Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 22, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | KKR Financial Holdings LLC | ||
Entity Central Index Key | 1,386,926 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 100 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Assets | ||
Cash and cash equivalents | $ 627,237 | $ 320,122 |
Restricted cash and cash equivalents | 512,312 | 487,374 |
Securities, at estimated fair value | 229,206 | 417,519 |
Corporate loans, at estimated fair value | 3,305,264 | 5,188,610 |
Equity investments, at estimated fair value | 168,658 | 262,946 |
Oil and gas properties, net | 110,934 | 114,868 |
Interests in joint ventures and partnerships, at estimated fair value | 793,996 | 888,408 |
Derivative assets | 46,447 | 40,852 |
Interest and principal receivable | 10,937 | 22,196 |
Receivable for investments sold | 35,522 | 19,930 |
Other assets | 10,544 | 25,570 |
Total assets | 5,851,057 | 7,788,395 |
Liabilities | ||
Collateralized loan obligation secured notes, at estimated fair value | 3,087,941 | 4,843,746 |
Collateralized loan obligation junior notes to affiliates, at estimated fair value | 89,607 | 0 |
Collateralized loan obligation warehouse facility | 20,000 | 0 |
Senior notes | 123,008 | 413,006 |
Junior subordinated notes | 250,154 | 248,498 |
Payable for investments purchased | 315,773 | 220,085 |
Accounts payable, accrued expenses and other liabilities | 43,297 | 43,667 |
Accrued interest payable | 14,577 | 20,619 |
Related party payable | 5,810 | 3,892 |
Derivative liabilities | 32,705 | 43,892 |
Total liabilities | 3,982,872 | 5,837,405 |
Equity | ||
Preferred shares, no par value, 50,000,000 shares authorized and 14,950,000 issued and outstanding as of both December 31, 2016 and December 31, 2015 | 0 | 0 |
Common shares, no par value, 500,000,000 shares authorized and 100 shares issued and outstanding as of both December 31, 2016 and December 31, 2015 | 0 | 0 |
Paid-in-capital | 2,764,061 | 2,764,061 |
Accumulated deficit | (967,452) | (895,950) |
Total KKR Financial Holdings LLC and Subsidiaries shareholders’ equity | 1,796,609 | 1,868,111 |
Noncontrolling interests | 71,576 | 82,879 |
Total equity | 1,868,185 | 1,950,990 |
Total liabilities and equity | $ 5,851,057 | $ 7,788,395 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred shares, no par value (in dollars per share) | ||
Preferred shares, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred shares, shares issued (in shares) | 14,950,000 | 14,950,000 |
Preferred shares, shares outstanding (in shares) | 14,950,000 | 14,950,000 |
Common shares, no par value (in dollars per share) | ||
Common shares, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common shares, shares issued (in shares) | 100 | 100 |
Common shares, shares outstanding (in shares) | 100 | 100 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Apr. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Other expenses | ||||
Net income (loss) attributable to noncontrolling interests | $ (6,000) | $ (11,800) | $ (23,400) | |
Successor Company | ||||
Revenues | ||||
Loan interest income | 212,431 | 226,692 | 275,935 | |
Securities interest income | 32,016 | 19,308 | 52,502 | |
Oil and gas revenue | 57,616 | 10,131 | 15,677 | |
Other | 48,282 | 35,941 | 31,142 | |
Total revenues | 350,345 | 292,072 | 375,256 | |
Investment costs and expenses | ||||
Interest expense | 144,437 | 267,574 | 211,942 | |
Interest expense to affiliates | 0 | 10,339 | 0 | |
Oil and gas production costs | 15,229 | 811 | 734 | |
Oil and gas depreciation, depletion and amortization | 19,458 | 3,934 | 5,406 | |
Other | 2,012 | 7,832 | 5,575 | |
Total investment costs and expenses | 181,136 | 290,490 | 223,657 | |
Other income (loss) | ||||
Net realized and unrealized gain (loss) on investments | (349,372) | (23,390) | (427,709) | |
Net realized and unrealized gain (loss) on derivatives and foreign exchange | (18,507) | 7,597 | 2,158 | |
Net realized and unrealized gain (loss) on debt | 16,478 | 68,259 | (19,659) | |
Net realized and unrealized gain (loss) on debt to affiliates | 0 | (6,330) | 0 | |
Net gain (loss) on extinguishment of debt | 0 | 29,846 | 0 | |
Other income (loss) | 7,019 | 10,624 | 12,567 | |
Total other income (loss) | (344,382) | 86,606 | (432,643) | |
Other expenses | ||||
Related party management compensation | 33,764 | 30,504 | 38,086 | |
General, administrative and directors' expenses | 6,498 | 30,945 | 11,614 | |
Professional services | 3,310 | 3,969 | 2,741 | |
Total other expenses | 43,572 | 65,418 | 52,441 | |
Income (loss) before income taxes | (218,745) | 22,770 | (333,485) | |
Income tax expense (benefit) | 484 | 1,389 | 1,190 | |
Net income (loss) | (219,229) | 21,381 | (334,675) | |
Net income (loss) attributable to noncontrolling interests | (5,956) | (11,779) | (23,429) | |
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries | (213,273) | 33,160 | (311,246) | |
Preferred share distributions | 20,673 | 27,564 | 27,564 | |
Net income (loss) available to common shares | $ (233,946) | $ 5,596 | $ (338,810) | |
Predecessor Company | ||||
Revenues | ||||
Loan interest income | $ 114,096 | |||
Securities interest income | 13,081 | |||
Oil and gas revenue | 61,782 | |||
Other | 28,283 | |||
Total revenues | 217,242 | |||
Investment costs and expenses | ||||
Interest expense | 64,362 | |||
Interest expense to affiliates | 0 | |||
Oil and gas production costs | 14,772 | |||
Oil and gas depreciation, depletion and amortization | 22,471 | |||
Other | 220 | |||
Total investment costs and expenses | 101,825 | |||
Other income (loss) | ||||
Net realized and unrealized gain (loss) on investments | 61,553 | |||
Net realized and unrealized gain (loss) on derivatives and foreign exchange | (9,783) | |||
Net realized and unrealized gain (loss) on debt | 0 | |||
Net realized and unrealized gain (loss) on debt to affiliates | 0 | |||
Net gain (loss) on extinguishment of debt | 0 | |||
Other income (loss) | 4,564 | |||
Total other income (loss) | 56,334 | |||
Other expenses | ||||
Related party management compensation | 29,841 | |||
General, administrative and directors' expenses | 8,891 | |||
Professional services | 26,877 | |||
Total other expenses | 65,609 | |||
Income (loss) before income taxes | 106,142 | |||
Income tax expense (benefit) | 162 | |||
Net income (loss) | 105,980 | |||
Net income (loss) attributable to noncontrolling interests | 0 | |||
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries | 105,980 | |||
Preferred share distributions | 6,891 | |||
Net income (loss) available to common shares | $ 99,089 | |||
Net income (loss) per common share: | ||||
Basic (in dollars per share) | $ 0.48 | |||
Diluted (in dollars per share) | $ 0.48 | |||
Weighted-average number of common shares outstanding: | ||||
Basic (in shares) | 204,276 | |||
Diluted (in shares) | 204,276 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Apr. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Successor Company | ||||
Net income (loss) | $ (219,229) | $ 21,381 | $ (334,675) | |
Other comprehensive income (loss): | ||||
Unrealized gains (losses) on securities available-for-sale | 0 | 0 | 0 | |
Unrealized gains (losses) on cash flow hedges | 0 | 0 | 0 | |
Total other comprehensive income (loss) | 0 | 0 | 0 | |
Comprehensive income (loss) | (219,229) | 21,381 | (334,675) | |
Less: Comprehensive income (loss) attributable to noncontrolling interests | 0 | 0 | 0 | |
Comprehensive income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries | $ (219,229) | $ 21,381 | $ (334,675) | |
Predecessor Company | ||||
Net income (loss) | $ 105,980 | |||
Other comprehensive income (loss): | ||||
Unrealized gains (losses) on securities available-for-sale | (5,253) | |||
Unrealized gains (losses) on cash flow hedges | (5,442) | |||
Total other comprehensive income (loss) | (10,695) | |||
Comprehensive income (loss) | 95,285 | |||
Less: Comprehensive income (loss) attributable to noncontrolling interests | 0 | |||
Comprehensive income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries | $ 95,285 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Total | Preferred Shares | Preferred Shares Paid-In Capital | Common Shares | Common Shares Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Noncontrolling interests |
Beginning balance (Predecessor Company) at Dec. 31, 2013 | $ 2,527,734 | $ 361,622 | $ 2,953,495 | $ (15,652) | $ (771,731) | |||
Balance (in shares) (Predecessor Company) at Dec. 31, 2013 | 14,950,000 | 204,824,159 | ||||||
Increase (Decrease) in Shareholders' Equity | ||||||||
Net income (loss) | Predecessor Company | 105,980 | 105,980 | ||||||
Other comprehensive income (loss) | Predecessor Company | (10,695) | (10,695) | ||||||
Distributions declared on preferred shares | Predecessor Company | (6,891) | (6,891) | ||||||
Distributions declared on common shares | Predecessor Company | (45,061) | (45,061) | ||||||
Share-based compensation expense related to restricted common shares | Predecessor Company | 1,018 | 1,018 | ||||||
Ending balance (Predecessor Company) at Apr. 30, 2014 | 2,572,085 | 361,622 | 2,954,513 | (26,347) | (717,703) | |||
Ending balance (Successor Company) at Apr. 30, 2014 | 2,572,085 | 361,622 | 2,954,513 | (26,347) | (717,703) | $ 0 | ||
Balance (in shares) (Predecessor Company) at Apr. 30, 2014 | 14,950,000 | 204,824,159 | ||||||
Balance (in shares) (Successor Company) at Apr. 30, 2014 | 14,950,000 | 204,824,159 | ||||||
Increase (Decrease) in Shareholders' Equity | ||||||||
Purchase accounting adjustments | Successor Company | 191,371 | 17,361 | (570,040) | 26,347 | 717,703 | |||
Ending balance (Successor Company) at May. 01, 2014 | 2,763,456 | 378,983 | 2,384,473 | 0 | 0 | 0 | ||
Balance (in shares) (Successor Company) at May. 01, 2014 | 14,950,000 | 204,824,159 | ||||||
