based on the estimated fair values. | ||||||||||||||||||||||||||||
-4 | Unless otherwise noted, this column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant increases and decreases in these inputs in isolation could result in significantly higher or lower fair value measurements. | ||||||||||||||||||||||||||||
-5 | The impact of changes in prepayment speeds may have differing impacts depending on the seniority of the instrument. Generally, an increase in the constant prepayment speed will positively impact the overall valuation of traditional mortgage assets. In contrast, an increase in the constant prepayment rate will negatively impact the overall valuation of interest-only strips. | ||||||||||||||||||||||||||||
-6 | When determining the illiquidity discount to be applied to equity investments, at estimated fair value, the Company seeks to take a uniform approach across its portfolio and generally applies a minimum 5% discount to all private equity investments carried at estimated fair value. The Company then evaluates such investments to determine if factors exist that could make it more challenging to monetize the investment and, therefore, justify applying a higher illiquidity discount. These factors generally include the salability of the investment, whether the issuer is undergoing significant restructuring activity or similar factors, as well as characteristics about the issuer including its size and/or whether it is experiencing, or expected to experience, a significant decline in earnings. Depending on the applicability of these factors, the Company determines the amount of any incremental illiquidity discount to be applied above the 5% minimum, and during the time the Company holds the investment, the illiquidity discount may be increased or decreased, from time to time, based on changes to these factors. The amount of illiquidity discount applied at any time requires considerable judgment about what a market participant would consider and is based on the facts and circumstances of each individual investment. Accordingly, the illiquidity discount ultimately considered by a market participant upon the realization of any investment may be higher or lower than that estimated by the Company in its valuations. | ||||||||||||||||||||||||||||
-7 | The directional change from an increase in the weight ascribed to the market comparables approach would increase the fair value of the Level 3 investments if the market comparables approach results in a higher valuation than the discounted cash flow approach. The opposite would be true if the market comparables approach results in a lower valuation than the discounted cash flow approach. | ||||||||||||||||||||||||||||
-8 | The directional change from an increase in the weight ascribed to the discounted cash flow approach would increase the fair value of the Level 3 investments if the discounted cash flow approach results in a higher valuation than the market comparables approach. The opposite would be true if the discounted cash flow approach results in a lower valuation than the market comparables approach. | ||||||||||||||||||||||||||||
-9 | The directional change from an increase in forward and spot rates varies and is dependent on the specific option. | ||||||||||||||||||||||||||||
SHAREHOLDERS_EQUITY_Tables
SHAREHOLDERS' EQUITY (Tables) (Predecessor Company) | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
Predecessor Company | ' | ||||||||||
Stock-based compensation | ' | ||||||||||
Schedule of restricted common share transactions | ' | ||||||||||
Predecessor Company | |||||||||||
Manager | Directors | Total | |||||||||
Unvested shares as January 1, 2014 | 584,634 | 85,194 | 669,828 | ||||||||
Issued | — | — | — | ||||||||
Vested | (243,648 | ) | — | (243,648 | ) | ||||||
Forfeited | — | — | — | ||||||||
Unvested shares as of April 30, 2014 | 340,986 | 85,194 | 426,180 | ||||||||
Schedule of common share option transactions | ' | ||||||||||
Predecessor Company | |||||||||||
Number of | Weighted Average | ||||||||||
Options | Exercise Price | ||||||||||
Outstanding as of January 1, 2014 | 1,932,279 | $ | 20.00 | ||||||||
Granted | — | — | |||||||||
Exercised | — | — | |||||||||
Forfeited | — | — | |||||||||
Outstanding as of April 30, 2014 | 1,932,279 | $ | 20.00 | ||||||||
Schedule of share-based compensation expense | ' | ||||||||||
For the four months ended April 30, 2014 and three and nine months ended September 30, 2013, the components of share-based compensation expense are as follows (amounts in thousands): | |||||||||||
Predecessor Company | |||||||||||
For the four | For the three | For the nine | |||||||||
months ended | months ended | months ended | |||||||||
April 30, 2014 | September 30, 2013 | September 30, 2013 | |||||||||
Restricted common shares granted to Manager | $ | 690 | $ | 690 | $ | 2,073 | |||||
Restricted common shares granted to certain directors | 328 | 256 | 769 | ||||||||
Total share-based compensation expense | $ | 1,018 | $ | 946 | $ | 2,842 | |||||
MANAGEMENT_AGREEMENT_AND_RELAT1
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended | |||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||
Management Agreement and Related Party Transactions | ' | |||||||||||||||||
Summary of components of related party management compensation | ' | |||||||||||||||||
The following table summarizes the components of related party management compensation on the Company’s condensed consolidated statements of operations, which are described in further detail below (amounts in thousands): | ||||||||||||||||||
Successor Company | Predecessor Company | |||||||||||||||||
Three months ended | Five months ended | Four months ended | Three months ended | Nine months ended | ||||||||||||||
September 30, 2014 | September 30, 2014 | April 30, 2014 | September 30, 2013 | September 30, 2013 | ||||||||||||||
Base management fees, net | $ | 4,986 | $ | 10,927 | $ | 5,253 | $ | 4,314 | $ | 23,500 | ||||||||
CLO management fees | 7,558 | 12,023 | 11,016 | 5,916 | 8,429 | |||||||||||||
Incentive fees | — | — | 12,882 | — | 22,742 | |||||||||||||
Manager share-based compensation | — | — | 690 | 690 | 2,073 | |||||||||||||
Total related party management compensation | $ | 12,544 | $ | 22,950 | $ | 29,841 | $ | 10,920 | $ | 56,744 | ||||||||
Summary of estimated fair value of contributions and distributions | ' | |||||||||||||||||
The table below summarizes the estimated fair value of contributions and distributions at the time of transfer, certain of which were different from the carrying value of assets transferred (amounts in thousands): | ||||||||||||||||||
Three months ended | ||||||||||||||||||
September 30, 2014 | ||||||||||||||||||
Cash | $ | 235,759 | ||||||||||||||||
Securities | 22,873 | |||||||||||||||||
Loans | 13,464 | |||||||||||||||||
Interests in joint ventures and partnerships | 19,433 | |||||||||||||||||
Total contributions from Parent | $ | 291,529 | ||||||||||||||||
Cash | $ | 14,370 | ||||||||||||||||
Equity investments, at estimated fair value | 101,042 | |||||||||||||||||
Oil and gas properties, net | 179,203 | |||||||||||||||||
Total distributions to Parent | $ | 294,615 | ||||||||||||||||
Base Management Fees | ' | |||||||||||||||||
Management Agreement and Related Party Transactions | ' | |||||||||||||||||
Summary of components of related party management compensation | ' | |||||||||||||||||
The table below summarizes the aggregate base management fees (amounts in thousands): | ||||||||||||||||||
Successor Company | Predecessor Company | |||||||||||||||||
Three months ended | Five months ended | Four months ended | Three months ended | Nine months ended | ||||||||||||||
September 30, 2014 | September 30, 2014 | April 30, 2014 | September 30, 2013 | September 30, 2013 | ||||||||||||||
Base management fees, gross | $ | 9,846 | $ | 16,534 | $ | 13,364 | $ | 9,799 | $ | 29,216 | ||||||||
CLO management fees credit(1) | (4,860 | ) | (5,607 | ) | (8,111 | ) | (3,684 | ) | (3,915 | ) | ||||||||
Other related party fees credit | — | — | — | (1,801 | ) | (1,801 | ) | |||||||||||
Total base management fees, net | $ | 4,986 | $ | 10,927 | $ | 5,253 | $ | 4,314 | $ | 23,500 | ||||||||
-1 | See “CLO Management Fees” for further discussion. | |||||||||||||||||
CLO Management Fees | ' | |||||||||||||||||
Management Agreement and Related Party Transactions | ' | |||||||||||||||||
Summary of components of related party management compensation | ' | |||||||||||||||||
The table below summarizes the aggregate CLO management fees, including the Fee Credits (amounts in thousands): | ||||||||||||||||||
Successor Company | Predecessor Company | |||||||||||||||||
Three months ended | Five months ended | Four months ended | Three months ended | Nine months ended | ||||||||||||||
September 30, 2014 | September 30, 2014 | April 30, 2014 | September 30, 2013 | September 30, 2013 | ||||||||||||||
Charged and retained CLO management fees(1) | $ | 12,418 | $ | 17,630 | $ | 2,905 | $ | 2,232 | $ | 4,514 | ||||||||
CLO management fees credit | (4,860 | ) | (5,607 | ) | 8,111 | 3,684 | 3,915 | |||||||||||
Total CLO management fees | $ | 7,558 | $ | 12,023 | $ | 11,016 | $ | 5,916 | $ | 8,429 | ||||||||
(1) Represents management fees incurred by the senior and subordinated note holders of a CLO, excluding the Fee Credits received by the Company based on its ownership percentage in the CLO. | ||||||||||||||||||
SEGMENT_REPORTING_Tables
SEGMENT REPORTING (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||||||||||
Segment reporting | ' | |||||||||||||||||||||||||||||||
Schedule showing net income (loss) components and total assets of reportable segments reconciled to amounts reflected in the condensed consolidated financial statements | ' | |||||||||||||||||||||||||||||||
The following table shows total assets of reportable segments reconciled to amounts reflected in the condensed consolidated balance sheets as of September 30, 2014 and December 31, 2013 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Credit | Natural Resources | Other | Reconciling | Total Consolidated | ||||||||||||||||||||||||||||
Items | ||||||||||||||||||||||||||||||||
As of | September 30, | December 31, | September 30, | December 31, | September 30, | December 31, | September 30, | December 31, | September 30, | December 31, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||
Total assets | $ | 8,654,153 | $ | 8,020,353 | $ | 326,841 | $ | 505,029 | $ | 228,595 | $ | 190,946 | $ | 111 | $ | 870 | $ | 9,209,700 | $ | 8,717,198 | ||||||||||||
Successor Company | ' | |||||||||||||||||||||||||||||||
Segment reporting | ' | |||||||||||||||||||||||||||||||
Schedule showing net income (loss) components and total assets of reportable segments reconciled to amounts reflected in the condensed consolidated financial statements | ' | |||||||||||||||||||||||||||||||
The following table presents the net (loss) income components of our reportable segments reconciled to amounts reflected in the condensed consolidated statements of operations for the three and five months ended September 30, 2014 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Successor Company | ||||||||||||||||||||||||||||||||
Credit | Natural Resources | Other | Reconciling Items(1) | Total Consolidated | ||||||||||||||||||||||||||||
Three | Five | Three | Five | Three | Five | Three | Five | Three | Five | |||||||||||||||||||||||
months | months | months | months | months | months | months | months | months | months | |||||||||||||||||||||||
ended | ended | ended | ended | ended | ended | ended | ended | ended | ended | |||||||||||||||||||||||
September | September | September | September | September | September | September | September | September | September | |||||||||||||||||||||||
30, 2014 | 30, 2014 | 30, 2014 | 30, 2014 | 30, 2014 | 30, 2014 | 30, 2014 | 30, 2014 | 30, 2014 | 30, 2014 | |||||||||||||||||||||||
Total revenues | $ | 98,413 | $ | 160,724 | $ | 17,929 | $ | 49,859 | $ | 8,414 | $ | 8,486 | $ | — | $ | — | $ | 124,756 | $ | 219,069 | ||||||||||||
Total investment costs and expenses | 46,412 | 81,822 | 14,617 | 34,674 | 311 | 508 | — | — | 61,340 | 117,004 | ||||||||||||||||||||||
Total other (loss) income | (132,098 | ) | (114,985 | ) | (1,514 | ) | (6,394 | ) | 7,927 | 16,581 | — | — | (125,685 | ) | (104,798 | ) | ||||||||||||||||
Total other expenses | 14,136 | 26,889 | 617 | 2,010 | 145 | 328 | — | 35 | 14,898 | 29,262 | ||||||||||||||||||||||
Income tax expense | 34 | 58 | — | — | — | 4 | — | — | 34 | 62 | ||||||||||||||||||||||
Net (loss) income | $ | (94,267 | ) | $ | (63,030 | ) | $ | 1,181 | $ | 6,781 | $ | 15,885 | $ | 24,227 | $ | — | $ | (35 | ) | $ | (77,201 | ) | $ | (32,057 | ) | |||||||
Net income attributable to noncontrolling interests | 816 | 816 | — | — | — | — | — | — | 816 | 816 | ||||||||||||||||||||||
Net (loss) income attributable to KKR Financial Holdings LLC and Subsidiaries | $ | (95,083 | ) | $ | (63,846 | ) | $ | 1,181 | $ | 6,781 | $ | 15,885 | $ | 24,227 | $ | — | $ | (35 | ) | $ | (78,017 | ) | $ | (32,873 | ) | |||||||
(1) Consists of directors’ expenses which are not allocated to individual segments. | ||||||||||||||||||||||||||||||||
Predecessor Company | ' | |||||||||||||||||||||||||||||||
Segment reporting | ' | |||||||||||||||||||||||||||||||
Schedule showing net income (loss) components and total assets of reportable segments reconciled to amounts reflected in the condensed consolidated financial statements | ' | |||||||||||||||||||||||||||||||
The following table presents the net income (loss) components of our reportable segments reconciled to amounts reflected in the condensed consolidated statements of operations for the four months ended April 30, 2014 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Predecessor Company | ||||||||||||||||||||||||||||||||
Credit | Natural Resources | Other | Reconciling Items(1) | Total Consolidated | ||||||||||||||||||||||||||||
Four months ended | Four months ended | Four months ended | Four months ended | Four months ended | ||||||||||||||||||||||||||||
April 30, 2014 | April 30, 2014 | April 30, 2014 | April 30, 2014 | April 30, 2014 | ||||||||||||||||||||||||||||
Total revenues | $ | 134,255 | $ | 61,782 | $ | 21,205 | $ | — | $ | 217,242 | ||||||||||||||||||||||
Total investment costs and expenses | 62,485 | 38,915 | 425 | — | 101,825 | |||||||||||||||||||||||||||
Total other income (loss) | 76,046 | (8,123 | ) | (11,589 | ) | — | 56,334 | |||||||||||||||||||||||||
Total other expenses | 23,121 | 1,633 | 230 | 40,625 | 65,609 | |||||||||||||||||||||||||||
Income tax expense | 146 | — | 16 | — | 162 | |||||||||||||||||||||||||||
Net income (loss) | $ | 124,549 | $ | 13,111 | $ | 8,945 | $ | (40,625 | ) | $ | 105,980 | |||||||||||||||||||||