Beginning balance (Predecessor Company) at Apr. 30, 2014 | 2,572,085 | 361,622 | 2,954,513 | (26,347) | (717,703) | |||
Beginning balance (Successor Company) at Apr. 30, 2014 | 2,572,085 | 361,622 | 2,954,513 | (26,347) | (717,703) | 0 | ||
Balance (in shares) (Predecessor Company) at Apr. 30, 2014 | 14,950,000 | 204,824,159 | ||||||
Balance (in shares) (Successor Company) at Apr. 30, 2014 | 14,950,000 | 204,824,159 | ||||||
Increase (Decrease) in Shareholders' Equity | ||||||||
Reverse stock split (in shares) | Successor Company | (204,824,059) | |||||||
Capital contributions | Successor Company | 106,125 | 106,125 | ||||||
Net income (loss) | Successor Company | (219,229) | (213,273) | (5,956) | |||||
Other comprehensive income (loss) | Successor Company | 0 | |||||||
Distributions declared on preferred shares | Successor Company | (20,673) | (20,673) | ||||||
Distributions to Parent | Successor Company | (617,080) | (617,080) | ||||||
Contributions from Parent | Successor Company | 474,844 | 474,844 | ||||||
Capital contributions from Parent | Successor Company | 605 | 605 | ||||||
Ending balance (Successor Company) at Dec. 31, 2014 | 2,488,048 | 378,983 | 2,385,078 | 0 | (376,182) | 100,169 | ||
Balance (in shares) (Successor Company) at Dec. 31, 2014 | 14,950,000 | 100 | ||||||
Increase (Decrease) in Shareholders' Equity | ||||||||
Capital contributions | Successor Company | 6,139 | 6,139 | ||||||
Net income (loss) | Successor Company | (334,675) | (311,246) | (23,429) | |||||
Other comprehensive income (loss) | Successor Company | 0 | |||||||
Distributions declared on preferred shares | Successor Company | (27,564) | (27,564) | ||||||
Distributions to Parent | Successor Company | (430,829) | (430,829) | ||||||
Contributions from Parent | Successor Company | 251,748 | 251,748 | ||||||
Ending balance (Successor Company) at Dec. 31, 2015 | 1,950,990 | 378,983 | 2,385,078 | 0 | (895,950) | 82,879 | ||
Ending balance at Dec. 31, 2015 | 1,950,990 | |||||||
Balance (in shares) (Successor Company) at Dec. 31, 2015 | 14,950,000 | 100 | ||||||
Increase (Decrease) in Shareholders' Equity | ||||||||
Cumulative effect adjustment from adoption of accounting guidance | Successor Company | Accounting Standards Update 2014-13 | (1,877) | (1,877) | ||||||
Capital contributions | Successor Company | 8,085 | 8,085 | ||||||
Capital distributions | Successor Company | (7,609) | (7,609) | ||||||
Net income (loss) | Successor Company | 21,381 | 33,160 | (11,779) | |||||
Other comprehensive income (loss) | Successor Company | 0 | |||||||
Distributions declared on preferred shares | Successor Company | (27,564) | (27,564) | ||||||
Distributions to Parent | Successor Company | (412,969) | (412,969) | ||||||
Contributions from Parent | Successor Company | 331,189 | 331,189 | ||||||
Ending balance (Successor Company) at Dec. 31, 2016 | 1,868,185 | $ 378,983 | $ 2,385,078 | $ 0 | (967,452) | $ 71,576 | ||
Ending balance at Dec. 31, 2016 | 1,868,185 | |||||||
Balance (in shares) (Successor Company) at Dec. 31, 2016 | 14,950,000 | 100 | ||||||
Increase (Decrease) in Shareholders' Equity | ||||||||
Cumulative effect adjustment from adoption of accounting guidance | Successor Company | Cumulative-Effect Adjustment of Deconsolidation of VIE | $ 4,682 | $ 4,682 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 4 Months Ended | 8 Months Ended | 12 Months Ended | ||
Apr. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Cash flows from financing activities | |||||
Distributions on common shares | $ (80,800) | $ (179,100) | |||
Cash and cash equivalents at beginning of period | 320,122 | ||||
Cash and cash equivalents at end of period | 627,237 | 320,122 | |||
Successor Company | |||||
Cash flows from operating activities | |||||
Net income (loss) | $ (219,229) | 21,381 | (334,675) | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||
Net realized and unrealized (gain) loss on derivatives and foreign exchange | 18,507 | (7,597) | (2,158) | ||
Net (gain) loss on extinguishment of debt | 0 | (29,846) | 0 | ||
Unrealized (depreciation) appreciation on investments allocable to noncontrolling interests | 5,956 | (11,779) | (23,429) | ||
Write-off of debt issuance costs | 0 | 0 | 0 | ||
Lower of cost or estimated fair value adjustment on corporate loans held for sale | 0 | 0 | 0 | ||
Impairment charges | 0 | 0 | 0 | ||
Share-based compensation | 0 | 0 | 0 | ||
Net realized and unrealized (gain) loss on investments | 343,416 | 35,169 | 451,138 | ||
Depreciation and net amortization | 21,391 | 36,023 | 28,242 | ||
Net realized and unrealized (gain) loss on debt | (16,478) | (68,259) | 19,659 | ||
Net realized and unrealized (gain) loss on debt to affiliates | 0 | 6,330 | 0 | ||
Changes in assets and liabilities: | |||||
Interest receivable | (11,485) | 8,636 | 26,607 | ||
Other assets | (21,117) | (14,875) | (33,780) | ||
Related party payable | 5,724 | 1,918 | (1,512) | ||
Accounts payable, accrued expenses and other liabilities | (20,561) | (3,162) | 30,949 | ||
Accrued interest payable | 1,769 | (346) | 1,217 | ||
Net cash provided by (used in) operating activities | 107,893 | (26,407) | 162,258 | ||
Cash flows from investing activities | |||||
Principal payments from corporate loans | 634,536 | 1,455,688 | 1,401,760 | ||
Principal payments from securities | 60,056 | 34,285 | 14,044 | ||
Proceeds from sales of corporate loans | 575,099 | 2,134,178 | 1,509,737 | ||
Proceeds from sales of securities | 38,342 | 116,259 | 173,075 | ||
Proceeds from equity and other investments | 89,697 | 173,496 | 74,609 | ||
Purchases of corporate loans | (1,245,460) | (2,495,709) | (1,873,963) | ||
Purchases of securities | (95,881) | (5,068) | (19,387) | ||
Purchases of equity and other investments | (158,618) | (81,707) | (102,365) | ||
Net change in proceeds, purchases and settlements of derivatives | (7,295) | 8,002 | 22,176 | ||
Net change in restricted cash and cash equivalents | 202,355 | (111,715) | (39,867) | ||
Net cash provided by (used in) investing activities | 92,831 | 1,227,709 | 1,159,819 | ||
Cash flows from financing activities | |||||
Issuance of collateralized loan obligation secured notes | 885,983 | 1,391,610 | 965,823 | ||
Retirement of collateralized loan obligation secured notes | (1,045,041) | (2,142,035) | (1,672,467) | ||
Repayment of senior notes | 0 | (258,750) | 0 | ||
Distributions on common shares | (121,088) | (80,811) | (179,081) | ||
Distributions on preferred shares | [1] | (13,782) | (27,564) | (27,564) | |
Distributions to Parent | (203,568) | (64,151) | (251,748) | ||
Contributions from Parent | 235,759 | 267,038 | 0 | ||
Capital contributions from Parent | 605 | 0 | 0 | ||
Capital distributions to noncontrolling interests | 0 | (7,609) | (2,728) | ||
Capital contributions from noncontrolling interests | 1,110 | 8,085 | 8,867 | ||
Other capitalized costs | (7,810) | 0 | (6,462) | ||
Net cash provided by (used in) financing activities | (247,732) | (894,187) | (1,165,360) | ||
Net increase (decrease) in cash and cash equivalents | (47,008) | 307,115 | 156,717 | ||
Cash and cash equivalents at beginning of period | 210,413 | 320,122 | 163,405 | ||
Cash and cash equivalents at end of period | $ 210,413 | 163,405 | 627,237 | 320,122 | |
Supplemental cash flow information | |||||
Cash paid for interest | 114,939 | 239,028 | 167,215 | ||
Net cash paid (refunded) for income taxes | 93 | 36 | (4,532) | ||
Non-cash investing and financing activities | |||||
Assets distributed to Parent | (292,425) | (268,007) | 0 | ||
Assets contributed from Parent | 239,085 | 64,151 | 251,748 | ||
Redemption on subordinated notes | 0 | (42,259) | 0 | ||
Assets contributed from noncontrolling interests | 105,015 | 0 | 0 | ||
Natural resources assets transferred out | (114,546) | 0 | 0 | ||
Interest in Trinity transferred in | 114,546 | 0 | 0 | ||
Preferred share distributions declared, not yet paid | 6,891 | 6,891 | 6,891 | ||
Loans transferred from held for investment to held for sale | 0 | 0 | 0 | ||
Successor Company | CLO warehouse facility | |||||
Cash flows from financing activities | |||||
Proceeds from credit facilities | 0 | 82,479 | 274,296 | ||
Repayment of credit facilities | 0 | (62,479) | (274,296) | ||
Successor Company | Other Credit Facilities | |||||
Cash flows from financing activities | |||||
Proceeds from credit facilities | 115,100 | 0 | 0 | ||
Repayment of credit facilities | (95,000) | $ 0 | $ 0 | ||
Predecessor Company | |||||
Cash flows from operating activities | |||||
Net income (loss) | 105,980 | ||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||
Net realized and unrealized (gain) loss on derivatives and foreign exchange | 9,783 | ||||
Net (gain) loss on extinguishment of debt | 0 | ||||
Unrealized (depreciation) appreciation on investments allocable to noncontrolling interests | 0 | ||||
Write-off of debt issuance costs | 1,472 | ||||
Lower of cost or estimated fair value adjustment on corporate loans held for sale | (5,038) | ||||
Impairment charges | 4,391 | ||||
Share-based compensation | 1,018 | ||||
Net realized and unrealized (gain) loss on investments | (60,906) | ||||
Depreciation and net amortization | 15,832 | ||||
Net realized and unrealized (gain) loss on debt | 0 | ||||
Net realized and unrealized (gain) loss on debt to affiliates | 0 | ||||
Changes in assets and liabilities: | |||||
Interest receivable | (6,753) | ||||
Other assets | (19,668) | ||||
Related party payable | (1,815) | ||||
Accounts payable, accrued expenses and other liabilities | 27,211 | ||||
Accrued interest payable | (1,470) | ||||
Net cash provided by (used in) operating activities | 70,037 | ||||
Cash flows from investing activities | |||||
Principal payments from corporate loans | 906,166 | ||||
Principal payments from securities | 21,223 | ||||
Proceeds from sales of corporate loans | 36,595 | ||||
Proceeds from sales of securities | 44,373 | ||||