-1 | Consists of certain expenses not allocated to individual segments including other expenses comprised of incentive fees of $12.9 million and merger related transaction costs of $22.7 million for the four months ended April 30, 2014. The remaining reconciling items include insurance expenses, directors’ expenses and share-based compensation expense. | |||||||||||||||||||||||||||||||
The following table presents the net income (loss) components of our reportable segments reconciled to amounts reflected in the condensed consolidated statements of operations for the three and nine months ended September 30, 2013 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Predecessor Company | ||||||||||||||||||||||||||||||||
Credit | Natural Resources | Other | Reconciling Items(1) | Total Consolidated | ||||||||||||||||||||||||||||
Three | Nine | Three | Nine | Three | Nine | Three | Nine | Three | Nine | |||||||||||||||||||||||
months | months | months | months | months | months | months | months | months | months | |||||||||||||||||||||||
ended | ended | ended | ended | ended | ended | ended | ended | ended | ended | |||||||||||||||||||||||
September | September | September | September | September | September | September | September | September | September | |||||||||||||||||||||||
30, 2013 | 30, 2013 | 30, 2013 | 30, 2013 | 30, 2013 | 30, 2013 | 30, 2013 | 30, 2013 | 30, 2013 | 30, 2013 | |||||||||||||||||||||||
Total revenues | $ | 96,243 | $ | 320,769 | $ | 32,446 | $ | 84,118 | $ | 13 | $ | 1,509 | $ | — | $ | — | $ | 128,702 | $ | 406,396 | ||||||||||||
Total investment costs and expenses | 55,253 | 162,097 | 22,386 | 61,355 | 238 | 667 | — | — | 77,877 | 224,119 | ||||||||||||||||||||||
Total other income (loss) | 6,969 | 132,853 | (3,437 | ) | (918 | ) | 2,694 | 6,015 | — | (20,269 | ) | 6,226 | 117,681 | |||||||||||||||||||
Total other expenses | 14,155 | 43,151 | 1,269 | 3,698 | 116 | 484 | 1,607 | 27,837 | 17,147 | 75,170 | ||||||||||||||||||||||
Income tax (benefit) expense | 9 | 420 | — | — | 9 | 14 | — | — | 18 | 434 | ||||||||||||||||||||||
Net income (loss) | $ | 33,795 | $ | 247,954 | $ | 5,354 | $ | 18,147 | $ | 2,344 | $ | 6,359 | $ | (1,607 | ) | $ | (48,106 | ) | $ | 39,886 | $ | 224,354 | ||||||||||
-1 | Consists of certain expenses not allocated to individual segments including (i) other income (loss) comprised of losses on restructuring and extinguishment of debt of zero and $20.3 million for the three and nine months ended September 30, 2013, respectively, and (ii) other expenses comprised of incentive fees of zero and $22.7 million for the three and nine months ended September 30, 2013, respectively. The remaining reconciling items include insurance expenses, directors’ expenses and share-based compensation expense. | |||||||||||||||||||||||||||||||
EARNINGS_PER_COMMON_SHARE_Tabl
EARNINGS PER COMMON SHARE (Tables) (Predecessor Company) | 9 Months Ended | ||||||||||
Sep. 30, 2014 | |||||||||||
Predecessor Company | ' | ||||||||||
Earnings per common share | ' | ||||||||||
Schedule of reconciliation of basic and diluted net (loss) income per common share | ' | ||||||||||
The following table presents a reconciliation of basic and diluted net income per common share for the Predecessor Company (amounts in thousands, except per share information): | |||||||||||
Predecessor Company | |||||||||||
Four months | Three months | Nine months | |||||||||
ended | ended | ended | |||||||||
April 30, 2014 | September 30, 2013 | September 30, 2013 | |||||||||
Net income | $ | 105,980 | $ | 39,886 | $ | 224,354 | |||||
Less: Preferred share distributions | 6,891 | 6,891 | 20,520 | ||||||||
Net income available to common shares | $ | 99,089 | $ | 32,995 | $ | 203,834 | |||||
Less: Dividends and undistributed earnings allocated to participating securities | 292 | 109 | 701 | ||||||||
Net income allocated to common shares | $ | 98,797 | $ | 32,886 | $ | 203,133 | |||||
Basic: | |||||||||||
Basic weighted average common shares outstanding | 204,276 | 204,134 | 201,824 | ||||||||
Net income per common share | $ | 0.48 | $ | 0.16 | $ | 1.01 | |||||
Diluted: | |||||||||||
Diluted weighted average common shares outstanding(1) | 204,276 | 204,134 | 201,824 | ||||||||
Net income per common share | $ | 0.48 | $ | 0.16 | $ | 1.01 | |||||
(1) Potential anti-dilutive common shares excluded from diluted earnings per share related to common share options were 1,932,279 for all periods presented. | |||||||||||
ACCUMULATED_OTHER_COMPREHENSIV1
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) (Predecessor Company) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
Predecessor Company | ' | |||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | ' | |||||||||||||||||||
Schedule of components of changes in accumulated other comprehensive loss | ' | |||||||||||||||||||
The components of changes in accumulated other comprehensive loss for the Predecessor Company were as follows (amounts in thousands): | ||||||||||||||||||||
Predecessor Company | ||||||||||||||||||||
Four months ended April 30, 2014 (1) | ||||||||||||||||||||
Net unrealized | Net unrealized | Total | ||||||||||||||||||
gains on | losses on cash | |||||||||||||||||||
available-for-sale | flow hedges | |||||||||||||||||||
securities | ||||||||||||||||||||
Beginning balance | $ | 23,567 | $ | (39,219 | ) | $ | (15,652 | ) | ||||||||||||
Other comprehensive loss before reclassifications | (2,614 | ) | (5,442 | ) | (8,056 | ) | ||||||||||||||
Amounts reclassified from accumulated other comprehensive loss(2) | (2,639 | ) | — | (2,639 | ) | |||||||||||||||
Net current-period other comprehensive loss | (5,253 | ) | (5,442 | ) | (10,695 | ) | ||||||||||||||
Ending balance | $ | 18,314 | $ | (44,661 | ) | $ | (26,347 | ) | ||||||||||||
-1 | The Company’s gross and net of tax amounts are the same. | |||||||||||||||||||
-2 | Includes an impairment charge of $4.4 million for investments which were determined to be other-than-temporary for the four months ended April 30, 2014. These reclassified amounts are included in net realized and unrealized (loss) gain on investments on the condensed consolidated statements of operations. | |||||||||||||||||||
Predecessor Company | ||||||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||||||
September 30, 2013(1) | September 30, 2013(1) | |||||||||||||||||||
Net unrealized | Net unrealized | Total | Net unrealized | Net unrealized | Total | |||||||||||||||
gains on | losses on cash | gains on | losses on cash | |||||||||||||||||
available-for-sale | flow hedges | available-for-sale | flow hedges | |||||||||||||||||
securities | securities | |||||||||||||||||||
Beginning balance | $ | 16,657 | $ | (56,300 | ) | $ | (39,643 | ) | $ | 17,472 | $ | (87,698 | ) | $ | (70,226 | ) | ||||
Other comprehensive (loss) income before reclassifications | (1,871 | ) | 6,813 | 4,942 | (11,580 | ) | 38,211 | 26,631 | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss(2) | 5,008 | — | 5,008 | 13,902 | — | 13,902 | ||||||||||||||
Net current-period other comprehensive income | 3,137 | 6,813 | 9,950 | 2,322 | 38,211 | 40,533 | ||||||||||||||
Ending balance | $ | 19,794 | $ | (49,487 | ) | $ | (29,693 | ) | $ | 19,794 | $ | (49,487 | ) | $ | (29,693 | ) | ||||
-1 | The Company’s gross and net of tax amounts are the same. | |||||||||||||||||||
-2 | Includes an impairment charge of $5.0 million and $17.5 million for investments which were determined to be other-than-temporary for the three and nine months ended September 30, 2013, respectively. These reclassified amounts are included in net realized and unrealized gain on investments on the condensed consolidated statements of operations. | |||||||||||||||||||
ORGANIZATION_Details
ORGANIZATION (Details) (Predecessor Company) | 0 Months Ended | |
Apr. 30, 2014 | Jan. 17, 2013 | |
Series A LLC Preferred Shares | ' | ' |
Definitive merger agreement | ' | ' |
Preferred shares, dividend rate (as a percent) | 7.38% | 7.38% |
KFN | KKR & Co. | ' | ' |
Definitive merger agreement | ' | ' |
Stock exchange ratio to be applied in the merger transaction | 0.51 | ' |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Collateralized Debt Obligation (CLOs) VIEs | Collateralized Debt Obligation (CLOs) VIEs | Collateralized Debt Obligation (CLOs) VIEs | Collateralized Debt Obligation (CLOs) VIEs | |||
Nonaffiliates | loan | Nonaffiliates | ||||
Collateralized Debt Obligation disclosures | ' | ' | ' | ' | ' | ' |
Number of Collateralized Loan Obligation (CLOs) VIEs (in loans) | ' | ' | ' | ' | 8 | ' |
Corporate debt investment, par amount | ' | $6,600,000,000 | ' | ' | $6,700,000,000 | ' |
Estimated fair value of corporate debt investments | ' | 6,400,000,000 | ' | ' | 6,400,000,000 | ' |
Collateralized loan obligation secured notes | 6,135,849,000 | ' | 5,500,000,000 | ' | ' | ' |
Collateralized Loan Obligation Secured Notes | ' | ' | ' | $5,249,383,000 | ' | $5,300,000,000 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) | 9 Months Ended | 4 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Apr. 30, 2014 | Dec. 31, 2013 | |
item | Predecessor Company | Predecessor Company | |
approach | item | item | |
category | component | ||
component | |||
Consolidation | ' | ' | ' |
Minimum percentage of voting interest required to consolidate non-VIEs | 50.00% | ' | ' |
Fair Value of Financial Instruments | ' | ' | ' |
Number of approaches used to determine fair value of investments (in approaches) | 2 | ' | ' |
Corporate Loans | ' | ' | ' |
Period for determination of non-accrual status | '90 days | ' | ' |
Number of methods interest income recognized | 2 | ' | ' |
Sustained period of repayment performance | '6 months | ' | ' |
Summary of corporate loans | ' | ' | ' |
Number of loan categories | ' | 3 | ' |
Allowance for Loan Losses | ' | ' | ' |
Number of components in the loans receivable allowance for loan losses (in components) | ' | 2 | 2 |
Number of internally assigned risk grades | ' | 3 | 3 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) (Predecessor Company, KFN, KKR & Co.) | 0 Months Ended | |
Apr. 30, 2014 | Dec. 16, 2013 | |
Predecessor Company | KFN | KKR & Co. | ' | ' |
Merger transaction | ' | ' |
Exchange ratio of share based awards under merger transaction | 0.51 | 0.51 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 5) (KKR Fund Holdings) | Sep. 30, 2014 |
KKR Fund Holdings | ' |
Earnings per common share | ' |
Number of common shares held | 100 |
MERGER_TRANSACTION_Details
MERGER TRANSACTION (Details) (USD $) | 0 Months Ended | ||
Apr. 30, 2014 | Dec. 16, 2013 | Apr. 30, 2014 | |
KFN | KKR & Co. | ' | ' | ' |
Merger transaction | ' | ' | ' |
Transaction costs | $24,200,000 | ' | $24,200,000 |
KFN | KKR & Co. | General, administrative and directors expenses | ' | ' | ' |
Merger transaction | ' | ' | ' |
Transaction costs | 22,700,000 | ' | 22,700,000 |
Predecessor Company | Phantom share | ' | ' | ' |
Merger transaction | ' | ' | ' |
Exchange ratio of share based awards under merger transaction | 0.51 | ' | ' |
Predecessor Company | KFN | KKR & Co. | ' | ' | ' |
Merger transaction | ' | ' | ' |
Exchange ratio of share based awards under merger transaction | 0.51 | 0.51 | ' |
Assets acquired: | ' | ' | ' |
Cash and cash equivalents | ' | ' | 210,413,000 |
Restricted cash and cash equivalents | ' | ' | 649,967,000 |
Securities | ' | ' | 541,149,000 |
Corporate loans | ' | ' | 6,649,054,000 |
Equity investments | ' | ' | 297,054,000 |
Oil and gas properties, net | ' | ' | 505,238,000 |
Interests in joint ventures and partnerships | ' | ' | 491,324,000 |
Derivative assets | ' | ' | 26,383,000 |
Interest and principal receivable | ' | ' | 35,992,000 |
Other assets | ' | ' | 208,144,000 |
Total assets | ' | ' | 9,614,718,000 |
Liabilities assumed: | ' | ' | ' |
Collateralized loan obligation secured notes | ' | ' | 5,663,666,000 |
Credit facilities | ' | ' | 63,189,000 |
Senior notes | ' | ' | 415,538,000 |
Junior subordinated notes | ' | ' | 245,782,000 |
Accounts payable, accrued expenses and other liabilities | ' | ' | 357,084,000 |
Accrued interest payable | ' | ' | 17,647,000 |
Derivative liabilities | ' | ' | 88,356,000 |
Total liabilities | ' | ' | 6,851,262,000 |
Fair value of preferred shares | ' | ' | 378,983,000 |
Fair value of net assets acquired | ' | ' | 2,384,473,000 |
Less: Purchase price | 2,369,559,000 | ' | ' |
Bargain purchase gain | $14,914,000 | ' | ' |
Predecessor Company | KFN | KKR & Co. | Restricted common shares | ' | ' | ' |
Merger transaction | ' | ' | ' |
Exchange ratio of share based awards under merger transaction | 0.51 | ' | ' |
Predecessor Company | KFN | KKR & Co. | Phantom share | Directors | ' | ' | ' |
Merger transaction | ' | ' | ' |
Exchange ratio of share based awards under merger transaction | 0.51 | ' | ' |
SECURITIES_Details
SECURITIES (Details) (USD $) | 3 Months Ended | 5 Months Ended | 12 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Securities, at estimated fair value | Other securities, at estimated fair value. | Residential mortgage-backed securities | ||||
Net realized and unrealized gains | ' | ' | ' | ' | ' | ' |
Net realized (losses) gains | ($103) | $632 | ' | ' | ' | ' |
Net change in unrealized (losses) gains | -4,645 | 6,178 | ' | ' | ' | ' |
Net realized and unrealized (losses) gains | -4,748 | 6,810 | ' | ' | ' | ' |
Securities Available-for-Sale | ' | ' | ' | ' | ' | ' |
Par | 647,189 | 647,189 | 647,189 | ' | ' | ' |
Amortized Cost | ' | ' | 586,052 | 326,775 | ' | ' |
Amortized Cost | 586,052 | 586,052 | ' | ' | ' | ' |
Gross Unrealized Gains | ' | ' | ' | 24,791 | ' | ' |
Gross Unrealized Losses | ' | ' | ' | -1,225 | ' | ' |
Estimated Fair Value | ' | ' | ' | 350,341 | ' | ' |
Total securities | 589,160 | 589,160 | 589,160 | 573,312 | ' | ' |
Total Securities | ' | ' | ' | ' | ' | ' |
Amortized Cost | ' | ' | ' | ' | 135,968 | 138,284 |
Gross Unrealized Gains | ' | ' | ' | ' | 12,436 | 2,809 |
Gross Unrealized Losses | ' | ' | ' | ' | -1,437 | -65,089 |
Other securities, at estimated fair value | ' | ' | ' | ' | 146,967 | 76,004 |
Amortized Cost | ' | ' | ' | 601,027 | ' | ' |
Gross Unrealized Gains | ' | ' | ' | 40,036 | ' | ' |
Gross Unrealized Losses | ' | ' | ' | -67,751 | ' | ' |
Total securities | $589,160 | $589,160 | $589,160 | $573,312 | ' | ' |
SECURITIES_Details_2
SECURITIES (Details 2) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Corporate debt securities | Corporate debt securities | Securities | Securities | Securities | Securities | |
issuer | security | |||||
security | issuer | |||||
Fair value on available for sale securities in a gross continuous unrealized loss position by the length of time | ' | ' | ' | ' | ' | ' |
Less Than 12 months | ' | ' | ' | ' | ' | $25,543,000 |
12 Months or More | ' | ' | ' | ' | ' | 30,034,000 |
Total Estimated Fair Value | ' | ' | ' | ' | ' | 55,577,000 |
Unrealized losses on available for sale securities in a gross continuous unrealized loss position by the length of time | ' | ' | ' | ' | ' | ' |
Less Than 12 months | ' | ' | ' | ' | ' | -658,000 |
12 months or More | ' | ' | ' | ' | ' | -567,000 |
Total Unrealized Losses | ' | ' | ' | ' | ' | -1,225,000 |
Other-than-temporarily impaired loss | ' | ' | 5,000,000 | 4,400,000 | 17,500,000 | ' |
Number of issuers with corporate debt securities in default | 1 | 1 | ' | ' | ' | ' |
Number of corporate debt securities in default | 1 | 1 | ' | ' | ' | ' |
Estimated fair value of corporate debt security in default | $12,800,000 | $25,400,000 | ' | ' | ' | ' |
SECURITIES_Details_3
SECURITIES (Details 3) (Predecessor Company, USD $) | 4 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Apr. 30, 2014 | Sep. 30, 2013 |
Predecessor Company | ' | ' |
Net realized gains and losses recognized on the sale of securities available for sale | ' | ' |
Gross realized gains | $2,516 | $2,829 |
Gross realized losses | ' | -6 |
Net realized gains | $2,516 | $2,823 |
SECURITIES_Details_4
SECURITIES (Details 4) (Predecessor Company, USD $) | Dec. 31, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 |
In Thousands, unless otherwise specified | Equity investments, at estimated fair value | Securities | Securities | Securities | |
security | security | security | |||
Troubled Debt Restructurings | ' | ' | ' | ' | ' |
Modified amortized cost of security | $601,027 | ' | ' | ' | $24,100 |
Estimated fair value of new securities received from the security TDR exchange | $181,212 | $16,100 | ' | ' | ' |
Number of securities that qualified as TDRs | ' | ' | 0 | 0 | ' |
Number of securities modified as TDRs in default within a twelve month period subsequent to their original restructuring | ' | 0 | ' | ' | ' |
SECURITIES_Details_5
SECURITIES (Details 5) (USD $) | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | Successor Company | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company |
issuer | Corporate debt securities | Corporate debt securities | Corporate debt securities | issuer | Corporate debt securities | Corporate debt securities | |
Percent to total investment in corporate loans, debt securities and other investments | Percent to total investment in corporate loans, debt securities and other investments | Percent to total investment in corporate loans, debt securities and other investments | Percent to total investment in corporate loans, debt securities and other investments | Percent to total investment in corporate loans, debt securities and other investments | |||
Top three largest | Top three largest | Ten issuers | Top three largest | Ten issuers | |||
Concentrated risks | ' | ' | ' | ' | ' | ' | ' |
Number of issuers with whom a specified percentage of estimated fair value of corporate debt securities is concentrated (in issuers) | 10 | ' | ' | ' | 10 | ' | ' |
Number of largest issuers with whom a specified percentage of estimated fair value of debt securities is concentrated (in issuers) | 3 | ' | ' | ' | 3 | ' | ' |
Concentration risk of total fair value (as a percent) | ' | 30.00% | ' | 64.00% | ' | 21.00% | 55.00% |
Securities | ' | ' | $157,500 | ' | $350,341 | $104,500 | ' |
Estimated fair value of securities pledged as collateral | ' | ' | ' | ' | ' | ' | ' |
Pledged as collateral for collateralized loan obligation secured debt | 315,462 | ' | ' | ' | 324,830 | ' | ' |
Total | $315,462 | ' | ' | ' | $324,830 | ' | ' |
CORPORATE_LOANS_AND_ALLOWANCE_2
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details) (Successor Company, USD $) | Sep. 30, 2014 |
In Thousands, unless otherwise specified | |
Summary of corporate loans | ' |
Par | $6,651,027 |
Amortized Cost | 6,457,031 |
Estimated Fair Value | 6,354,143 |
Corporate Loans, at Estimated Fair Value | ' |
Summary of corporate loans | ' |
Par | 6,651,027 |
Amortized Cost | 6,457,031 |
Estimated Fair Value | $6,354,143 |
CORPORATE_LOANS_AND_ALLOWANCE_3
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 2) (Successor Company, Corporate Loans, at Estimated Fair Value, USD $) | 3 Months Ended | 5 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 |
Successor Company | Corporate Loans, at Estimated Fair Value | ' | ' |
Net realized and unrealized (losses) gains | ' | ' |
Net realized gains | $6,353 | $1,637 |
Net change in unrealized losses | -128,749 | -102,888 |
Net realized and unrealized losses | ($122,396) | ($101,251) |
CORPORATE_LOANS_AND_ALLOWANCE_4
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 3) (USD $) | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Apr. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Corporate Loans, at Estimated Fair Value | Corporate Loans | Corporate Loans | Corporate Loans | Corporate Loans | Corporate Loans | Corporate Loans Held for Sale | Corporate Loans, at Estimated Fair Value | Corporate loans and corporate loans held for sale | |||
Summary of corporate loans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal | ' | ' | $6,873,666,000 | ' | $6,280,470,000 | ' | ' | ' | $315,738,000 | $277,458,000 | ' |
Net unamortized discount | ' | ' | -181,046,000 | ' | -105,979,000 | ' | ' | ' | -20,070,000 | -54,997,000 | ' |
Total amortized cost | 6,457,031,000 | 6,457,031,000 | 6,692,620,000 | ' | 6,174,491,000 | ' | ' | ' | 295,668,000 | 222,461,000 | ' |
Lower of cost or fair value adjustment | ' | ' | -15,920,000 | ' | ' | ' | ' | ' | -15,920,000 | ' | ' |
Allowance for loan losses | ' | ' | -224,999,000 | -223,541,000 | -224,999,000 | -212,594,000 | -203,255,000 | -223,472,000 | ' | ' | ' |
Unrealized gains | ' | ' | 15,019,000 | ' | ' | ' | ' | ' | ' | 15,019,000 | ' |
Net carrying value | ' | ' | 6,466,720,000 | ' | 5,949,492,000 | ' | ' | ' | 279,748,000 | 237,480,000 | ' |
Cumulative charge-offs and other adjustments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $18,100,000 |
CORPORATE_LOANS_AND_ALLOWANCE_5
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 4) (Predecessor Company, USD $) | 3 Months Ended | 4 Months Ended | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
component | component | |||
Summary of corporate loans | ' | ' | ' | ' |
Number of components in the loans receivable allowance for loan losses (in components) | ' | 2 | ' | 2 |
Allowance for loan losses: | ' | ' | ' | ' |
Beginning balance | ' | $224,999 | ' | ' |
Provision for loan losses | 9,339 | ' | 20,407 | ' |
Charge-offs | 0 | -1,500 | -31,300 | ' |
Corporate Loans | ' | ' | ' | ' |
Allowance for loan losses: | ' | ' | ' | ' |
Beginning balance | 203,255 | 224,999 | 223,472 | ' |
Provision for loan losses | 9,339 | ' | 20,407 | ' |
Charge-offs | ' | -1,458 | -31,285 | ' |
Ending balance | $212,594 | $223,541 | $212,594 | ' |
CORPORATE_LOANS_AND_ALLOWANCE_6
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 5) (Predecessor Company, USD $) | Apr. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | |||||
Allowance for loan losses by basis of impairment method: | ' | ' | ' | ' | ' |
Ending balance: individually evaluated for impairment | ' | $142,682 | ' | ' | ' |
Ending balance: collectively evaluated for impairment | ' | 82,317 | ' | ' | ' |
Allowance for loan losses | ' | 224,999 | ' | ' | ' |
Corporate loans (recorded investment) by basis of impairment method: | ' | ' | ' | ' | ' |
Recorded Investment | ' | 6,193,232 | ' | ' | ' |
Corporate Loans | ' | ' | ' | ' | ' |
Allowance for loan losses by basis of impairment method: | ' | ' | ' | ' | ' |
Allowance for loan losses | 223,541 | 224,999 | 212,594 | 203,255 | 223,472 |
Corporate loans (recorded investment) by basis of impairment method: | ' | ' | ' | ' | ' |
Ending balance: individually evaluated for impairment | ' | 554,442 | ' | ' | ' |
Ending balance: collectively evaluated for impairment | ' | 5,638,790 | ' | ' | ' |
Recorded Investment | ' | $6,193,232 | ' | ' | ' |
CORPORATE_LOANS_AND_ALLOWANCE_7
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 6) (Predecessor Company, USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | issuer |
Recorded investment in impaired loans and related allowances for credit losses | ' |
Number of issuers of loans related to the aggregate allowance on impaired loans (in issuers) | 4 |
Impaired Financing Receivable, Recorded Investment | ' |
Recorded Investment, with an allowance recorded | $554,442 |
Recorded Investment | 554,442 |
Unpaid Principal Balance, with an allowance recorded | 594,416 |
Unpaid Principal Balance | 594,416 |
Related Allowance | 142,682 |
Impaired Financing Receivable, Amortized Cost | ' |
Allocated component of allowance for loan losses to the account for impairment | 142,682 |
Texas Competitive Electric Holdings Company LLC | ' |
Impaired Financing Receivable, Amortized Cost | ' |
Impaired loans | 311,600 |
Allocated component of allowance for loan losses to the account for impairment | $66,900 |
CORPORATE_LOANS_AND_ALLOWANCE_8
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 7) (Predecessor Company, USD $) | 3 Months Ended | 4 Months Ended | 9 Months Ended |
Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | |
Predecessor Company | ' | ' | ' |
Average recorded investment in impaired loans and interest income recognized | ' | ' | ' |
Interest income related to impaired loans with a related allowance recorded | ' | $4,500,000 | ' |
Average Recorded Investment, with no related allowance recorded | ' | ' | 1,623,000 |
Average Recorded Investment, with an allowance recorded | 554,554,000 | ' | 517,544,000 |
Average Recorded Investment | 554,554,000 | ' | 519,167,000 |
Interest Income Recognized, with an allowance recorded | 4,471,000 | ' | 14,740,000 |
Interest Income Recognized | $4,471,000 | ' | $14,740,000 |
CORPORATE_LOANS_AND_ALLOWANCE_9
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 8) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Apr. 30, 2014 | Dec. 31, 2013 |
Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Corporate Loans, at Estimated Fair Value | class | Corporate Loans | Corporate Loans | Corporate Loans | Corporate Loans | Corporate Loans Held for Sale | Corporate Loans Held for Sale | Corporate Loans Held for Sale | Corporate Loans Held for Sale | Corporate Loans, at Estimated Fair Value | Corporate Loans, at Estimated Fair Value | ||||
issuer | issuer | ||||||||||||||
Recorded investment in impaired loans and related allowances for credit losses | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of classifications of non-accrual loans | ' | ' | ' | ' | 3 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Recorded investment with nonaccrual status | ' | ' | ' | ' | $624,148,000 | ' | ' | ' | $554,442,000 | ' | ' | ' | $44,823,000 | ' | $24,883,000 |
Interest income recognized using cash basis method | ' | 5,500,000 | 5,300,000 | 20,900,000 | ' | 4,500,000 | 4,500,000 | 14,700,000 | ' | 1,000,000 | 700,000 | 6,200,000 | ' | 100,000 | ' |
Par amount of non-accrual loans | 580,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 237,200,000 |
Estimated fair value of non-accrual loans | 391,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated fair value of past due loans | 300,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12,200,000 |
Recorded investment of non-accrual and past due loans | ' | ' | ' | ' | ' | ' | ' | ' | 237,200,000 | ' | ' | ' | ' | ' | ' |
Par amount of non-accrual and past due loans | 410,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 15,500,000 |
Number of issuers past due (in issuers) | ' | ' | ' | ' | ' | ' | ' | ' | 3 | ' | ' | ' | ' | ' | 1 |
Past due interest payments of amortized cost of non-accrual and past due loans | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total past due interest payment | ' | ' | ' | ' | ' | ' | ' | ' | 5,600,000 | ' | ' | ' | ' | ' | ' |
Less than 30 days past due | ' | ' | ' | ' | ' | ' | ' | ' | 900,000 | ' | ' | ' | ' | ' | ' |
60-89 days past due | ' | ' | ' | ' | ' | ' | ' | ' | 2,300,000 | ' | ' | ' | ' | ' | ' |
Interest payments related to loans at estimated fair value that were 90 or more days past due | ' | ' | ' | ' | ' | ' | ' | ' | $2,400,000 | ' | ' | ' | ' | ' | $200,000 |
Recovered_Sheet1
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 9) (Predecessor Company, USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Corporate Loans and Allowance for Loan Losses | ' |
Recorded Investment | $6,193,232 |
Allowances for loan losses | 82,317 |
Unallocated | ' |
Corporate Loans and Allowance for Loan Losses | ' |
Recorded Investment | 5,638,790 |
Allowances for loan losses | 82,300 |
Allocated | ' |
Corporate Loans and Allowance for Loan Losses | ' |
Recorded Investment | 554,442 |
High | Unallocated | ' |
Corporate Loans and Allowance for Loan Losses | ' |
Recorded Investment | 325,525 |
High | Senior Secured Loan | Unallocated | ' |
Corporate Loans and Allowance for Loan Losses | ' |
Recorded Investment | 26,886 |
High | Second Lien Loan | Unallocated | ' |
Corporate Loans and Allowance for Loan Losses | ' |
Recorded Investment | 286,996 |
High | Subordinated | Unallocated | ' |
Corporate Loans and Allowance for Loan Losses | ' |
Recorded Investment | 11,643 |
Moderate | Unallocated | ' |
Corporate Loans and Allowance for Loan Losses | ' |
Recorded Investment | 1,099,898 |
Moderate | Senior Secured Loan | Unallocated | ' |
Corporate Loans and Allowance for Loan Losses | ' |
Recorded Investment | 1,033,065 |
Moderate | Second Lien Loan | Unallocated | ' |
Corporate Loans and Allowance for Loan Losses | ' |
Recorded Investment | 27,504 |
Moderate | Subordinated | Unallocated | ' |
Corporate Loans and Allowance for Loan Losses | ' |
Recorded Investment | 39,329 |
Low | Unallocated | ' |
Corporate Loans and Allowance for Loan Losses | ' |
Recorded Investment | 4,213,367 |
Low | Senior Secured Loan | Unallocated | ' |
Corporate Loans and Allowance for Loan Losses | ' |
Recorded Investment | 4,148,913 |
Low | Second Lien Loan | Unallocated | ' |
Corporate Loans and Allowance for Loan Losses | ' |
Recorded Investment | 25,864 |
Low | Subordinated | Unallocated | ' |
Corporate Loans and Allowance for Loan Losses | ' |
Recorded Investment | $38,590 |
Recovered_Sheet2
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 10) (Predecessor Company, USD $) | 3 Months Ended | 4 Months Ended | 9 Months Ended | |
Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Summary of corporate loans | ' | ' | ' | ' |
Charge-offs recorded | $0 | $1,500,000 | $31,300,000 | ' |
Corporate loans held for sale | ' | ' | ' | 279,748,000 |
Corporate loans transferred from held for investment to held for sale | ' | 348,808,000 | 316,003,000 | ' |
Net charge for lower of cost or estimated fair value adjustment | ' | -5,038,000 | 11,442,000 | ' |
Corporate loans transferred from held for sale to held for investment | 0 | 0 | 0 | ' |
Carrying Amount | ' | ' | ' | ' |
Summary of corporate loans | ' | ' | ' | ' |
Corporate loans held for sale | ' | ' | ' | 279,748,000 |
Corporate Loans | ' | ' | ' | ' |
Summary of corporate loans | ' | ' | ' | ' |
Charge-offs recorded | ' | 1,458,000 | 31,285,000 | ' |
Corporate loans transferred from held for investment to held for sale | 239,200,000 | 348,800,000 | 316,000,000 | ' |