Proceeds from equity and other investments | 48,911 | ||||
Purchases of corporate loans | (886,230) | ||||
Purchases of securities | (78,106) | ||||
Purchases of equity and other investments | (104,301) | ||||
Net change in proceeds, purchases and settlements of derivatives | (7,265) | ||||
Net change in restricted cash and cash equivalents | (299,579) | ||||
Net cash provided by (used in) investing activities | (318,213) | ||||
Cash flows from financing activities | |||||
Issuance of collateralized loan obligation secured notes | 648,197 | ||||
Retirement of collateralized loan obligation secured notes | (221,914) | ||||
Repayment of senior notes | 0 | ||||
Distributions on common shares | (45,061) | ||||
Distributions on preferred shares | [1] | (13,782) | |||
Distributions to Parent | 0 | ||||
Contributions from Parent | 0 | ||||
Capital contributions from Parent | 0 | ||||
Capital distributions to noncontrolling interests | 0 | ||||
Capital contributions from noncontrolling interests | 0 | ||||
Other capitalized costs | (3,918) | ||||
Net cash provided by (used in) financing activities | 301,422 | ||||
Net increase (decrease) in cash and cash equivalents | 53,246 | ||||
Cash and cash equivalents at beginning of period | 157,167 | $ 210,413 | |||
Cash and cash equivalents at end of period | 210,413 | ||||
Supplemental cash flow information | |||||
Cash paid for interest | 53,576 | ||||
Net cash paid (refunded) for income taxes | 157 | ||||
Non-cash investing and financing activities | |||||
Assets distributed to Parent | 0 | ||||
Assets contributed from Parent | 0 | ||||
Redemption on subordinated notes | 0 | ||||
Assets contributed from noncontrolling interests | 0 | ||||
Natural resources assets transferred out | 0 | ||||
Interest in Trinity transferred in | 0 | ||||
Preferred share distributions declared, not yet paid | 0 | ||||
Loans transferred from held for investment to held for sale | 348,808 | ||||
Predecessor Company | CLO warehouse facility | |||||
Cash flows from financing activities | |||||
Proceeds from credit facilities | 0 | ||||
Repayment of credit facilities | 0 | ||||
Predecessor Company | Other Credit Facilities | |||||
Cash flows from financing activities | |||||
Proceeds from credit facilities | 13,300 | ||||
Repayment of credit facilities | $ (75,400) | ||||
[1] | For the four months ended April 30, 2014, $6.9 million of distributions on preferred shares was previously presented as "preferred share distribution payable" within operating activities of the consolidated statements of cash flows. |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Cash Flows (Parenthetical) $ in Millions | 4 Months Ended |
Apr. 30, 2014USD ($) | |
Distributions On Preferred Shares Presented Within Operating Activities | Predecessor Company | |
Preferred share distribution payable | $ 6.9 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | 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 and interests in joint ventures and partnerships. 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 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 primarily 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 subsidiaries, including CLOs. On April 30, 2014, the Company completed a merger whereby KKR Fund Holdings L.P. ("Parent"), a subsidiary of KKR & Co. L.P. ("KKR & Co." and, together with its subsidiaries, "KKR"), acquired all of the Company's outstanding common shares through an exchange of equity through which its shareholders received 0.51 common units representing limited partner interests of KKR & Co. for each common share of KFN (the “Merger Transaction”). Following the Merger Transaction, Parent became the sole holder of all of the Company's outstanding common shares. As of the close of trading on April 30, 2014, the Company's common shares were delisted on the New York Stock Exchange (“NYSE”). However, the Company’s 7.375% Series A LLC Preferred Shares (“Series A LLC Preferred Shares”), senior notes and junior subordinated notes remain outstanding. The Company is externally managed and advised by its Manager pursuant to an amended and restated management agreement (as amended the “Management Agreement”). The Manager is a subsidiary of KKR & Co. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The 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 consolidated financial statements are the financial results of certain entities, which are not considered VIEs, 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 a result of the Merger Transaction, the Company’s 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 consolidated financial statements. This change in accounting basis is represented in the 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. 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 CLO secured notes. As such, the accounting policies followed by the Company in the preparation of its consolidated financial statements for the Successor period present all financial assets and CLO secured notes at estimated fair value. The initial fair value presentation was a result of the push down basis of accounting, while the prospective fair value presentation was for the primary purpose of reporting values 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 gain (loss) on investments and net realized and unrealized gain (loss) on debt, respectively, in the 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 Company period, all purchases and sales of assets are recorded on the trade date. Comparatively, for the Predecessor Company 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 consolidated financial statements are appropriate, actual results could differ from those estimates. Consolidation 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"), KKR CLO 9, Ltd. (“CLO 9”), KKR CLO 10, Ltd. (“CLO 10”), KKR CLO 15, Ltd. ("CLO 15") and KKR CLO 16, Ltd. ("CLO 16") (collectively the “Cash Flow CLOs”) are entities established to complete secured financing transactions. During 2016, the Company called KKR 2016-1, Ltd. ("CLO 2016-1"), KKR Financial CLO 2007-1 (“CLO 2007-1") and KKR Financial CLO 2011-1 (“CLO 2011-1") and during 2015, the Company called KKR Financial CLO 2005-2, Ltd. (“CLO 2005-2"), KKR Financial CLO 2005-1, Ltd. ("CLO 2005-1") and KKR Financial CLO 2006-1, Ltd ("CLO 2006-1"), whereby the Company repaid all senior and mezzanine notes outstanding. 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. In addition, during 2016, the Company declared a distribution in kind on its common shares of certain subordinated notes of KKR CLO 11, Ltd ("CLO 11") and KKR CLO 13, Ltd ("CLO 13") to its Parent as the sole holder of its common shares. CLO 11 and CLO 13 had previously been consolidated by the Company as they were VIEs which the Company determined it had the power to direct the activities that most significantly impacted these entities’ economic performance and the Company had 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. Following the distribution, the Company determined that it no longer met the consolidation criteria and de-consolidated CLO 11 and CLO 13, resulting in a reduction in both consolidated assets and liabilities of approximately $1.0 billion as of December 31, 2016. Also, as a result of the de-consolidation, the interest expense and management fees that were previously consolidated will no longer be included in the Company's consolidated statements of operations. The Company finances the majority of its corporate debt investments through its CLOs. As of December 31, 2016 , the Company’s Cash Flow CLOs held $3.1 billion par amount, or $3.1 billion estimated fair value, of corporate debt investments. As of December 31, 2015, the Company's CLOs held $5.5 billion par amount, or $5.1 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 December 31, 2016 and December 31, 2015, the aggregate par amount of CLO debt totaled $3.2 billion and $4.9 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 majority owned entities for which the Company is presumed to have control. The ownership interests of these entities held by third parties are reflected as noncontrolling interests in the accompanying financial statements. The Company began consolidating a majority of these non‑VIE entities as a result of the asset contributions from its Parent during the second half of 2014. For certain of these entities, the Company previously held a percentage ownership, but following the incremental contributions from its Parent, were presumed to have control. 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 gain (loss) on investments in the consolidated statements of operations. 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 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 and Interests in Joint Ventures and Partnerships, at Estimated Fair Value: Equity and interests in joint ventures and partnerships, 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. Interests in joint ventures and partnerships include certain equity investments related to the oil and gas, commercial real estate and specialty lending sectors. Valuation models are generally based on market comparables and 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. Natural resources investments are generally valued using a discounted cash flow analysis. Key inputs used in this methodology that require estimates include the weighted average cost of capital. In addition, the valuations of natural resources investments generally incorporate both commodity prices as quoted on indices and long‑term commodity price forecasts, which may be substantially different from, and are currently higher than, commodity prices on certain indices for equivalent future dates. Long‑term commodity price forecasts are utilized to capture the value of the investments across a range of commodity prices within the portfolio associated with future development and to reflect price expectations. 