Corporate Loans Held for Sale | ' | ' | ' | ' |
Summary of corporate loans | ' | ' | ' | ' |
Corporate loans held for sale | 312,300,000 | 546,100,000 | 312,300,000 | ' |
Net charge for lower of cost or estimated fair value adjustment | $2,800,000 | $5,000,000 | $11,400,000 | ' |
Recovered_Sheet3
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 11) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Apr. 30, 2014 | Apr. 30, 2014 | Apr. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
loan | issuer | issuer | issuer | Minimum | Maximum | Corporate Loans | Corporate Loans | Corporate Loans | Corporate Loans, at Estimated Fair Value | Corporate Loans, at Estimated Fair Value | Corporate Loans, at Estimated Fair Value | ||
issuer | loan | loan | issuer | issuer | item | issuer | |||||||
issuer | item | ||||||||||||
Troubled debt restructurings: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Troubled debt restructurings on a recorded investment basis | ' | ' | ' | ' | $55,400,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Number of issuers related to recorded investment balance (in issuers) | ' | ' | ' | ' | 3 | ' | ' | ' | ' | ' | ' | ' | ' |
Sustained period of repayment performance for determining the reclassification of restructured loans from non-accrual to accrual status | ' | ' | ' | ' | '6 months | ' | ' | ' | ' | ' | ' | ' | ' |
Troubled debt restructurings, included in non-accrual loans | ' | ' | ' | ' | 55,400,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Specific reserves allocated to the issuer | ' | ' | ' | ' | 22,100,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Financing Receivable Modifications Extension Period of Maturity Date | ' | ' | ' | '4 years | ' | '3 years | '5 years | ' | ' | ' | ' | ' | ' |
Higher coupon rate for extended period (as a percent) | ' | ' | 4.00% | 6.80% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of TDRs (in issuers) | ' | ' | ' | ' | ' | ' | ' | 1 | 2 | ' | 2 | 1 | ' |
Pre-modification outstanding recorded investment | ' | ' | 195,422,000 | 70,028,000 | ' | ' | ' | 154,075,000 | 68,358,000 | ' | 41,347,000 | 1,670,000 | ' |
Number of issuers troubled debt restructurings | ' | ' | 2 | 3 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Post-modification outstanding recorded investment | ' | ' | 24,571,000 | 40,659,000 | ' | ' | ' | ' | 39,430,000 | ' | 24,571,000 | 1,229,000 | ' |
Estimated fair value of equity received from the TDRs excluded from post-modification outstanding recorded investment | ' | ' | ' | ' | ' | ' | ' | 92,000,000 | 2,100,000 | ' | 12,300,000 | ' | ' |
Number of TDRs identified as impaired (in issuers) | ' | ' | ' | ' | ' | ' | ' | 1 | 2 | ' | ' | ' | ' |
Number of loans carried at estimated fair value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 | 1 | ' |
Charge-offs recorded related to TDR's | ' | ' | 1,100,000 | 26,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Charge-offs related to TDR's as a percentage of charge-offs related to loans and losses (in percentage) | ' | ' | 76.00% | 86.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Charge-offs recorded | ' | 0 | 1,500,000 | 31,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Lending commitment to borrower whose loans had been modified in the troubled debt restructuring | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of loans modified as TDRs in default | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Modified amortized cost of corporate loans that did not qualify as TDRs | ' | 195,600,000 | 1,100,000,000 | 2,000,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of loans in default | 4 | ' | ' | ' | 6 | ' | ' | ' | ' | ' | ' | ' | ' |
Amortized cost of corporate loans in default | ' | ' | ' | ' | 215,700,000 | ' | ' | ' | ' | 203,700,000 | ' | ' | 12,000,000 |
Estimated fair value of corporate loans in default | $300,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of issuers in default | 2 | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' |
Recovered_Sheet4
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 12) (USD $) | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
Successor Company | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Corporate Loans | Corporate Loans | Corporate Loans | Corporate Loans | Corporate Loans | Corporate Loans | |||
issuer | Percent to total investment in corporate loans, debt securities and other investments | Percent to total investment in corporate loans, debt securities and other investments | issuer | Percent to total investment in corporate loans, debt securities and other investments | Percent to total investment in corporate loans, debt securities and other investments | |||
Top Twenty Issuers | Top three largest | Top Twenty Issuers | Top three largest | |||||
Concentrated risks | ' | ' | ' | ' | ' | ' | ' | ' |
Concentration risk (as a percent) | ' | ' | 40.00% | 12.00% | ' | ' | 46.00% | 14.00% |
Number of issuers with whom a specified percentage of estimated fair value or amortized cost of corporate loans is concentrated | ' | 20 | ' | ' | ' | 20 | ' | ' |
Number of issuers with the largest concentration of corporate loans | ' | 3 | ' | ' | ' | 3 | ' | ' |
Amortized cost of corporate loans concentrated in major issuers (in dollars) | ' | ' | ' | ' | ' | ' | ' | $935,200,000 |
Estimated fair value of corporate loans | $6,354,143,000 | ' | ' | $734,800,000 | $237,480,000 | ' | ' | ' |
Recovered_Sheet5
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 13) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | Successor Company | Predecessor Company |
Estimated Fair Value | Carrying Amount | |
Pledged assets | ' | ' |
Pledged as collateral for collateralized loan obligation secured debt | $6,046,310 | $6,231,541 |
Total loans pledged as collateral | $6,046,310 | $6,231,541 |
NATURAL_RESOURCES_ASSETS_Detai
NATURAL RESOURCES ASSETS (Details) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | |
Successor Company | Successor Company | Predecessor Company | |
Oil and natural gas properties | ' | ' | ' |
Proved oil and natural gas properties (successful efforts method) | $128,800,000 | $128,800,000 | $451,909,000 |
Unproved oil and natural gas properties | 0 | 0 | 16,913,000 |
Less: Accumulated depreciation, depletion and amortization | -6,170,000 | -6,170,000 | -68,453,000 |
Oil and gas properties, net | 122,630,000 | 122,630,000 | 400,369,000 |
Interests in joint ventures and partnerships | 146,700,000 | 146,700,000 | ' |
Amount capitalized from purchases of natural resource assets | ' | 85,000,000 | 154,500,000 |
Aggregate value of private equity, natural resources assets distributed to Parent | $179,200,000 | ' | ' |
BORROWINGS_Details
BORROWINGS (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 16, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 16, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Sep. 27, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Jun. 25, 2013 | Dec. 31, 2013 | Jun. 25, 2013 | Jun. 25, 2013 | Jun. 25, 2013 | Jan. 23, 2014 | Jan. 23, 2014 | Jan. 23, 2014 | Jan. 23, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | Nov. 14, 2013 | Dec. 31, 2013 | Nov. 14, 2013 | Nov. 14, 2013 | Feb. 27, 2013 | Dec. 31, 2013 | Feb. 27, 2013 | Dec. 31, 2013 | Feb. 27, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Collaterized loan obligation secured notes | CLO 2005-1 senior secured notes | CLO 2005-1 senior secured notes | CLO 2005-2 senior secured notes | CLO 2005-2 senior secured notes | CLO 2006-1 senior secured notes | CLO 2006-1 senior secured notes | CLO 2007-1 senior secured notes | CLO 2007-1 senior secured notes | CLO 2007-1 mezzanine notes | CLO 2007-1 mezzanine notes | CLO 2007-1 subordinated notes | CLO 2007-1 subordinated notes | CLO 2007-A senior secured notes | CLO 2007-A senior secured notes | CLO 2007-A subordinated notes | CLO 2007-A subordinated notes | CLO 2011-1 senior debt | CLO 2011-1 senior debt | CLO 2012-1 senior secured notes | CLO 2012-1 senior secured notes | CLO 2012-1 subordinated notes | CLO 2012-1 subordinated notes | CLO 2013-1 senior secured notes | CLO 2013-1 senior secured notes | CLO 2013-2 senior secured notes | CLO 2013-2 senior secured notes | CLO 9 senior secured notes | CLO 9 senior secured notes | CLO 9 senior secured notes | CLO 9 subordinated notes | CLO 9 subordinated notes | CLO 9 subordinated notes | 8.375% Senior Notes | 8.375% Senior Notes | 7.500% Senior notes | 7.500% Senior notes | Junior subordinated notes | Junior subordinated notes | Collaterized loan obligation secured notes | CLO 2005-1 senior secured notes | CLO 2005-2 senior secured notes | CLO 2006-1 senior secured notes | CLO 2007-1 senior secured notes | CLO 2007-1 mezzanine notes | CLO 2007-1 subordinated notes | CLO 2007-A senior secured notes | CLO 2007-A mezzanine notes | CLO 2007-A subordinated notes | CLO 2011-1 senior debt | CLO 2011-1 senior debt | CLO 2012-1 senior secured notes | CLO 2012-1 subordinated notes | CLO 2013-1 senior secured notes | CLO 2013-1 senior secured notes | CLO 2013-1 senior secured notes | CLO 2013-1 senior secured notes | CLO 2013-1 senior secured notes | CLO 2013-2 senior secured notes | CLO 2013-2 senior secured notes | CLO 2013-2 senior secured notes | CLO 2013-2 senior secured notes | 2015 Facility | 2015 Facility | 2015 Natural Resources Facility | 2015 Natural Resources Facility | 2015 Natural Resources Facility | 2015 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | Total credit facilities | 8.375% Senior Notes | 7.500% Senior notes | Junior subordinated notes | |||
Nonaffiliates | Nonaffiliates | Nonaffiliates | Nonaffiliates | LIBOR | Minimum | Maximum | Minimum | Minimum | Maximum | Maximum | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LIBOR | LIBOR | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of Company's borrowings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Par | ' | $5,478,539,000 | ' | $200,058,000 | ' | $258,369,000 | ' | $224,947,000 | ' | $2,024,737,000 | ' | $489,723,000 | ' | $134,468,000 | ' | $63,902,000 | ' | $15,096,000 | ' | $405,239,000 | ' | $367,500,000 | ' | $18,000,000 | ' | $458,500,000 | ' | $339,250,000 | ' | $463,750,000 | ' | ' | $15,000,000 | ' | ' | $258,750,000 | ' | $115,043,000 | ' | $283,517,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Par | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 463,800,000 | ' | ' | 15,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 519,400,000 | ' | 458,500,000 | ' | 384,000,000 | ' | 339,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Collateralized loan obligation secured debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,249,383,000 | ' | 193,909,000 | 335,570,000 | 384,925,000 | 2,075,040,000 | 406,428,000 | 136,097,000 | 428,152,000 | 55,327,000 | 15,096,000 | ' | 388,703,000 | 362,727,000 | 18,000,000 | ' | 449,409,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Credit facilities | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 125,289,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75,000,000 | ' | ' | 50,289,000 | ' | ' | ' | 0 | ' | ' | ' | ' | 125,289,000 | ' | ' | ' |
Senior notes | 414,905,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 362,276,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 250,800,000 | 111,476,000 | ' |
Junior subordinated notes | 246,484,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 283,517,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 283,517,000 |
Total borrowings | 6,135,849,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 291,163,000 | ' | 123,742,000 | ' | 246,484,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total borrowings, carrying value | ' | 5,443,586,000 | ' | 199,895,000 | ' | 256,965,000 | ' | 224,303,000 | ' | 2,008,230,000 | ' | 483,296,000 | ' | 128,592,000 | ' | 63,895,000 | ' | 39,850,000 | ' | 405,239,000 | ' | 366,269,000 | ' | 14,586,000 | ' | 446,590,000 | ' | 334,435,000 | ' | 457,730,000 | ' | ' | 13,711,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total borrowings, carrying value | 6,104,975,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6,020,465,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted Average Borrowing Rate (as a percent) | ' | ' | ' | 1.79% | ' | 0.67% | ' | 1.10% | ' | 0.79% | ' | 3.84% | ' | 13.30% | ' | 7.73% | ' | 10.35% | ' | 1.58% | ' | 2.33% | ' | 15.40% | ' | 1.97% | ' | 2.22% | ' | 2.24% | ' | ' | ' | ' | ' | 8.38% | ' | 7.50% | ' | 5.39% | ' | ' | 0.73% | 0.63% | 0.69% | 0.79% | 3.65% | 18.15% | 1.57% | 7.44% | 42.22% | ' | 1.25% | 2.34% | 11.67% | ' | 1.98% | ' | ' | ' | ' | ' | ' | ' | 1.39% | ' | ' | 2.42% | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8.38% | 7.50% | 5.39% |
Weighted Average Remaining Maturity | ' | ' | '939 days | ' | '1153 days | ' | '1425 days | ' | '2419 days | ' | '2419 days | ' | '2419 days | ' | '1111 days | ' | '1111 days | ' | '1415 days | ' | '3729 days | ' | '3729 days | ' | '3941 days | ' | '4133 days | ' | '4398 days | ' | ' | '4398 days | ' | ' | '9908 days | ' | '10033 days | ' | '8041 days | ' | ' | ' | '1212 days | '1426 days | '1698 days | '2692 days | '2692 days | '2692 days | '1384 days | '1384 days | '1384 days | ' | '1688 days | '4002 days | '4002 days | ' | '4214 days | ' | ' | ' | ' | ' | ' | ' | '699 days | ' | ' | '674 days | ' | ' | ' | '1519 days | ' | ' | ' | ' | ' | '10181 days | '10306 days | '8347 days |
Total borrowings, fair value of collateral | $6,441,056,000 | $6,441,056,000 | ' | $243,376,000 | ' | $400,937,000 | ' | $460,164,000 | ' | $2,335,665,000 | ' | $564,927,000 | ' | $155,117,000 | ' | $62,924,000 | ' | $14,865,000 | ' | $515,671,000 | ' | $366,628,000 | ' | $17,957,000 | ' | $479,944,000 | ' | $350,048,000 | ' | $458,018,000 | ' | ' | $14,815,000 | ' | ' | ' | ' | ' | ' | ' | $6,645,905,000 | $6,431,970,000 | $303,104,000 | $496,917,000 | $649,894,000 | $2,354,938,000 | $461,250,000 | $154,456,000 | $540,677,000 | $69,867,000 | $19,063,000 | ' | $517,597,000 | $376,603,000 | $18,689,000 | ' | $468,915,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $213,935,000 | ' | ' | ' | ' | ' | ' | ' | ' | $213,935,000 | ' | ' | ' |
Debt, variable interest rate basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'three-month LIBOR | ' | ' | ' | 'three-month LIBOR | ' | ' | ' | ' | 'three-month LIBOR | ' | ' | ' | ' | 'LIBOR | 'LIBOR | ' | ' | ' | 'LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.35% | ' | ' | ' | ' | ' | ' | 1.67% | ' | ' | ' | 2.16% | ' | ' | 2.25% | ' | ' | 1.75% | 2.75% | ' | ' | 1.75% | 1.75% | 3.25% | 3.25% | ' | ' | ' | ' |
BORROWINGS_Details_2
BORROWINGS (Details 2) (USD $) | 5 Months Ended | 3 Months Ended | 5 Months Ended | 3 Months Ended | 5 Months Ended | 1 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 0 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 0 Months Ended | 4 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 0 Months Ended | 4 Months Ended | |||||||||||||||
Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 16, 2014 | Sep. 16, 2014 | Sep. 16, 2014 | Sep. 16, 2014 | Oct. 31, 2014 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 27, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 27, 2013 | Sep. 27, 2013 | Apr. 30, 2014 | Apr. 30, 2014 | Apr. 30, 2014 | Jan. 23, 2014 | Jan. 23, 2014 | Jan. 23, 2014 | Jan. 23, 2014 | Jun. 25, 2013 | Jun. 25, 2013 | Jun. 25, 2013 | Jun. 25, 2013 | Apr. 30, 2014 | Apr. 30, 2014 | |
Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Senior Notes Non-Called Legacy CLO | Senior Notes Non-Called Legacy CLO | CLO 2007-A senior secured an junior secured mezzanine notes | CLO 2007-A senior secured an junior secured mezzanine notes | CLO 2011-1 senior debt | CLO 2007-1 Class E secured notes | CLO 2006-1 Class E secured notes | CLO 9 notes | CLO 9 senior secured notes | CLO 9 senior secured notes | CLO 9 subordinated notes | Subsequent Event | Senior Notes Non-Called Legacy CLO | Senior Notes Non-Called Legacy CLO | Senior Notes Non-Called Legacy CLO | CLO 2011-1 senior debt | CLO 2011-1 senior debt | CLO 2011-1 senior debt | CLO 2011-1 senior debt | CLO 2011-1 senior debt | CLO 2011-1 senior debt | CLO 2007-1 Class E secured notes | CLO 2007-A Class G secured notes | CLO 2007-A Class H secured notes | CLO 2013-2 senior secured notes | CLO 2013-2 senior secured notes | CLO 2013-2 senior secured notes | CLO 2013-2 senior secured notes | CLO 2013-1 senior secured notes | CLO 2013-1 senior secured notes | CLO 2013-1 senior secured notes | CLO 2013-1 senior secured notes | Class D and Class E Secured Notes 2007 C L O A [Member] | CLO 2005-1 Class D through F secured notes | ||||
LIBOR | 2007 CLO-A mezzanine notes | Maximum | Nonaffiliates | Nonaffiliates | Nonaffiliates | Nonaffiliates | |||||||||||||||||||||||||||||||
Details of Company's borrowings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Collateralized loan obligation secured debt repaid | $778,866,000 | $104,400,000 | $301,300,000 | $431,000,000 | $431,000,000 | $46,600,000 | ' | ' | ' | ' | ' | ' | $63,900,000 | $221,914,000 | $774,302,000 | $190,800,000 | $182,600,000 | $697,100,000 | ' | $31,700,000 | $39,400,000 | $77,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Par amount of notes issued | ' | ' | ' | ' | ' | ' | 37,500,000 | 15,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 21,900,000 | 29,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 61,100,000 | 72,000,000 |
Proceeds from senior notes | ' | ' | ' | ' | ' | ' | 37,600,000 | 15,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 21,900,000 | 30,200,000 | 30,100,000 | ' | ' | ' | ' | ' | ' | ' | ' | 61,300,000 | 71,500,000 |
Increase in the maximum borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 300,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Increase in current borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 225,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Par amount of notes issued | ' | ' | ' | ' | ' | ' | ' | ' | 518,000,000 | 463,800,000 | ' | 15,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 29,800,000 | ' | 384,000,000 | ' | 339,300,000 | ' | 519,400,000 | ' | 458,500,000 | ' | ' |
Floating rate senior secured note | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.01 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 319,300,000 | ' | ' | ' | 442,000,000 | ' | ' |
Debt, variable interest rate basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'three-month LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | 'three-month LIBOR | ' | ' | ' | 'three-month LIBOR | ' | ' | ' | ' | ' |
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.35% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.16% | ' | ' | ' | 1.67% | ' | ' | ' |
Fixed rate senior secured note | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $20,000,000 | ' | ' | ' | $16,500,000 | ' | ' |
Fixed rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.74% | ' | ' | ' | 3.73% | ' | ' |
BORROWINGS_Details_3
BORROWINGS (Details 3) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | Dec. 31, 2013 | Nov. 30, 2012 | Nov. 30, 2012 | Nov. 30, 2012 | 20-May-14 | Nov. 14, 2013 | 20-May-14 | Dec. 31, 2013 | Nov. 14, 2013 | Nov. 14, 2013 | Feb. 27, 2013 | 15-May-14 | Dec. 31, 2013 | Feb. 27, 2013 | Feb. 27, 2013 | Dec. 31, 2013 | Feb. 27, 2013 | Dec. 31, 2013 |
Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
2015 Facility | 2015 Facility | 2015 Facility | 2015 Facility | 2015 Facility | 2015 Natural Resources Facility | 2015 Natural Resources Facility | 2015 Natural Resources Facility | 2015 Natural Resources Facility | 2015 Natural Resources Facility | 2015 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | |||
LIBOR | Alternate base rate | Minimum | Maximum | Minimum | Minimum | Maximum | Maximum | ||||||||||||||
LIBOR | LIBOR | ||||||||||||||||||||
Details of Company's borrowings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Credit facility term | ' | ' | '3 years | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' |
Current borrowing capacity under line of credit facility | ' | ' | ' | ' | $150,000,000 | ' | ' | ' | ' | $75,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 68,500,000 | ' | 6,000,000 | ' | ' | ' | ' |
Amount outstanding | $0 | $125,289,000 | ' | $75,000,000 | ' | ' | ' | ' | ' | ' | $50,289,000 | ' | ' | ' | ' | $0 | ' | ' | ' | ' | ' |
Debt, variable interest rate basis | ' | ' | ' | ' | ' | 'LIBOR | 'alternate base rate | ' | 'LIBOR | ' | ' | ' | ' | 'LIBOR | ' | ' | ' | ' | ' | ' | ' |
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | ' | ' | ' | ' | ' | 2.25% | 1.25% | ' | ' | ' | ' | 1.75% | 2.75% | ' | ' | ' | ' | 1.75% | 1.75% | 3.25% | 3.25% |
BORROWINGS_Details_4
BORROWINGS (Details 4) (Predecessor Company, USD $) | 9 Months Ended | 0 Months Ended | |
Share data in Millions, unless otherwise specified | Sep. 30, 2013 | Jan. 18, 2013 | Jan. 18, 2013 |
7 500% convertible senior notes | 7 500% convertible senior notes | ||
Details of Company's borrowings | ' | ' | ' |
Interest rate (as a percent) | ' | ' | 7.50% |
Convertible senior notes issued, principal amount | ' | ' | $172,500,000 |
Conversion rate of common stock shares per $1,000 principal amount (in shares per USD) | ' | 141.8256 | ' |
Principal amount used for debt instrument conversion ratio | ' | ' | 1,000 |
Conversion rate of additional common shares issued upon conversion per $1,000 principal amount to account for the make-whole premium (in shares per USD) | ' | 9.2324 | ' |
Amount of debt that had been tendered for conversion | $186,254,000 | $172,500,000 | ' |
Number of common shares of the entity issued in exchange of convertible notes (in shares) | ' | 26.1 | ' |
DERIVATIVE_INSTRUMENTS_Details
DERIVATIVE INSTRUMENTS (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company |
Cash Flow Hedges: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | Cash Flow Hedges: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | |||
Interest rate swaps | Interest rate swaps | Commodity swaps | Credit default swaps-protection purchased | Foreign exchange forward contracts | Foreign exchange options | Common stock warrants | Total Rate of Return Swaps | Options | Interest rate swaps | Commodity swaps | Credit default swaps-protection purchased | Foreign exchange forward contracts | Foreign exchange options | Common stock warrants | Total Rate of Return Swaps | Options | |||
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notional amount | ' | $0 | $442,833 | $0 | $0 | ($372,015) | $0 | $0 | $0 | $0 | ' | $478,333 | ' | ($100,000) | ($320,380) | $129,900 | ' | ' | ' |
Estimated Fair Value | ($22,011) | $0 | ($45,556) | $26 | $0 | $17,248 | $0 | $0 | $233 | $6,038 | ($51,411) | ($42,078) | $1,493 | ($2,019) | ($25,258) | $8,941 | $945 | ($229) | $6,794 |
DERIVATIVE_INSTRUMENTS_Details1
DERIVATIVE INSTRUMENTS (Details 2) (Predecessor Company, USD $) | 3 Months Ended | 4 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 |
Predecessor Company | ' | ' | ' |
Net (losses) gains recognized in accumulated other comprehensive loss on cash flow hedges | ' | ' | ' |
Net (losses) gains recognized in accumulated other comprehensive loss on cash flow hedges | $6,813 | ($5,442) | $38,211 |
DERIVATIVE_INSTRUMENTS_Details2
DERIVATIVE INSTRUMENTS (Details 3) (USD $) | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | Successor Company | Successor Company | Predecessor Company | Predecessor Company |
Foreign exchange options and forward contracts | Free-Standing Derivatives: | Foreign exchange options and forward contracts | Free-Standing Derivatives: | |
Credit default swaps-protection purchased | Credit default swaps-protection purchased | |||
Notional amount | ' | ' | ' | ' |
Notional amount | ' | $0 | ' | ($100,000) |
Notional amount of liability | $372,015 | ' | $190,500 | ' |
DERIVATIVE_INSTRUMENTS_Details3
DERIVATIVE INSTRUMENTS (Details 4) (Free-Standing Derivatives:, USD $) | 3 Months Ended | 5 Months Ended | 3 Months Ended | 5 Months Ended | 3 Months Ended | 5 Months Ended | 3 Months Ended | 5 Months Ended | 3 Months Ended | 5 Months Ended | 3 Months Ended | 5 Months Ended | 3 Months Ended | 5 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 |
Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Interest rate swaps | Interest rate swaps | Commodity swaps | Commodity swaps | Foreign exchange options and forward contracts | Foreign exchange options and forward contracts | Common stock warrants | Common stock warrants | Total Rate of Return Swaps | Total Rate of Return Swaps | Options | Options | Commodity swaps | Commodity swaps | Commodity swaps | Credit Default Swaps | Credit Default Swaps | Credit Default Swaps | Foreign exchange options and forward contracts | Foreign exchange options and forward contracts | Foreign exchange options and forward contracts | Common stock warrants | Common stock warrants | Common stock warrants | Total Rate of Return Swaps | Total Rate of Return Swaps | Total Rate of Return Swaps | Options | Options | Options | ||||||
Effect on income from free-standing derivatives | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Realized gains (losses) | ($10,679) | ($13,682) | ' | ' | $338 | ($1,194) | ($11,489) | ($13,129) | $1,237 | $1,237 | ($765) | ($596) | ' | ' | $506 | ($9,099) | $608 | ($78) | ($2,515) | $1,008 | ($365) | ($2,167) | ($3,526) | $502 | ($2,068) | $2,770 | ' | ' | ' | $447 | ($2,349) | $447 | $0 | $0 | ($91) |
Unrealized gains (losses) | 10,831 | 4,670 | 2,892 | 1,767 | 2,678 | -672 | 6,082 | 5,124 | -1,077 | -1,082 | 392 | 179 | -136 | -646 | -3,568 | -684 | -5,620 | -3,645 | -5,856 | -2,725 | -967 | 1,986 | 552 | 1,444 | 2,784 | -4,929 | -1,219 | 137 | 540 | 729 | 284 | 729 | 90 | -19 | 213 |
Total | $152 | ($9,012) | $2,892 | $1,767 | $3,016 | ($1,866) | ($5,407) | ($8,005) | $160 | $155 | ($373) | ($417) | ($136) | ($646) | ($3,062) | ($9,783) | ($5,012) | ($3,723) | ($8,371) | ($1,717) | ($1,332) | ($181) | ($2,974) | $1,946 | $716 | ($2,159) | ($1,219) | $137 | $540 | $1,176 | ($2,065) | $1,176 | $90 | ($19) | $122 |
FAIR_VALUE_OF_FINANCIAL_INSTRU2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Apr. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Apr. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Unobservable Inputs (Level 3) | Carrying Amount | Estimated Fair Value | Proved oil and natural gas properties | Corporate Loans | Corporate Loans | Corporate Loans | Corporate Loans | Corporate Loans | Corporate Loans Held for Sale | Corporate Loans Held for Sale | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Carrying Amount | Carrying Amount | Estimated Fair Value | Estimated Fair Value | |||
Proved oil and natural gas properties | Proved oil and natural gas properties | ||||||||||||||||||||
Assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash, restricted cash, and cash equivalents | ' | $1,059,825,000 | ' | $1,059,825,000 | $1,059,825,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | $507,552,000 | ' | ' | $507,552,000 | ' | $507,552,000 | ' |
Corporate loans, net of allowance for loan losses of $224,999 as of December 31, 2013 | 6,354,143,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,691,988,000 | 359,653,000 | 5,949,492,000 | ' | 6,051,641,000 | ' |
Allowances for loan losses | ' | ' | ' | ' | ' | 224,999,000 | ' | 223,541,000 | 224,999,000 | 212,594,000 | 203,255,000 | 223,472,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Corporate loans held for sale | ' | ' | ' | ' | ' | 279,748,000 | ' | ' | ' | ' | ' | ' | 546,100,000 | 312,300,000 | ' | 267,169,000 | 14,109,000 | 279,748,000 | ' | 281,278,000 | ' |
Private equity investments, at cost | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,496,000 | 405,000 | ' | 4,496,000 | ' |
Other assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,513,000 | ' | 5,763,000 | ' | 5,513,000 | ' |
Liabilities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Collateralized loan obligation secured debt | ' | ' | ' | ' | ' | 5,249,383,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,179,207,000 | 5,249,383,000 | ' | 5,179,207,000 | ' |
Credit facilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 125,289,000 | 125,289,000 | ' | 125,289,000 | ' |
Senior notes | 414,905,000 | 412,571,000 | ' | 414,905,000 | 412,571,000 | 362,276,000 | ' | ' | ' | ' | ' | ' | ' | ' | 393,772,000 | ' | ' | 362,276,000 | ' | 393,772,000 | ' |
Junior subordinated notes | 246,484,000 | ' | 243,394,000 | 246,484,000 | 243,394,000 | 283,517,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 247,416,000 | 283,517,000 | ' | 247,416,000 | ' |
Oil and natural gas properties | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Impairment charges of oil and natural gas properties | ' | ' | ' | ' | ' | ' | 10,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Oil and natural gas properties | $122,630,000 | ' | ' | ' | ' | $400,369,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $16,100,000 | ' | $5,700,000 |
FAIR_VALUE_OF_FINANCIAL_INSTRU3
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) (USD $) | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Apr. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company |
Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Equity investments, at estimated fair value | Estimated Fair Value | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | Recurring basis | |||
Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Portion at estimated fair value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | |||||||