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. Over-the-counter (“OTC”) Derivative Contracts: OTC derivative contracts may 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: As of January 1, 2015, the Company adopted the measurement alternative issued by the FASB whereby the financial liabilities of its consolidated CLOs were measured using the fair value of the financial assets of its consolidated CLOs, which was determined to be more observable. The Company considered the fair value of these financial assets, which were classified as Level 2 assets, as more observable than the fair value of these financial liabilities, which were classified as Level 3 liabilities. As a result of this new basis of measurement, the Company's CLO secured notes were transferred from Level 3 to Level 2 during the first quarter of 2015. Prior to this adoption, CLO secured notes were initially valued at transaction price and subsequently valued using a third party valuation servicer. The approach used to estimate the fair values was the discounted cash flow method, which included consideration of the cash flows of the debt obligation based on projected quarterly interest payments and quarterly amortization. The debt obligations were discounted based on the appropriate yield curve given the debt obligation's respective maturity and credit rating. The most significant inputs to the valuation of these instruments were 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 8 to these 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 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. The Company utilizes a valuation committee, whose members consist of employees of the Manager or its affiliates. The valuation committee is responsible for coordinating and consistently implementing the Company’s quarterly valuation policies, guidelines and processes. 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. For assets classified as Level 3, valuations may be performed by the relevant investment professionals or by independent third parties with input from the relevant investment professionals and are based on various factors including evaluation of financial and operating data, company specific developments, market discount rates and valuations of comparable companies and model projections. Asset valuations are approved by the valuation committee, which may be assisted by a subcommittee for the valuation of certain investments. 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 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 consolidated statements of operations. On the 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 Company 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 gain (loss) on investments in the consolidated statements of operations. Comparatively, the Predecessor Company reported all unrealized gains and losses in accumulated other comprehensive loss on the 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 Predecessor 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 Predecessor Company considered its intent to sell the debt security, the Predecessor 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 Predecessor Company would have been required to sell the debt security before its anticipated recovery. For equity securities, the Predecessor 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 Predecessor Company intended to sell or estimated that it was more likely than not that the Predecessor 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 Predecessor 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 Company 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 Predecessor Company and Successor Company manage the risks of these securities. All securities, at estimated fair value are included within securities on the 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 Company 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 Predecessor Company and Successor Company manage the risks of these investments. RMBS, at estimated fair value are included within securities on the consolidated balance sheets. Equity Investments, at Estimated Fair Value The Predecessor Company 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 Predecessor Company and Successor Company may have significant influence. The fair value option was elected for the equity investments for the purpose of enhancing the transparency of their financial condition as fair value is consistent with how the Predecessor Company and Successor Company manage the risks of these investments. Equity investments carried at estimated fair value are presented separately on the consolidated balance sheets. Interests in Joint Ventures and Partnerships The Predecessor Company and Successor Company both elected the fair value option of accounting for certain of their interests in joint ventures and partnerships. The fair value option of accounting was elected for 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 Predecessor Company and Successor Company manage the risks of these interests. Interests in joint ventures and partnerships are presented separately on the consolidated balance sheets. Equity Method Investments The Predecessor Company and Successor Company hold certain investments where the Predecessor Company and Successor Company do not control the investee nor are the primary beneficiary, but can exert significant influence over the financial and operating policies of the investee. Significant influence typically exists if the Predecessor Company and Successor Company have a 20% to 50% ownership interest in the investee unless predominant evidence to the contrary exists. The evaluation of whether the Predecessor Company and Successor Company exerts control or significant influence over the financial and operational policies of an investee may also require significant judgment based on the facts and circumstances surrounding each individual investment. Factors include investor voting or other rights, any influence the Predecessor Company and Successor Company may have on the governing board of the investee and the relationship between the Predecessor Company and Successor Company and other investors in the entity. The fair value option was elected to account for these equity investments with any changes in estimated fair value recorded in net realized and unrealized gain (loss) on investments in the consolidated statements of operations. Corporate Loans, Net In connection with the Successor Company’s application of acquisition accounting related to the Merger Transaction and to align more closely with KKR & Co.’s method of accounting, the Successor 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 gain (loss) on investments in the 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 Predecessor Company initially recorded corporate loans at their purchase prices. The Successor 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 Predecessor Company transferred to held for sale were transferred at the lower of cost or estimated fair value. As of the Effective Date, the Successor 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 Predecessor 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 collat |
SECURITIES
SECURITIES | 12 Months Ended |
Dec. 31, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
SECURITIES | SECURITIES In connection with the Merger Transaction and as of the Effective Date, the Company accounts for all of its securities at estimated fair value with unrealized gains and losses recorded in the consolidated statements of operations. 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 consolidated statements of operations; and (iii) RMBS, at estimated fair value, with unrealized gains and losses recorded in the consolidated statements of operations. Successor Company The following table summarizes the Company’s securities as of December 31, 2016 and December 31, 2015 , which are carried at estimated fair value (amounts in thousands): December 31, 2016 December 31, 2015 Par Amortized Cost Estimated Fair Value Par Amortized Cost Estimated Fair Value Securities, at estimated fair value $ 371,785 $ 304,628 $ 229,206 $ 520,135 $ 474,201 $ 417,519 Total $ 371,785 $ 304,628 $ 229,206 $ 520,135 $ 474,201 $ 417,519 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 gains (losses) from securities (amounts in thousands): Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Net realized gains (losses) $ 5,763 $ (10,797 ) $ 2,891 Net (increase) decrease in unrealized losses (18,783 ) (36,273 ) (11,460 ) Net realized and unrealized gains (losses) $ (13,020 ) $ (47,070 ) $ (8,569 ) Defaulted Securities As of December 31, 2016 and December 31, 2015 , no corporate debt securities in the Company's portfolio were in default. Concentration Risk The Company’s corporate debt securities portfolio has certain credit risk concentrated in a limited number of issuers. As of December 31, 2016 , approximately 97% 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, Preferred Proppants LLC and Mizuho Bank Ltd., which combined represented $134.7 million, or approximately 71% of the estimated fair value of the Company’s corporate debt securities. As of December 31, 2015, approximately 89% 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, Preferred Proppants LLC and JC Penney Corp. Inc., which combined represented $192.5 million , or approximately 52% of the estimated fair value of the Company’s corporate debt securities. Pledged Assets Note 6 to these 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, 2016 and December 31, 2015 (amounts in thousands): December 31, 2016 December 31, 2015 Pledged as collateral for collateralized loan obligation secured debt $ 13,337 $ 170,365 Total $ 13,337 $ 170,365 Predecessor Company Under the Predecessor Company, the majority of unrealized losses 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 that were determined to be temporarily impaired, the Company did not intend to sell or believed 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 these securities available-for-sale. During the four months ended April 30, 2014, the Company recognized losses totaling $4.4 million 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 gain (loss) on investments in the 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 Company recorded gross realized gains of $2.5 million and gross realized losses of zero for the four months ended April 30, 2014. Troubled Debt Restructurings As discussed above in Note 2 to these consolidated financial statements, beginning the Effective Date, the Company accounted for all of its securities at estimated fair value with unrealized gains and losses recorded in the 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 4 to these consolidated financial statements for further discussion on the loan TDRs related to this single issuer. As of April 30, 2014, no securities modified as TDRs were in default within a twelve month period subsequent to their original restructuring. |