Residential mortgage-backed securities | Corporate debt securities | Interest rate swaps | Commodity swaps | Foreign exchange forward contracts | Total Rate of Return Swaps | Options | Corporate debt securities | Interest rate swaps | Commodity swaps | Foreign exchange forward contracts | Total Rate of Return Swaps | Residential mortgage-backed securities | Corporate debt securities | Options | Other securities, at estimated fair value. | Residential mortgage-backed securities | Interest rate swaps | Commodity swaps | Credit default swaps-protection purchased | Foreign exchange forward contracts | Foreign exchange options | Common stock warrants | Total Rate of Return Swaps | Options | Other securities, at estimated fair value. | Interest rate swaps | Commodity swaps | Credit default swaps-protection purchased | Foreign exchange forward contracts | Common stock warrants | Total Rate of Return Swaps | Portion at estimated fair value | Other securities, at estimated fair value. | Residential mortgage-backed securities | Foreign exchange options | Options | Portion at estimated fair value | ||||||||||||||||
Assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Securities available-for-sale | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $350,341 | ' | ' | ' | ' | $350,341 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $326,940 | ' | ' | ' | ' | ' | $23,401 |
Trading securities | ' | ' | 57,146 | 532,014 | ' | ' | ' | ' | ' | ' | ' | 317,471 | ' | ' | ' | ' | ' | 57,146 | 214,543 | ' | ' | ' | ' | ' | ' | ' | ' | 146,967 | 76,004 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 39,437 | ' | ' | ' | ' | ' | ' | ' | ' | 107,530 | 76,004 | ' | ' | ' |
Total securities | 589,160 | 589,160 | ' | ' | ' | ' | ' | ' | ' | ' | 317,471 | ' | ' | ' | ' | ' | 271,689 | ' | ' | ' | 573,312 | ' | ' | ' | ' | ' | 573,312 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 366,377 | ' | ' | ' | ' | ' | ' | ' | ' | 206,935 | ' | ' | ' | ' | ' |
Corporate loans | 6,354,143 | 6,354,143 | ' | ' | ' | ' | ' | ' | ' | ' | 6,066,376 | ' | ' | ' | ' | ' | 287,767 | ' | ' | ' | 237,480 | ' | ' | ' | ' | ' | 237,480 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 84,680 | ' | ' | ' | ' | ' | ' | ' | ' | 152,800 | ' | ' | ' | ' | ' |
Equity investments, at estimated fair value | 162,759 | 162,759 | ' | ' | ' | ' | ' | ' | ' | 16,936 | 104,053 | ' | ' | ' | ' | ' | 41,770 | ' | ' | ' | 181,212 | 16,100 | ' | ' | ' | ' | 181,212 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 39,515 | 3,638 | ' | ' | ' | ' | ' | ' | ' | ' | 138,059 | ' | ' | ' | ' | ' |
Interests in joint ventures and partnerships | 745,005 | 745,005 | ' | ' | ' | ' | ' | ' | ' | ' | 7,684 | ' | ' | ' | ' | ' | 737,321 | ' | ' | ' | 436,241 | ' | ' | ' | ' | ' | 430,083 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 14,836 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 415,247 | ' | ' | ' | ' | ' |
Other assets | ' | 5,405 | ' | ' | ' | ' | ' | ' | ' | ' | 5,405 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,513 | 5,513 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Derivatives: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Derivative assets | ' | ' | ' | ' | 419 | 26 | 19,061 | 233 | 6,038 | ' | ' | ' | 419 | 26 | 19,061 | 233 | ' | ' | ' | 6,038 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,290 | 5,408 | ' | 4,846 | 8,941 | 945 | ' | 6,794 | ' | ' | ' | 3,290 | 5,408 | ' | 4,846 | 945 | ' | ' | ' | ' | ' | 8,941 | 6,794 | ' |
Total derivatives | 25,777 | 25,777 | ' | ' | ' | ' | ' | ' | ' | ' | 19,739 | ' | ' | ' | ' | ' | 6,038 | ' | ' | ' | 30,224 | ' | ' | ' | ' | ' | 30,224 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 14,489 | ' | ' | ' | ' | ' | ' | ' | ' | 15,735 | ' | ' | ' | ' | ' |
Total | ' | 7,882,249 | ' | ' | ' | ' | ' | ' | ' | 16,936 | 6,520,728 | ' | ' | ' | ' | ' | 1,344,585 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,452,311 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 54,351 | 469,184 | ' | ' | ' | ' | ' | ' | ' | ' | 928,776 | ' | ' | ' | ' | ' |
Liabilities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Collateralized loan obligation secured notes | 6,135,849 | 5,443,586 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,443,586 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Collateralized loan obligation secured debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,249,383 | ' | 5,179,207 | ' | 5,179,207 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Derivatives: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Derivative liabilities | ' | ' | ' | ' | 45,975 | ' | 1,813 | ' | ' | ' | ' | ' | 45,975 | ' | 1,813 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 45,368 | 3,915 | 2,019 | 30,104 | ' | ' | 229 | ' | ' | ' | ' | 45,368 | 3,915 | 2,019 | 30,104 | ' | 229 | ' | ' | ' | ' | ' | ' | ' |
Total derivatives | 47,788 | 47,788 | ' | ' | ' | ' | ' | ' | ' | ' | 47,788 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 81,635 | ' | ' | ' | ' | ' | 81,635 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 81,635 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total | ' | $5,491,374 | ' | ' | ' | ' | ' | ' | ' | ' | $47,788 | ' | ' | ' | ' | ' | $5,443,586 | ' | ' | ' | ' | ' | ' | ' | ' | ' | $81,635 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $81,635 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
FAIR_VALUE_OF_FINANCIAL_INSTRU4
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 3) (Predecessor Company, USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Assets and liabilities measured at fair value on a recurring and non- recurring basis | ' |
Net carrying value | $6,466,720 |
Corporate Loans Held for Sale | ' |
Assets and liabilities measured at fair value on a recurring and non- recurring basis | ' |
Net carrying value | 279,748 |
Amortized Cost | Corporate Loans Held for Sale | ' |
Assets and liabilities measured at fair value on a recurring and non- recurring basis | ' |
Loans held for sale | 183,600 |
Non-recurring basis | Significant Other Observable Inputs (Level 2) | ' |
Assets and liabilities measured at fair value on a recurring and non- recurring basis | ' |
Loans held for sale | 90,485 |
Asset, fair value | 90,485 |
Non-recurring basis | Significant Unobservable Inputs (Level 3) | ' |
Assets and liabilities measured at fair value on a recurring and non- recurring basis | ' |
Loans held for sale | 5,568 |
Asset, fair value | 5,568 |
Non-recurring basis | Estimated Fair Value | ' |
Assets and liabilities measured at fair value on a recurring and non- recurring basis | ' |
Loans held for sale | 96,053 |
Asset, fair value | $96,053 |
FAIR_VALUE_OF_FINANCIAL_INSTRU5
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 4) (USD $) | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Apr. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 |
In Thousands, unless otherwise specified | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company |
Collateralized loan obligation secured notes | Collateralized loan obligation secured notes | Collateralized loan obligation secured notes | Corporate debt securities | Corporate debt securities | Corporate debt securities | Residential mortgage-backed securities | Residential mortgage-backed securities | Residential mortgage-backed securities | Corporate Loans, at Estimated Fair Value | Corporate Loans, at Estimated Fair Value | Corporate Loans, at Estimated Fair Value | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Foreign exchange options | Foreign exchange options | Options | Options | Options | Securities | Securities | Securities | Securities | Securities | Other Securities, at Estimated Fair Value | Other Securities, at Estimated Fair Value | Other Securities, at Estimated Fair Value | Other Securities, at Estimated Fair Value | Other Securities, at Estimated Fair Value | Residential mortgage-backed securities | Residential mortgage-backed securities | Residential mortgage-backed securities | Residential mortgage-backed securities | Residential mortgage-backed securities | Corporate Loans, at Estimated Fair Value | Corporate Loans, at Estimated Fair Value | Corporate Loans, at Estimated Fair Value | Corporate Loans, at Estimated Fair Value | Corporate Loans, at Estimated Fair Value | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Foreign exchange options | Foreign exchange options | Foreign exchange options | Foreign exchange options | Foreign exchange options | Common stock warrants | Common stock warrants | Options | Options | Options | Options | Options | ||||
Reconciliation of assets measured on Level 3 basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at the beginning of the period | ' | $5,663,665 | $5,547,914 | $5,663,665 | $156,500 | $169,592 | $156,500 | $59,623 | $59,242 | $59,623 | $294,218 | $300,282 | $294,218 | $157,765 | $141,160 | $157,765 | $472,467 | $515,556 | $472,467 | $8,854 | $7,056 | $6,684 | $6,175 | $6,684 | ' | ' | $23,528 | $23,401 | $37,380 | $23,401 | $42,221 | $125,511 | $107,530 | $27,872 | $107,530 | $2,909 | $58,753 | $76,004 | $82,973 | $76,004 | $83,842 | $153,395 | $152,800 | $45,936 | $152,800 | $16,141 | $258,977 | $138,059 | $100,294 | $138,059 | $97,746 | $494,420 | $415,247 | $235,024 | $415,247 | $142,477 | $8,128 | $8,941 | $5,751 | $8,941 | $8,277 | $3,561 | $1,574 | $6,492 | $6,794 | ' | $6,794 | ' |
Total gain or losses (for the period) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Included in earnings | ' | 28,669 | 5,468 | ' | 2,185 | -7,751 | ' | 1,359 | 1,421 | ' | 2,951 | -10,084 | ' | 2,160 | -3,265 | ' | 21,690 | 8,639 | ' | -1,798 | -7,056 | -509 | -137 | ' | ' | ' | 44 | 22 | 297 | ' | 279 | 479 | 3,059 | 1,384 | ' | 2,656 | 1,416 | 3,088 | 1,747 | ' | 7,301 | 1,240 | -5,123 | 497 | ' | -555 | 12,126 | 9,076 | 5,558 | ' | 8,648 | -24,158 | 22,377 | 3,739 | ' | 7,646 | 726 | -813 | 2,180 | ' | -346 | -1,475 | 512 | 192 | -302 | 90 | ' | 90 |
Included in other comprehensive income | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 33 | 121 | 338 | ' | 559 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Transfers into Level 3 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6,937 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Transfers out of Level 3 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -1,230 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -119,033 | -8,751 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchases | ' | 52,594 | 471,441 | ' | 20,000 | 29,780 | ' | ' | ' | ' | 1,261 | 1,327 | ' | ' | ' | ' | 27,466 | 15,381 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25,000 | 8,100 | ' | 31,791 | ' | ' | ' | ' | ' | ' | 8,822 | 37,959 | ' | 69,727 | ' | ' | 5,000 | ' | 5,003 | 1,615 | 42,683 | 132,198 | ' | 229,862 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,790 | ' | 8,790 |
Sales | ' | ' | ' | ' | -3,966 | -6,870 | ' | ' | ' | ' | -2,912 | ' | ' | ' | ' | ' | ' | -13,795 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -17,810 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -198 | ' | -198 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Settlements | ' | -197,014 | -581,237 | ' | -5,127 | 29,792 | ' | -1,740 | -3,517 | ' | 4,764 | -3,758 | ' | -17,535 | -96,125 | ' | -6,067 | 211,540 | ' | ' | ' | ' | ' | ' | ' | ' | -32 | -16 | 936 | ' | -4,108 | ' | -10,078 | -1,154 | ' | -1,154 | -546 | -2,529 | -5,334 | ' | -11,757 | 2,272 | -3,104 | 89 | ' | -832 | ' | 120,593 | ' | ' | -545 | -1,184 | 14,113 | -38,040 | ' | -47,064 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at the end of the period | ' | 5,547,914 | 5,443,586 | 5,443,586 | 169,592 | 214,543 | 214,543 | 59,242 | 57,146 | 57,146 | 300,282 | 287,767 | 287,767 | 141,160 | 41,770 | 41,770 | 515,556 | 737,321 | 737,321 | 7,056 | ' | 6,175 | 6,038 | 6,038 | ' | ' | 30,510 | 23,528 | 38,951 | 30,510 | 38,951 | 125,990 | 125,511 | 36,202 | 125,990 | 36,202 | 59,623 | 58,753 | 79,386 | 59,623 | 79,386 | 156,907 | 153,395 | 84,841 | 156,907 | 84,841 | 152,070 | 258,977 | 110,654 | 152,070 | 110,654 | 470,693 | 494,420 | 332,921 | 470,693 | 332,921 | 8,854 | 8,128 | 7,931 | 8,854 | 7,931 | 2,086 | 2,086 | 6,684 | 6,492 | 8,880 | 6,684 | 8,880 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | ' | ' | 5,324 | 33,993 | ' | -7,751 | -5,566 | ' | -185 | 438 | ' | -10,084 | -7,092 | ' | -3,265 | 109 | ' | 8,639 | 26,272 | ' | ' | ' | -137 | -646 | ' | ' | ' | ' | 297 | 66 | 279 | ' | ' | 1,384 | 2,683 | 2,656 | ' | ' | 5,868 | 5,242 | 21,565 | ' | ' | 497 | 4,445 | -851 | ' | ' | 5,857 | 20,499 | 8,947 | ' | ' | 3,739 | -1,781 | 7,646 | ' | ' | 2,180 | -87 | -346 | -1,475 | 513 | ' | ' | 90 | -110 | 90 |
Transfers from Level 1 into Level 2 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Transfers from Level 2 into Level 1 | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0 | $0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
FAIR_VALUE_OF_FINANCIAL_INSTRU6
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 5) (USD $) | 3 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Minimum | Maximum | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Minimum | Maximum | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | |
Collateralized loan obligation secured notes | Corporate debt securities | Residential mortgage-backed securities | Corporate Loans, at Estimated Fair Value | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Interests in Joint Ventures and Partnerships | Options | Yield analysis | Yield analysis | Yield analysis | Yield analysis | Yield analysis | Yield analysis | Yield analysis | Yield analysis | Yield analysis | Yield analysis | Broker quotes | Broker quotes | Broker quotes | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Market comparables | Market comparables | Market comparables | Market comparables | Market comparables | Market comparables | Market comparables | Market comparables | Market comparables | Inputs to both market comparables and discounted cash flow | Inputs to both market comparables and discounted cash flow | Inputs to both market comparables and discounted cash flow | Inputs to both market comparables and discounted cash flow | Inputs to both market comparables and discounted cash flow | Inputs to both market comparables and discounted cash flow | Inputs to both market comparables and discounted cash flow | Inputs to both market comparables and discounted cash flow | Foreign exchange options | Securities | Other Securities, at Estimated Fair Value | Residential mortgage-backed securities | Corporate Loans, at Estimated Fair Value | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Interests in Joint Ventures and Partnerships | Options | Yield analysis | Yield analysis | Yield analysis | Yield analysis | Yield analysis | Yield analysis | Yield analysis | Yield analysis | Yield analysis | Yield analysis | Broker quotes | Broker quotes | Broker quotes | Broker quotes | Broker quotes | Broker quotes | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Discounted cash flow | Market comparables | Market comparables | Market comparables | Market comparables | Market comparables | Market comparables | Market comparables | Market comparables | Market comparables | Inputs to both market comparables and discounted cash flow | Inputs to both market comparables and discounted cash flow | Inputs to both market comparables and discounted cash flow | Inputs to both market comparables and discounted cash flow | Inputs to both market comparables and discounted cash flow | Inputs to both market comparables and discounted cash flow | Inputs to both market comparables and discounted cash flow | Inputs to both market comparables and discounted cash flow | Option pricing model | Option pricing model | Option pricing model | |||||
Minimum | Weighted Average | Minimum | Maximum | Corporate debt securities | Corporate debt securities | Corporate debt securities | Corporate debt securities | Corporate Loans, at Estimated Fair Value | Corporate Loans, at Estimated Fair Value | Corporate Loans, at Estimated Fair Value | Corporate debt securities | Corporate debt securities | Corporate debt securities | Weighted Average | Minimum | Maximum | Residential mortgage-backed securities | Residential mortgage-backed securities | Residential mortgage-backed securities | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Options | Options | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Options | Options | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Options | Options | Minimum | Securities | Securities | Securities | Other Securities, at Estimated Fair Value | Other Securities, at Estimated Fair Value | Other Securities, at Estimated Fair Value | Other Securities, at Estimated Fair Value | Corporate Loans, at Estimated Fair Value | Corporate Loans, at Estimated Fair Value | Corporate Loans, at Estimated Fair Value | Securities | Securities | Securities | Other Securities, at Estimated Fair Value | Other Securities, at Estimated Fair Value | Other Securities, at Estimated Fair Value | Residential mortgage-backed securities | Residential mortgage-backed securities | Residential mortgage-backed securities | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Options | Options | Options | Options | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Options | Options | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Equity investments, at estimated fair value | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships | Options | Options | Foreign exchange options | Foreign exchange options | Foreign exchange options | ||||||||||||||||||||
Collateralized loan obligation secured notes | Collateralized loan obligation secured notes | Collateralized loan obligation secured notes | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Collateralized loan obligation secured notes | Collateralized loan obligation secured notes | Collateralized loan obligation secured notes | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Weighted Average | Minimum | Maximum | Weighted Average | Minimum | Maximum | Weighted Average | Weighted Average | Minimum | Maximum | |||||||||||||||||||||||||||||||||
Valuation techniques used for assets, measured at fair value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Assets, fair value (in dollars) | ' | ' | ' | $214,543 | $57,146 | $287,767 | $41,770 | ' | $737,321 | $6,038 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $8,941 | $23,401 | $107,530 | $76,004 | $152,800 | $138,059 | ' | $415,247 | $6,794 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Liabilities, fair value (in dollars) | ' | ' | $5,443,586 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Yield | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12.00% | 3.00% | 14.00% | 10.00% | 3.00% | 18.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10.00% | 6.00% | 12.00% | ' | 12.00% | 7.00% | 17.00% | 16.00% | 14.00% | 23.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net leverage | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12 | 12 | ' | ' | 6 | 0 | 13 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12 | 11 | 12 | ' | 1 | 1 | 2 | 7 | 4 | 12 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Illiquidity discount | ' | ' | ' | ' | ' | ' | ' | 5.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5.00% | ' | ' | ' | ' | ' | 3.00% | 3.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weight ascribed to market comparables | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 95.00% | 0.00% | 100.00% | 50.00% | 0.00% | 100.00% | 50.00% | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50.00% | 33.00% | 100.00% | 50.00% | 50.00% | 100.00% | 50.00% | 50.00% | ' | ' | ' |
Weight ascribed to discounted cash flows | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 74.00% | 0.00% | 100.00% | 62.00% | 0.00% | 100.00% | 50.00% | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 59.00% | 50.00% | 100.00% | 50.00% | 50.00% | 100.00% | 50.00% | 50.00% | ' | ' | ' |
EBITDA multiple | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9 | 8 | 10 | 9 | 5 | 12 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8 | 8 | 9 | ' | 8 | 7 | 8 | 8 | 6 | 11 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Discount margin | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 270.00% | 90.00% | 1500.00% | ' | 890.00% | 830.00% | 950.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Offered quotes (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $102 | $101 | $104 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $105 | $104 | $105 | $102 | $101 | $102 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Probability of default | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.00% | 2.00% | 3.00% | 7.00% | 0.00% | 21.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7.00% | 0.00% | 21.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Loss severity | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 33.00% | 30.00% | 38.00% | 25.00% | 12.00% | 35.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 28.00% | 16.00% | 77.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Constant prepayment rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12.00% | 2.00% | 15.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 15.00% | 3.00% | 35.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
LTM EBITDA multiple | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8 | 5 | 12 | ' | 11 | 9 | 15 | 10 | 10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12 | 6 | 16 | 9 | 9 | ' | ' | 9 | 9 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Forward EBITDA multiple | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8 | 4 | 10 | 9 | 9 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12 | 10 | 14 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average cost of capital | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13.00% | 10.00% | 15.00% | ' | 11.00% | 8.00% | 18.00% | 13.00% | 13.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11.00% | 8.00% | 14.00% | 12.00% | 8.00% | 24.00% | 12.00% | 12.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Current capitalization rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7.00% | 6.00% | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7.00% | 6.00% | 9.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
LTM EBITDA exit multiple | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5 | 5 | ' | 10 | 10 | ' | ' | 11 | 11 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10 | 4 | 11 | ' | ' | ' | ' | 10 | 9 | 10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Forward and spot rates, Assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | 0 | 1 |
Weight ascribed to each valuation technique | 0.00% | -100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.00% | -100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 3 Months Ended | ||||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 |
item | Successor Company | Successor Company | Predecessor Company | Predecessor Company | |
Corporate Loans, at Estimated Fair Value | Corporate Loans | ||||
Guarantees | ' | ' | ' | ' | ' |
Non-recourse debt | ' | $331.50 | ' | $231.70 | ' |
Financial guarantees related to natural resources investments | ' | 0 | ' | 17.9 | ' |
Estimated future contributions for interests in joint ventures and partnerships | ' | 170.4 | ' | 325.5 | ' |
Aggregate par amounts to purchase corporate loans | ' | ' | ' | ' | 62.7 |
Unfunded financing commitments for corporate loans | ' | ' | $13.10 | ' | $17.40 |
Contingencies | ' | ' | ' | ' | ' |
Number of Delaware actions voluntarily dismissed | 2 | ' | ' | ' | ' |
SHAREHOLDERS_EQUITY_Details
SHAREHOLDERS' EQUITY (Details) (USD $) | Jun. 27, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Apr. 30, 2014 | Dec. 16, 2013 | Apr. 30, 2014 | Jan. 17, 2013 | Jan. 17, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Dec. 31, 2013 | Apr. 30, 2014 | Apr. 30, 2014 | Apr. 30, 2014 |
KKR & Co. | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Common share options | Common share options | KFN | KFN | Series A LLC Preferred Shares | Series A LLC Preferred Shares | Series A LLC Preferred Shares | Restricted common shares | Restricted common shares | Restricted common shares | Restricted common shares | Restricted common shares | Restricted common shares | Restricted common shares | Common share options | Phantom share | Phantom share | |||||
Maximum | KKR & Co. | KKR & Co. | KFN | Manager | Manager | Directors | Directors | Directors | |||||||||||||
KKR & Co. | KFN | ||||||||||||||||||||
KKR & Co. | |||||||||||||||||||||
Stock-based compensation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred shares, shares issued | ' | 14,950,000 | ' | ' | ' | 14,950,000 | ' | ' | ' | ' | 14,950,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gross proceeds from issue of preferred shares (in dollars) | ' | ' | ' | ' | ' | ' | ' | ' | ' | $373,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net proceeds from issuance of preferred stock (in dollars) | ' | ' | ' | ' | 361,622,000 | ' | ' | ' | ' | 362,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred shares, dividend rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | 7.38% | 7.38% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exchange ratio of share based awards under merger transaction | ' | ' | ' | ' | ' | ' | 0.51 | 0.51 | ' | ' | ' | ' | ' | 0.51 | ' | ' | ' | ' | ' | 0.51 | 0.51 |
Number of common shares issued | 100 | 100 | ' | ' | ' | 204,824,159 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of common shares outstanding | 100 | 100 | ' | ' | ' | 204,824,159 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price of share options granted, minimum (as a percent) | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Termination period from date of grant | ' | ' | ' | '10 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Authorized shares available to satisfy awards as of the balance sheet date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,964,625 | ' | ' |
Restricted common share transactions | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unvested shares at the beginning of the period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 669,828 | ' | ' | 584,634 | ' | 85,194 | 85,194 | ' | ' | ' |
Vested (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -243,648 | ' | ' | -243,648 | ' | ' | ' | ' | ' | ' |
Unvested shares at the end of the period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 426,180 | ' | ' | 340,986 | ' | 85,194 | 85,194 | ' | ' | ' |
Value of unvested restricted common shares granted (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $11.54 | $10.33 | ' | ' | ' | ' | ' |
Unrecognized compensation cost (in dollars) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2,200,000 | $3,900,000 | ' | ' | ' | ' | ' | ' | ' | ' |
SHAREHOLDERS_EQUITY_Details_2
SHAREHOLDERS' EQUITY (Details 2) (Predecessor Company, Common share options, USD $) | Apr. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2013 |
Predecessor Company | Common share options | ' | ' | ' |
Number of Options | ' | ' | ' |
Outstanding at the beginning of the period (in shares) | 1,932,279 | 1,932,279 | ' |
Outstanding at the end of the period (in shares) | 1,932,279 | 1,932,279 | ' |
Exercisable at the end of the period (in shares) | 1,932,279 | ' | 1,932,279 |
Weighted Average Exercise Price | ' | ' | ' |
Outstanding at the beginning of the period (in dollars per share) | $20 | $20 | ' |
Outstanding at the end of the period (in dollars per share) | $20 | $20 | ' |
SHAREHOLDERS_EQUITY_Details_3
SHAREHOLDERS' EQUITY (Details 3) (Predecessor Company, Restricted common shares, USD $) | 3 Months Ended | 4 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 |
Stock-based compensation | ' | ' | ' |
Share-based compensation expense (in dollars) | $946 | $1,018 | $2,842 |
Manager | ' | ' | ' |
Stock-based compensation | ' | ' | ' |
Share-based compensation expense (in dollars) | 690 | 690 | 2,073 |
Directors | ' | ' | ' |
Stock-based compensation | ' | ' | ' |
Share-based compensation expense (in dollars) | $256 | $328 | $769 |
MANAGEMENT_AGREEMENT_AND_RELAT2
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Details) (USD $) | 3 Months Ended | 5 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 5 Months Ended | 3 Months Ended | 5 Months Ended | 3 Months Ended | 5 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Sep. 30, 2007 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | |
Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
CLO Management Fees | CLO Management Fees | CLO Management Fees | Manager | Manager | Manager | Manager | Manager | Collateral manager | Collateral manager | Manager | Manager | Manager | Manager | Manager | Manager | Manager | Manager | Manager | Manager | Collateral manager | Collateral manager | Collateral manager | Collateral manager | ||||||
item | Maximum | CLO 2013-1 and CLO 2013-2 | period | Base Management Fees | Base Management Fees | Incentive Fees | Incentive Fees | CLO Management Fees | CLO Management Fees | Base Management Fees | Base Management Fees | Base Management Fees | Base Management Fees | Incentive Fees | Incentive Fees | Incentive Fees | Manager Share-Based Compensation | Manager Share-Based Compensation | Manager Share-Based Compensation | CLO Management Fees | CLO Management Fees | CLO Management Fees | CLO Management Fees | ||||||
item | |||||||||||||||||||||||||||||
Management Agreement and Related Party Transactions | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Renewal period | ' | ' | ' | ' | ' | '1 year | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Votes for termination, minimum (as a percent) | ' | ' | ' | ' | ' | 66.70% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notice period for termination | ' | ' | ' | ' | ' | '180 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Multiplier used to determine termination fee | ' | ' | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of 12 month periods considered for calculation of termination fee (in periods) | ' | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Specified period for which average annual incentive fee to be considered | ' | ' | ' | ' | ' | '12 months | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Related party transaction expense | ' | ' | ' | ' | ' | ' | $4,986,000 | $10,927,000 | $0 | $0 | $7,558,000 | $12,023,000 | ' | ' | ' | $4,314,000 | ' | $5,253,000 | $23,500,000 | $0 | $12,882,000 | $22,742,000 | $690,000 | $690,000 | $2,073,000 | $5,916,000 | $11,016,000 | ' | $8,429,000 |