CORPORATE LOANS AND ALLOWANCE F
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES | 12 Months Ended |
Dec. 31, 2016 | |
Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract] | |
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES | 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 December 31, 2016 and December 31, 2015 (amounts in thousands): December 31, 2016 December 31, 2015 Par Amortized Cost Estimated Fair Value Par Amortized Cost Estimated Fair Value Corporate loans, at estimated fair value $ 3,433,059 $ 3,419,483 $ 3,305,264 $ 5,722,646 $ 5,619,815 $ 5,188,610 Total $ 3,433,059 $ 3,419,483 $ 3,305,264 $ 5,722,646 $ 5,619,815 $ 5,188,610 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 gains (losses) from corporate loans (amounts in thousands): Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Net realized gains (losses) $ (234,354 ) $ (51,356 ) $ 1,411 Net (increase) decrease in unrealized losses 312,340 (195,256 ) (204,006 ) Net realized and unrealized gains (losses) $ 77,986 $ (246,612 ) $ (202,595 ) For the corporate loans measured at estimated fair value under the fair value option of accounting, $12.1 million and $137.7 million , respectively, of net losses were attributable to changes in instrument specific credit risk for the years ended December 31, 2016 and December 31, 2015 . For the eight months ended December 31, 2014, $135.1 million of net losses were attributable to changes in instrument specific credit risk. Gains and losses attributable to changes in instrument specific credit risk were determined by excluding the non-credit components of gains and losses, such as those due to changes in interest rates and general market conditions. In addition, gains and losses attributable to those loans on non-accrual status or specifically identified as more volatile based on financial or operating performance, restructuring or other factors, were considered instrument specific. 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 December 31, 2016 , the Company held a total par value and estimated fair value of $114.1 million and $26.0 million , respectively, of non-accrual loans carried at estimated fair value. As of December 31, 2016 , the Company had no 90 or more days past due loans. As of December 31, 2015, the Company held a total par value and estimated fair value of $435.2 million and $127.5 million, respectively, of non-accrual loans. As of December 31, 2015, the Company held a total par value and estimated fair value of $374.7 million and $118.2 million, respectively, of 90 or more days past due loans, all of which were on non-accrual status as of December 31, 2015. Defaulted Loans As of December 31, 2016 , the Company held no corporate loans that were in default. As of December 31, 2015, the Company held one corporate loan that was in default with a total estimated fair value of $113.6 million from one issuer. Concentration Risk The Company’s corporate loan portfolio has certain credit risk concentrated in a limited number of issuers. As of December 31, 2016 under the Successor Company where all corporate loans are carried at estimated fair value, approximately 21% of the total estimated fair value of the Company’s corporate loan portfolio was concentrated in twenty issuers, with no single issuer individually greater than 2% of the aggregate estimated fair value of the Company’s corporate loans. As of December 31, 2015 under the Successor Company where all corporate loans are carried at estimated fair value, approximately 31% 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 PQ Corp, which combined represented $434.6 million , or approximately 8% of the aggregate estimated fair value of the Company’s corporate loans. Pledged Assets Note 6 to these consolidated financial statements describes the Company’s borrowings under which the Company has pledged loans for borrowings. The following table summarizes the corporate loans, at estimated fair value, pledged as collateral as of December 31, 2016 and December 31, 2015 (amounts in thousands): December 31, 2016 December 31, 2015 Pledged as collateral for collateralized loan obligation secured debt $ 3,048,841 $ 4,917,123 Total $ 3,048,841 $ 4,917,123 Predecessor Company Allowance for Loan Losses As discussed above in Note 2 to these 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 described in Note 2 to these 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 (amounts in thousands): For the four months ended April 30, 2014 Allowance for loan losses: Beginning balance $ 224,999 Provision for loan losses — Charge-offs (1,458 ) Ending balance $ 223,541 The charge-offs recorded during the four months ended April 30, 2014 were comprised primarily of loans modified in TDRs and loans transferred to loans held for sale. 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. While all of the Company’s impaired loans were typically 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). 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 nonaccrual 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. As described in Note 2 to these 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. Loans at Estimated Fair Value For the corporate loans measured at estimated fair value under the fair value option of accounting, $2.8 million of net gains were attributable to changes in instrument specific credit risk for the four months ended April 30, 2014. Gains and losses attributable to changes in instrument specific credit risk were determined by excluding the non-credit components of gains and losses, such as those due to changes in interest rates and general market conditions. In addition, gains and losses attributable to those loans on non-accrual status or specifically identified as more volatile based on financial or operating performance, restructuring or other factors, were considered instrument specific. Loans Held For Sale and the Lower of Cost or Fair Value Adjustment As discussed above in Note 2 to these 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. 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. 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, the Company did no t 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. Troubled Debt Restructurings As discussed above in Note 2 to these 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. 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 6 months . The following table presents the aggregate balance of loans whose terms had been modified in a TDR (dollar amounts in thousands): Four months ended April 30, 2014 Number of TDRs Pre-modification outstanding recorded investment(1) Post-modification outstanding recorded 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. 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. As of April 30, 2014, there were no commitments to lend additional funds to the issuers whose loans had been modified in a TDR and 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. 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. |
EQUITY INVESTMENTS AND INTEREST
EQUITY INVESTMENTS AND INTERESTS IN JOINT VENTURES AND PARTNERSHIPS | 12 Months Ended |
Dec. 31, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
EQUITY INVESTMENTS AND INTERESTS IN JOINT VENTURES AND PARTNERSHIPS | EQUITY INVESTMENTS AND INTERESTS IN JOINT VENTURES AND PARTNERSHIPS The Company holds interests in joint ventures and partnerships, certain of which (i) the Company participates alongside affiliates of the Manager through which the Company contributes capital for assets, including development projects related to commercial real estate and specialty lending focused businesses or (ii) are held as interests in private or public funds managed by KKR. Refer to Note 11 to these consolidated financial statements for further discussion. As of December 31, 2016 and December 31, 2015, the Company held $794.0 million and $888.4 million , respectively, of interests in joint ventures and partnerships carried at estimated fair value. In addition, as of December 31, 2016 and December 31, 2015, the Company held $168.7 million and $262.9 million , respectively, of equity investments, which were carried at estimated fair value and comprised primarily of common and preferred stock. Net Realized and Unrealized Gains (Losses) The following tables present the Company’s realized and unrealized gains (losses), which are accounted for similarly to securities and loans, from equity investments and interests in joint ventures and partnerships (amounts in thousands): Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Equity Investments Interests in Joint Ventures and Partnerships(1) Equity Investments Interests in Joint Ventures and Partnerships(1) Equity Investments Interests in Joint Ventures and Partnerships (1) Net realized gains (losses) $ (18,209 ) $ 18,253 $ 12,456 $ 16,986 $ (556 ) $ 4,272 Net (increase) decrease in unrealized losses (27,729 ) (60,670 ) (28,297 ) (135,811 ) (30,168 ) (112,038 ) Net realized and unrealized gains (losses) $ (45,938 ) $ (42,417 ) $ (15,841 ) $ (118,825 ) $ (30,724 ) $ (107,766 ) (1) Includes net loss attributable to noncontrolling interests of $11.8 million , $23.4 million and $6.0 million for the years ended December 31, 2016 and 2015, and eight months ended December 31, 2014, respectively. For the four months ended April 30, 2014, net realized gains and net decrease in unrealized losses for equity investments totaled $12.0 million and $12.4 million , respectively. For the four months ended April 30, 2014, net realized gains (losses) and net increase in unrealized losses for interests in joint ventures and partnerships totaled zero and $1.4 million , respectively. Equity Method Investments The Company holds certain investments where the Company does not control the investee and where the Company is not the primary beneficiary, but can exert significant influence over the financial and operating policies of the investee. Significant influence typically exists if the Company has a 20% to 50% ownership interest in the investee unless predominant evidence to the contrary exists. Under the equity method of accounting, the Company records its proportionate share of net income or loss based on the investee’s financial results. Given that the Company elected the fair value option to account for these equity method investments, the Company’s share of the investee’s underlying net income or loss predominantly represents fair value adjustments in the investments. Changes in estimated fair value are recorded in net realized and unrealized gain (loss) on investments in the consolidated statements of operations. As of December 31, 2016 and December 31, 2015, the Company had equity method investments, at estimated fair value, totaling $408.3 million and $506.5 million , respectively. The Company's equity method investments are comprised primarily of the following issuers with the respective ownership percentages: (i) Maritime Credit Corporation Ltd., which the Company holds approximately 31% through its ownership of KKR Nautilus Aggregator Limited, (ii) LCI Helicopters Limited, which the Company holds approximately 33% common equity interest in and (iii) Mineral Acquisition Company, which the Company holds approximately 70% through its ownership of KKR Royalty Aggregator LLC. KKR Royalty Aggregator LLC is an investment company for accounting purposes and accordingly, does not consolidate Mineral Acquisition Company, which it wholly-owns. The Company consolidates both KKR Nautilus Aggregator Limited and KKR Royalty Aggregator LLC and reflects all ownership interests held by third parties as noncontrolling interests in its financial statements. Separate financial information for two of the Company's equity method investments: Trinity River Energy, LLC held through KNR Trinity Holdings LLC and Maritime Credit Corporation Ltd. held through KKR Nautilus Aggregator Limited are included as exhibits to this Annual Report on Form 10-K. Summarized Financial Information The following table shows summarized financial information for the Company’s equity method investments reported under the fair value option of accounting assuming 100% ownership (amounts in thousands): Credit Commercial Real Estate Natural Resources As of December 31, 2016 2015 2016 2015 2016 2015 Total assets $ 761,512 $ 628,165 $ 710,688 $ 878,878 $ 137,518 $ 137,128 Total liabilities $ 532,693 $ 418,281 $ 682,865 $ 812,935 $ — $ 90 Redeemable stock $ — $ — $ — $ — $ — $ — Noncontrolling interests $ — $ — $ — $ — $ — $ — The following table shows summarized financial information for the Company’s equity method investments, which were reported under the fair value option of accounting and were determined to be significant as defined by accounting guidance, assuming 100% ownership (amounts in thousands): Successor Company Credit Commercial Real Estate Natural Resources Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Revenues $ 45,332 $ 29,503 $ 14,157 $ 186,252 $ 138,431 $ 77,661 $ 6,479 $ 4,673 $ 5,057 Expenses (1) $ 55,412 $ 40,408 $ 19,325 $ 124,070 $ 148,463 $ 80,685 $ 791 $ 5,685 $ 3,600 Net income (loss) (2) $ 12,709 $ (20,796 ) $ (19,118 ) $ 62,181 $ 21,629 $ (3,024 ) $ 5,688 $ (1,012 ) $ 1,457 Predecessor Company Credit Commercial Real Estate Natural Resources Four months ended April 30, 2014 Four months ended April 30, 2014 Four months ended April 30, 2014 Revenues $ 3,967 $ 30,338 $ 2,579 Expenses (1) $ 4,350 $ 36,914 $ 1,763 Net income (loss) (2) $ 8,741 $ (6,576 ) $ 815 (1) Expenses include items such as operating costs, professional fees, management fees, depreciation and amortization, compensation, acquisition costs and other general and administrative costs for Credit and Commercial Real Estate. Expenses include items such as lease operating, production taxes, depreciation, depletion and amortization, and other general and administrative costs for Natural Resources. (2) Net income (loss) includes realized and unrealized gains and losses, as well as other than temporary impairment. |
BORROWINGS
BORROWINGS | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
BORROWINGS | BORROWINGS The Company accounts for its collateralized loan obligation secured notes at estimated fair value, with changes in estimated fair value recorded in the consolidated statements of operations, and all of its other borrowings at amortized cost. As of January 1, 2015, the Company adopted the measurement alternative issued by the FASB whereby the financial liabilities of its consolidated CLOs were measured using the fair value of the financial assets of its consolidated CLOs, which was determined to be more observable. Certain information with respect to the Company’s borrowings as of December 31, 2016 is summarized in the following table (dollar amounts in thousands): Par Carrying Value(1) Weighted Average Borrowing Rate Weighted Average Remaining Maturity (in days) Collateral(2) CLO 2012-1 secured notes $ 367,500 $ 378,978 3.01 % 2906 $ 333,931 CLO 2012-1 subordinated notes(3) 18,000 9,613 15.40 2906 16,356 CLO 2012-1 subordinated notes to affiliates(3) 19,663 10,501 — 2906 17,867 CLO 2013-1 secured notes 458,500 470,354 2.59 3118 450,836 CLO 2013-1 subordinated notes to affiliates(3) 23,063 14,970 — 3118 22,678 CLO 2013-2 secured notes 339,250 343,208 2.88 3310 323,644 CLO 2013-2 subordinated notes to affiliates(3) 30,959 19,074 — 3310 29,535 CLO 9 secured notes 463,750 471,824 2.89 3575 437,048 CLO 9 subordinated notes(3) 15,000 10,170 15.58 3575 14,136 CLO 9 subordinated notes to affiliates(3) 33,400 22,646 6.11 3575 31,477 CLO 10 secured notes 368,000 377,369 3.18 3271 356,393 CLO 10 subordinated notes to affiliates(3) 39,146 22,416 7.53 3271 37,912 CLO 15 secured notes 370,500 370,632 3.06 4309 376,971 CLO 15 subordinated notes(3) 12,100 11,430 — 4309 12,311 CLO 16 secured notes 644,300 640,386 3.16 4403 596,916 CLO 16 subordinated notes(3) 4,500 3,977 — 4403 4,169 Total collateralized loan obligation secured debt 3,207,631 3,177,548 3,062,180 CLO warehouse facility(4) 20,000 20,000 2.25 305 101,976 7.500% Senior notes 115,043 123,008 7.50 9210 — Junior subordinated notes 283,517 250,154 3.34 7218 — Total borrowings $ 3,626,191 $ 3,570,710 $ 3,164,156 (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 secured and subordinated notes are calculated pro rata based on the par amount for each respective CLO. (3) Subordinated notes to unaffiliated and affiliated parties 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 cash distributions during the year, if any. (4) Represents a $200.0 million CLO warehouse facility. Certain information with respect to the Company’s borrowings as of December 31, 2015 is summarized in the following table (dollar amounts in thousands): Par Carrying Value(1) Weighted Average Borrowing Rate Weighted Average Remaining Maturity (in days) Collateral(2) CLO 2007-1 secured notes $ 1,544,032 $ 1,630,293 2.10 % 1962 $ 1,732,855 CLO 2007-1 subordinated notes(3) 134,468 74,954 11.66 1962 150,912 CLO 2007-A subordinated notes(3) 15,096 17,060 14.49 654 48,856 CLO 2011-1 senior debt 249,301 249,301 1.67 1689 310,498 CLO 2012-1 secured notes 367,500 365,383 2.59 3272 361,684 CLO 2012-1 subordinated notes(3) 18,000 10,845 15.82 3272 17,715 CLO 2013-1 secured notes 458,500 450,280 2.05 3484 479,391 CLO 2013-2 secured notes 339,250 334,187 2.52 3676 347,989 CLO 9 secured notes 463,750 454,103 2.33 3941 463,574 CLO 9 subordinated notes(3) 15,000 9,972 15.92 3941 14,994 CLO 10 secured notes 368,000 363,977 2.75 3637 384,991 CLO 11 secured notes 507,750 491,699 2.38 4123 501,286 CLO 11 subordinated notes(3) 28,250 23,306 5.28 4123 27,890 CLO 13 secured notes 370,000 364,986 2.84 4399 323,781 CLO 13 subordinated notes(3) 4,000 3,400 — 4399 3,500 Total collateralized loan obligation secured debt 4,882,897 4,843,746 5,169,916 8.375% Senior notes 258,750 289,660 8.38 9451 — 7.500% Senior notes 115,043 123,346 7.50 9576 — Junior subordinated notes 283,517 248,498 5.43 7584 — Total borrowings $ 5,540,207 $ 5,505,250 $ 5,169,916 (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 year, if any. CLO Debt For the CLO secured notes, which the Company measured based on the estimated fair value of the financial assets of its CLOs as of January 1, 2015, there were no gains (losses) attributable to changes in instrument specific credit risk for the years ended December 31, 2016 and 2015. For the eight months ended December 31, 2014, $27.0 million of net unrealized gains were attributable to changes in instrument specific credit risk related to the Company's CLO subordinated notes. For subordinated notes, which have no stated interest rate but are entitled to residual value upside of the transactions, the valuation is based on the performance of the underlying collateral held in the CLO and thus considered instrument specific. Prior to the Effective Date, the Company’s CLO secured notes were carried at amortized cost. Accordingly, no changes in estimated fair value on the CLO secured notes were recorded on the Company’s consolidated statements of operations for the four months ended April 30, 2014. 