Total related party management compensation | 12,544,000 | 22,950,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10,920,000 | 29,841,000 | 56,744,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Entity's percentage in subordinated notes (as a percent) | ' | ' | ' | 100.00% | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of CLOs the Company owns less than 100% of subordinated notes | ' | ' | 3 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common shares offering | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 230,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common share right offering | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 270,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common share closing price, minimum (in dollars per share) | ' | ' | ' | ' | ' | ' | $20 | $20 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of consecutive trading days | ' | ' | ' | ' | ' | ' | '5 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fees, waived | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,400,000 | ' | ' | ' | ' | $2,200,000 | ' | $2,900,000 | $6,600,000 | ' | ' | ' | ' | ' | ' | $3,000,000 | $1,600,000 | $3,000,000 | $18,000,000 |
MANAGEMENT_AGREEMENT_AND_RELAT3
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Details 2) (Manager, Base Management Fees, USD $) | 3 Months Ended | 5 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 |
Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Management Agreement and Related Party Transactions | ' | ' | ' | ' | ' |
Base management fees, gross | $9,846 | $16,534 | $9,799 | $13,364 | $29,216 |
CLO management fees credit | -4,860 | -5,607 | -3,684 | -8,111 | -3,915 |
Other related party fees credit | ' | ' | -1,801 | ' | -1,801 |
Total related party transaction expense | $4,986 | $10,927 | $4,314 | $5,253 | $23,500 |
MANAGEMENT_AGREEMENT_AND_RELAT4
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Details 3) (USD $) | 3 Months Ended | 5 Months Ended | 3 Months Ended | 5 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 |
Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Collateral manager | Collateral manager | Manager | Manager | Manager | Restricted common shares | Restricted common shares | Restricted common shares | Collateral manager | Collateral manager | Collateral manager | Manager | Manager | Manager | Manager | Manager | Manager | Manager | Manager | Manager | Manager | Manager | Manager | Manager | |
CLO Management Fees | CLO Management Fees | Incentive Fees | Incentive Fees | Reimbursable General and Administrative Expenses | CLO Management Fees | CLO Management Fees | CLO Management Fees | Incentive Fees | Incentive Fees | Incentive Fees | Manager Share-Based Compensation | Manager Share-Based Compensation | Manager Share-Based Compensation | Manager Share-Based Compensation | Manager Share-Based Compensation | Manager Share-Based Compensation | Reimbursable General and Administrative Expenses | Reimbursable General and Administrative Expenses | Reimbursable General and Administrative Expenses | Reimbursable General and Administrative Expenses | ||||
Restricted common shares | Restricted common shares | Restricted common shares | ||||||||||||||||||||||
Management Agreement and Related Party Transactions | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Charged and retained CLO management fees | $12,418 | $17,630 | ' | ' | ' | ' | ' | ' | $2,232 | $2,905 | $4,514 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
CLO management fees credit | -4,860 | -5,607 | ' | ' | ' | ' | ' | ' | 3,684 | 8,111 | 3,915 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total related party transaction expense | 7,558 | 12,023 | 0 | 0 | 800 | ' | ' | ' | 5,916 | 11,016 | 8,429 | 0 | 12,882 | 22,742 | 690 | 690 | 2,073 | ' | ' | ' | 2,300 | 2,800 | 1,800 | 5,900 |
Expenses recognized for restricted common shares granted | ' | ' | ' | ' | ' | $946 | $1,018 | $2,842 | ' | ' | ' | ' | ' | ' | ' | ' | ' | $700 | $700 | $2,100 | ' | ' | ' | ' |
MANAGEMENT_AGREEMENT_AND_RELAT5
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Details 4) (USD $) | 3 Months Ended | 5 Months Ended | 5 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | |
Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Affiliates | Affiliates | Affiliates | Affiliates | Affiliates | Affiliates | Affiliates | Affiliates | Affiliates | Affiliates | Affiliates | Affiliates | |||
issuer | Corporate Loans, at Estimated Fair Value | Corporate debt securities | Equity investments, at estimated fair value | Joint ventures and partnerships | Affiliated investments | issuer | Corporate loans | Corporate debt securities | Equity investments, at estimated fair value | Joint ventures and partnerships | Affiliated investments | |||
Percent to total investment in corporate loans, debt securities and other investments | Percent to total investment in corporate loans, debt securities and other investments | |||||||||||||
Investments in affiliates | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Investment in affiliates as a percentage of total investment (in percentage) | ' | ' | ' | ' | ' | ' | ' | 21.00% | ' | ' | ' | ' | ' | 27.00% |
Investment in affiliates, number of issuers | ' | ' | 19 | ' | ' | ' | ' | ' | 28 | ' | ' | ' | ' | ' |
Estimated Fair Value | ' | ' | $1,700,000,000 | $1,600,000,000 | $9,500,000 | $13,100,000 | $525,800,000 | ' | $2,100,000,000 | $1,900,000,000 | $52,800,000 | $84,500,000 | ' | ' |
Aggregate cost amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 400,300,000 | ' |
Contributions and Distribution | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash | 235,759,000 | 235,759,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Securities | 22,873,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Loans | 13,464,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interests in joint ventures and partnerships | 19,433,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total contributions from Parent | 291,529,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash | 14,370,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Equity investments, at estimated fair value | 101,042,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Oil and gas properties, net | 179,203,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total distributions to Parent | $294,615,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
SEGMENT_REPORTING_Details
SEGMENT REPORTING (Details) (USD $) | 3 Months Ended | 5 Months Ended | 3 Months Ended | 5 Months Ended | 3 Months Ended | 5 Months Ended | 3 Months Ended | 5 Months Ended | 3 Months Ended | 5 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | 3 Months Ended | 4 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Successor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | Predecessor Company | |
Reportable segments | Reportable segments | Reportable segments | Reportable segments | Reportable segments | Reportable segments | Reconciling Items | Reconciling Items | Reportable segments | Reportable segments | Reportable segments | Reportable segments | Reportable segments | Reportable segments | Reportable segments | Reportable segments | Reportable segments | Reportable segments | Reportable segments | Reportable segments | Reconciling Items | Reconciling Items | Reconciling Items | Reconciling Items | ||||||||
Credit | Credit | Natural Resources | Natural Resources | Other | Other | Credit | Credit | Credit | Credit | Natural Resources | Natural Resources | Natural Resources | Natural Resources | Other | Other | Other | Other | ||||||||||||||
Reconciliation of operating profit loss from segment to consolidated | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total revenues | $124,756,000 | ' | $219,069,000 | $98,413,000 | $160,724,000 | $17,929,000 | $49,859,000 | $8,414,000 | $8,486,000 | $0 | $0 | $128,702,000 | $217,242,000 | $406,396,000 | ' | $96,243,000 | $134,255,000 | $320,769,000 | ' | $32,446,000 | $61,782,000 | $84,118,000 | ' | $13,000 | $21,205,000 | $1,509,000 | ' | ' | ' | ' | ' |
Total investment costs and expenses | 61,340,000 | ' | 117,004,000 | 46,412,000 | 81,822,000 | 14,617,000 | 34,674,000 | 311,000 | 508,000 | 0 | 0 | 77,877,000 | 101,825,000 | 224,119,000 | ' | 55,253,000 | 62,485,000 | 162,097,000 | ' | 22,386,000 | 38,915,000 | 61,355,000 | ' | 238,000 | 425,000 | 667,000 | ' | ' | ' | ' | ' |
Total other income (loss) | -125,685,000 | ' | -104,798,000 | -132,098,000 | -114,985,000 | -1,514,000 | -6,394,000 | 7,927,000 | 16,581,000 | 0 | 0 | 6,226,000 | 56,334,000 | 117,681,000 | ' | 6,969,000 | 76,046,000 | 132,853,000 | ' | -3,437,000 | -8,123,000 | -918,000 | ' | 2,694,000 | -11,589,000 | 6,015,000 | ' | ' | ' | -20,269,000 | ' |
Total other expenses | 14,898,000 | ' | 29,262,000 | 14,136,000 | 26,889,000 | 617,000 | 2,010,000 | 145,000 | 328,000 | 0 | 35,000 | 17,147,000 | 65,609,000 | 75,170,000 | ' | 14,155,000 | 23,121,000 | 43,151,000 | ' | 1,269,000 | 1,633,000 | 3,698,000 | ' | 116,000 | 230,000 | 484,000 | ' | 1,607,000 | 40,625,000 | 27,837,000 | ' |
Income tax expense (benefit) | 34,000 | ' | 62,000 | 34,000 | 58,000 | 0 | 0 | 0 | 4,000 | 0 | 0 | 18,000 | 162,000 | 434,000 | ' | 9,000 | 146,000 | 420,000 | ' | ' | ' | ' | ' | 9,000 | 16,000 | 14,000 | ' | ' | ' | ' | ' |
Net (loss) income | -77,201,000 | -32,057,000 | -32,057,000 | -94,267,000 | -63,030,000 | 1,181,000 | 6,781,000 | 15,885,000 | 24,227,000 | 0 | -35,000 | 39,886,000 | 105,980,000 | 224,354,000 | ' | 33,795,000 | 124,549,000 | 247,954,000 | ' | 5,354,000 | 13,111,000 | 18,147,000 | ' | 2,344,000 | 8,945,000 | 6,359,000 | ' | -1,607,000 | -40,625,000 | -48,106,000 | ' |
Net income attributable to noncontrolling interests | 816,000 | ' | 816,000 | 816,000 | 816,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net (loss) income attributable to KKR Financial Holdings LLC and Subsidiaries | -78,017,000 | ' | -32,873,000 | -95,083,000 | -63,846,000 | 1,181,000 | 6,781,000 | 15,885,000 | 24,227,000 | ' | -35,000 | 39,886,000 | 105,980,000 | 224,354,000 | ' | 33,795,000 | ' | 247,954,000 | ' | 5,354,000 | ' | 18,147,000 | ' | 2,344,000 | ' | 6,359,000 | ' | -1,607,000 | ' | -48,106,000 | ' |
Incentive fees | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 12,900,000 | 22,700,000 | ' |
Net loss on restructuring and extinguishment of debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20,269,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | ' | 20,300,000 | ' |
Merger related transaction costs | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 22,700,000 | ' | ' |
Total assets | $9,209,700,000 | $9,209,700,000 | $9,209,700,000 | $8,654,153,000 | $8,654,153,000 | $326,841,000 | $326,841,000 | $228,595,000 | $228,595,000 | $111,000 | $111,000 | ' | ' | ' | $8,717,198,000 | ' | ' | ' | $8,020,353,000 | ' | ' | ' | $505,029,000 | ' | ' | ' | $190,946,000 | ' | ' | ' | $870,000 |
EARNINGS_PER_COMMON_SHARE_Deta
EARNINGS PER COMMON SHARE (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 |
In Thousands, except Share data, unless otherwise specified | KKR Fund Holdings | Predecessor Company | Predecessor Company | Predecessor Company |
Earnings per common share | ' | ' | ' | ' |
Number of common shares held | 100 | ' | ' | ' |
Reconciliation of basic and diluted net income and distributions per common share | ' | ' | ' | ' |
Net income | ' | $39,886 | $105,980 | $224,354 |
Less: Preferred share distributions | ' | 6,891 | 6,891 | 20,520 |
Net income available to common shares | ' | 32,995 | 99,089 | 203,834 |
Less: Dividends and undistributed earnings allocated to participating securities | ' | 109 | 292 | 701 |
Net income allocated to common shares | ' | $32,886 | $98,797 | $203,133 |
Basic: | ' | ' | ' | ' |
Basic weighted average common shares outstanding (in shares) | ' | 204,134,000 | 204,276,000 | 201,824,000 |
Net income per common share (in dollars per share) | ' | $0.16 | $0.48 | $1.01 |
Diluted: | ' | ' | ' | ' |
Diluted weighted average common shares outstanding (in shares) | ' | 204,134,000 | 204,276,000 | 201,824,000 |
Net income per common share (in dollars per share) | ' | $0.16 | $0.48 | $1.01 |
Anti-dilutive securities | ' | ' | ' | ' |
Anti-dilutive securities excluded from diluted earnings per share calculations (in shares) | ' | 1,932,279 | 1,932,279 | 1,932,279 |
ACCUMULATED_OTHER_COMPREHENSIV2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) (Predecessor Company, USD $) | 3 Months Ended | 4 Months Ended | 9 Months Ended |
Sep. 30, 2013 | Apr. 30, 2014 | Sep. 30, 2013 | |
Components of changes in accumulated other comprehensive income (loss) | ' | ' | ' |
Beginning balance | ($39,643,000) | ($15,652,000) | ($70,226,000) |
Other comprehensive (loss) income before reclassifications | 4,942,000 | -8,056,000 | 26,631,000 |
Amounts reclassified from accumulated other comprehensive loss | 5,008,000 | -2,639,000 | 13,902,000 |
Total other comprehensive (loss) income | 9,950,000 | -10,695,000 | 40,533,000 |
Ending balance | -29,693,000 | -26,347,000 | -29,693,000 |
Impairment charge for investments which were determined to be other-than-temporary | 5,000,000 | 4,400,000 | 17,500,000 |
Net unrealized gains on available-for-sale securities | ' | ' | ' |
Components of changes in accumulated other comprehensive income (loss) | ' | ' | ' |
Beginning balance | 16,657,000 | 23,567,000 | 17,472,000 |
Other comprehensive (loss) income before reclassifications | -1,871,000 | -2,614,000 | -11,580,000 |
Amounts reclassified from accumulated other comprehensive loss | 5,008,000 | -2,639,000 | 13,902,000 |
Total other comprehensive (loss) income | 3,137,000 | -5,253,000 | 2,322,000 |
Ending balance | 19,794,000 | 18,314,000 | 19,794,000 |
Net unrealized losses on cash flow hedges | ' | ' | ' |
Components of changes in accumulated other comprehensive income (loss) | ' | ' | ' |
Beginning balance | -56,300,000 | -39,219,000 | -87,698,000 |
Other comprehensive (loss) income before reclassifications | 6,813,000 | -5,442,000 | 38,211,000 |
Total other comprehensive (loss) income | 6,813,000 | -5,442,000 | 38,211,000 |
Ending balance | ($49,487,000) | ($44,661,000) | ($49,487,000) |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) (Successor Company, Series A LLC Preferred Shares, USD $) | Sep. 25, 2014 |
Successor Company | Series A LLC Preferred Shares | ' |
Subsequent events | ' |
Cash distribution declared (in dollars per share) | $0.46 |