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 2013-1, CLO 2013-2, CLO 9, CLO 10, CLO 15 and CLO 16 will end their reinvestment periods during July 2017, January 2018, October 2018, December 2018, October 2020 and January 2021, respectively. 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 August 2016, the Company called CLO 2007-1 and repaid all senior and mezzanine notes totaling $945.6 million par amount. In addition, during October 2016, the remaining $134.5 million par amount of CLO 2007-1 subordinated notes owned by third parties were deemed repaid in full, whereby the Company distributed assets held as collateral in CLO 2007-1 to the subordinated note holders. During November 2015, the Company called CLO 2005-2 and repaid all senior and mezzanine notes totaling $140.2 million par amount. In addition, during July 2015, the Company called CLO 2005-1 and repaid all senior and mezzanine notes totaling $142.4 million par amount. Furthermore, during February 2015, the Company called CLO 2006-1 and repaid aggregate senior and mezzanine notes totaling $181.8 million par amount. As described below in Note 7 to these consolidated financial statements, the Company used pay-fixed, receive-variable interest rate swaps to hedge interest rate risk associated with its CLOs. In connection with the repayment of CLO 2007-1 notes and CLO 2006-1 notes, the related interest rate swaps, with contractual notional amounts of $142.3 million and $84.0 million , respectively, were terminated. During the year ended December 31, 2016, excluding the amounts repaid for called CLOs, $2.0 million of original CLO 13 secured notes were repaid. Comparatively, during the year ended December 31, 2015, excluding the amounts repaid for called CLOs, $887.1 million of original CLO 2007-1 senior notes were repaid. CLO 2011-1 and CLO 2016-1 do not have reinvestment periods and all principal proceeds from holdings in the respective CLOs are used to amortize the transaction. During the year ended December 31, 2016, $348.4 million par amount of original CLO 2016-1 secured and subordinated notes were repaid in full. In addition, during December 2016, the remaining $8.2 million par amount of CLO 2016-1 subordinated notes owned by third parties were deemed repaid in full, whereby the Company distributed assets held as collateral in CLO 2016-1 to subordinated note holders. During March 2016, the Company called CLO 2011-1 and repaid all senior debt totaling $249.3 million par amount. Comparatively, during the year ended December 31, 2015, $153.2 million of original CLO 2011-1 senior notes were repaid. CLO Transactions During the year ended December 31, 2016, the Company issued $7.0 million par amount of CLO 13 class F notes for proceeds of $5.9 million . During December 2016, the Company declared a distribution in kind on its common shares of certain subordinated notes to its Parent as the sole holder of its common shares and distributed an aggregate $106.5 million par amount of CLO 2012-1, CLO 2013-1, CLO 2013-2, CLO 9, CLO 10, CLO 11 and CLO 13 subordinated notes. These notes were previously owned by the Company and eliminated in consolidation. Following the distribution, certain of the subordinated notes were held by an affiliate of the Manager and reflected as collateralized loan obligation junior secured notes to affiliates, at estimated fair value, on the Company's consolidated balance sheets. However, for certain CLOs, specifically CLO 11 and CLO 13, it was determined that the Company no longer met the consolidation criteria and therefore de-consolidated these two CLOs, resulting in a reduction of consolidated CLO liabilities of approximately $967.3 million . On December 15, 2016, the Company closed CLO 16, a $711.3 million secured financing transaction maturing on January 20, 2029. The Company issued $644.3 million par amount of senior secured notes to unaffiliated investors, $634.8 million of which was floating rate with a weighted-average coupon of three-month LIBOR plus 2.04% and $9.5 million of which was fixed rate with a coupon of 4.80% . The Company also issued $4.5 million par amount of subordinated notes to unaffiliated investors. The investments that are owned by CLO 16 collateralize the CLO 16 debt, and as a result, those investments are not available to the Company, its creditors or shareholders. On September 14, 2016, the Company closed CLO 15, a $410.8 million secured financing transaction maturing on October 18, 2028. The Company issued $370.5 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 2.05% . The Company also issued $12.1 million par amount of subordinated notes to unaffiliated investors. The investments that are owned by CLO 15 collateralize the CLO 15 debt, and as a result, those investments are not available to the Company, its creditors or shareholders. On June 7, 2016, the Company closed CLO 2016-1, a $426.4 million secured financing transaction maturing on June 7, 2018, which was funded during the third quarter of 2016. The Company issued $330.9 million par amount of senior secured notes to unaffiliated investors at a rate of three-month LIBOR plus 1.70% and $25.7 million par amount of subordinated notes to unaffiliated investors. The investments that are owned by CLO 2016-1 collateralize the CLO 2016-1 debt, and as a result, those investments are not available to the Company, its creditors or shareholders. During May 2016, the Company declared a distribution in kind on its common shares of certain subordinated notes to its Parent as the sole holder of its common shares and distributed an aggregate $96.5 million par amount of CLO 9, CLO 10, CLO 11 and CLO 13 subordinated notes. These notes were previously owned by the Company and eliminated in consolidation. Following the distribution, the subordinated notes were held by an affiliate of the Manager and reflected as collateralized loan obligation junior secured notes to affiliates, at estimated fair value, on the Company's consolidated balance sheets. During April 2016, the remaining $15.1 million par amount of CLO 2007-A subordinated notes owned by third parties were deemed repaid in full, whereby the Company distributed assets held as collateral in CLO 2007-A to the subordinated note holders. During the year ended December 31, 2015, the Company issued $30.0 million par amount of CLO 2005-2 class E notes for proceeds of $30.2 million and $35.0 million par amount of CLO 2007-1 class D and E notes for proceeds of $35.1 million . On December 16, 2015, the Company closed CLO 13, a $412.0 million secured financing transaction maturing on January 16, 2028. The Company issued $370.0 million par amount of senior secured notes to unaffiliated investors, $350.0 million of which was floating rate with a weighted-average coupon of three-month LIBOR plus 2.19% and $20.0 million of which was fixed rate with a weighted-average coupon of 3.83% . The Company also issued $4.0 million of subordinated notes to unaffiliated investors. The investments that are owned by CLO 13 collateralize the CLO 13 debt, and as a result, those investments are not available to the Company, its creditors or shareholders. On May 7, 2015 , the Company closed CLO 11, a $564.5 million secured financing transaction maturing on April 15, 2027 . The Company issued $507.8 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 2.06% . The Company also issued $28.3 million of subordinated notes to unaffiliated investors. The investments that are owned by CLO 11 collateralize the CLO 11 debt, and as a result, those investments are not available to the Company, its creditors or shareholders. CLO Warehouse Facility On November 1, 2016, CLO 17 entered into a $200.0 million CLO warehouse facility ("CLO 17 Warehouse"), which will mature upon the closing of CLO 17. The CLO 17 Warehouse was used to purchase assets for the CLO transaction in advance of its closing date upon which the proceeds of the CLO closing will be used to repay the CLO 17 Warehouse in full. Debt issued under the CLO 17 warehouse was non-recourse to the Company beyond the assets of CLO 17 and bore interest rates ranging from three-month LIBOR plus 1.25% to 2.20% . Upon the closing of CLO 17, the aggregate amount outstanding under the CLO 17 Warehouse will be repaid. On July 22, 2015, CLO 13 entered into a $350.0 million CLO warehouse facility ("CLO 13 Warehouse"), which matured upon the closing of CLO 13 on December 16, 2015. The CLO 13 Warehouse was used to purchase assets for the CLO transaction in advance of its closing date upon which the proceeds of the CLO closing were used to repay the CLO 13 Warehouse in full. Debt issued under the CLO 13 Warehouse was non-recourse to the Company beyond the assets of CLO 13 and bore interest at rates ranging from three-month LIBOR plus 1.50% to 2.25% . Upon the closing of CLO 13 on December 16, 2015, the aggregate amount outstanding under the CLO 13 Warehouse was repaid. As mentioned above, the Company de-consolidated CLO 13 as of December 31, 2016. On March 2, 2015, CLO 11 entered into a $ 570.0 million CLO warehouse facility ("CLO 11 Warehouse"), which matured upon the closing of CLO 11 on May 7, 2015. The CLO 11 Warehouse was used to purchase assets for the CLO transaction in advance of its closing date upon which the proceeds of the CLO closing were used to repay the CLO 11 Warehouse in full. Debt issued under the CLO 11 Warehouse was non-recourse to the Company beyond the assets of CLO 11 and bore interest at rates ranging from three-month LIBOR plus 1.25% to 1.75% . Upon the closing of CLO 11 on May 7, 2015, the aggregate amount outstanding under the CLO 11 Warehouse was repaid. As mentioned above, the Company de-consolidated CLO 11 as of December 31, 2016. Senior Notes On November 15, 2016, the Company redeemed $258.8 million aggregate principal amount of 8.375% Senior Notes due 2041 (the "Notes due 2041"), in accordance with the optional redemption provisions provided in the documents governing the Notes due 2041. The transaction resulted in the Company recording a gain of $29.8 million . Contractual Obligations The table below summarizes the Company’s contractual obligations (excluding interest) under borrowing agreements as of December 31, 2016 (amounts in thousands): Payments Due by Period Total Less than 1 year 1 - 3 years 3 - 5 years More than 5 years CLO 2012-1 notes $ 405,163 $ — $ — $ — $ 405,163 CLO 2013-1 notes 481,563 — — — 481,563 CLO 2013-2 notes 370,209 — — — 370,209 CLO 9 notes 512,149 — — — 512,149 CLO 10 notes 407,147 — — — 407,147 CLO 15 notes 382,600 — — — 382,600 CLO 16 notes 648,800 — — — 648,800 CLO warehouse facility 20,000 20,000 — — — Senior notes 115,043 — — — 115,043 Junior subordinated notes 283,517 — — — 283,517 Total $ 3,626,191 $ 20,000 $ — $ — $ 3,606,191 The remaining contractual maturities in the table above were allocated assuming no prepayments and represent the principal amount of all notes, excluding any discount and accounting adjustments. Expected maturities may differ from contractual maturities because the Company, as the borrower, may have the right to call or prepay certain obligations, with or without call or prepayment penalties. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS The Company enters into derivative transactions in order to hedge its interest rate and foreign currency exposure to the effects of interest rate and foreign currency 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 December 31, 2016 and December 31, 2015 (amounts in thousands): As of December 31, 2016 As of December 31, 2015 Notional Estimated Fair Value Notional Estimated Fair Value Free-Standing Derivatives: Interest rate swaps $ 141,000 $ (27,263 ) $ 297,667 $ (41,743 ) Foreign exchange forward contracts and options (460,282 ) 38,476 (375,524 ) 38,608 Common stock warrants — 1,528 — — Options — 1,001 — 95 Total $ 13,742 $ (3,040 ) Cash Flow Hedges Interest Rate Swaps As described above in Note 2 to these 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 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 CLOs as well as certain of its floating rate junior subordinated notes. The Predecessor Company designated these interest rate swaps as cash flow hedges and changes in the estimated fair value of the interest rate swaps were recorded through accumulated other comprehensive income (loss), with gains or losses representing hedge ineffectiveness, if any, recognized in earnings during the reporting period. The following table presents the net gains (losses) recognized in other comprehensive income (loss) related to derivatives in cash flow hedging relationships (amounts in thousands): For the four months ended April 30, 2014 Net gains (losses) recognized in accumulated other comprehensive income (loss) on cash flow hedges $ (5,442 ) For all hedges where hedge accounting was 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, the Company did not recognize any ineffectiveness in income on the consolidated statements of operations from its cash flow hedges. As of December 31, 2016 and December 31, 2015, the Successor Company had interest rate swaps with a notional amount of $141.0 million and $297.7 million , respectively, 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 consolidated statements of operations. Unrealized gains (losses) represent the change in fair value of the derivative instruments and are noncash items. 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 December 31, 2016 and December 31, 2015, the net contractual notional balance of our foreign exchange options and forward contract liabilities totaled $460.3 million and $375.5 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 consolidated statements of operations (amounts in thousands): Successor Company Year ended December 31, 2016 Year ended December 31, 2015 Realized gains (losses) Unrealized gains (losses) Total Realized gains (losses) Unrealized gains (losses) Total Interest rate swaps $ (9,316 ) $ 13,301 $ 3,985 $ (5,297 ) $ 11,610 $ 6,313 Foreign exchange forward contracts and options(1) 18,419 (15,098 ) 3,321 30,687 (27,747 ) 2,940 Common stock warrants 142 (757 ) (615 ) — (2,412 ) (2,412 ) Total rate of return swaps — — — 304 130 434 Options — 906 906 — (5,117 ) (5,117 ) Net realized and unrealized gains (losses) $ 9,245 $ (1,648 ) $ 7,597 $ 25,694 $ (23,536 ) $ 2,158 (1) Net of foreign exchange remeasurement gain or loss on foreign denominated assets. Successor Company Predecessor Company Eight months ended December 31, 2014 Four months ended April 30, 2014 Realized gains (losses) Unrealized gains (losses) Total Realized gains (losses) Unrealized gains (losses) Total Interest rate swaps $ — $ (6,890 ) $ (6,890 ) $ — $ — $ — Commodity swaps (962 ) (698 ) (1,660 ) (2,515 ) (5,856 ) (8,371 ) Credit default swaps(1) — — — (2,167 ) 1,986 (181 ) Foreign exchange forward contracts and options(2) (6,609 ) (1,561 ) (8,170 ) (2,068 ) 2,784 716 Common stock warrants 1,237 (1,082 ) 155 — 137 137 Total rate of return swaps (286 ) (184 ) (470 ) (2,349 ) 284 (2,065 ) Options — (1,472 ) (1,472 ) — (19 ) (19 ) Net realized and unrealized gains (losses) $ (6,620 ) $ (11,887 ) $ (18,507 ) $ (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. A master netting arrangement may allow each counterparty to net settle amounts owed between the Company and the counterparty as a result of multiple, separate derivative transactions. The Company has International Swaps and Derivatives Association ("ISDA") agreements or similar agreements with certain financial institutions which contain netting provisions. While these derivative instruments are eligible to be offset in accordance with applicable accounting guidance, the Company has elected to present derivative assets and liabilities on a gross basis in its consolidated balance sheets. As of December 31, 2016 , if the Company had elected to offset the asset and liability balances of its derivative instruments, the net positions would total the following with its respective financial institution counterparties: (i) $2.6 million net asset, net of $3.4 million collateral posted, (ii) $1.0 million net asset, net of $8.0 million collateral posted and (iii) $7.5 million net asset, net of $11.3 million collateral held. Comparatively, as of December 31, 2015, if the Company had elected to offset the asset and liability balances of its derivative instruments, the net positions would total the following with its respective financial institution counterparties: (i) $2.4 million net asset, net of $20.7 million collateral posted, (ii) $1.6 million net asset, net of $0.1 million collateral held and (iii) $9.1 million net asset, net of $23.6 million collateral held. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS Financial Instruments Not Carried at Estimated Fair Value As described above in Note 2 to these 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 December 31, 2016 (amounts in thousands): As of December 31, 2016 Fair Value Hierarchy Carrying Amount Estimated Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash, restricted cash, and cash equivalents $ 1,139,549 $ 1,139,549 $ 1,139,549 $ — $ — Liabilities: Senior notes 123,008 116,699 116,699 — — Junior subordinated notes 250,154 210,084 — — 210,084 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, 2015 (amounts in thousands): As of December 31, 2015 Fair Value Hierarchy Carrying Amount Estimated Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash, restricted cash, and cash equivalents $ 807,496 $ 807,496 $ 807,496 $ — $ — Liabilities: Senior notes 413,006 394,390 394,390 — — Junior subordinated notes 248,498 216,757 — — 216,757 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 December 31, 2016 , 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 Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of December 31, 2016 Assets: Securities: Corporate debt securities $ — $ 13,337 $ 175,206 $ 188,543 Residential mortgage-backed securities — — 40,663 40,663 Total securities — 13,337 215,869 229,206 Corporate loans — 3,176,070 129,194 3,305,264 Equity investments, at estimated fair value 36,353 — 132,305 168,658 Interests in joint ventures and partnerships, at estimated fair value — — 793,996 793,996 Derivatives: Foreign exchange forward contracts and options — 41,636 2,282 43,918 Options — — 1,001 1,001 Warrants — — 1,528 1,528 Total derivatives — 41,636 4,811 46,447 Total $ 36,353 $ 3,231,043 $ 1,276,175 $ 4,543,571 Liabilities: Collateralized loan obligation secured notes $ — $ 3,177,548 $ — $ 3,177,548 Derivatives: Interest rate swaps — 27,263 — 27,263 Foreign exchange forward contracts and options — 4,152 1,290 5,442 Total derivatives — 31,415 1,290 32,705 Total $ — $ 3,208,963 $ 1,290 $ 3,210,253 The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2015, 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 Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of December 31, 2015 Assets: Securities: Corporate debt securities $ — $ 172,912 $ 194,986 $ 367,898 Residential mortgage-backed securities — — 49,621 49,621 Total securities — 172,912 244,607 417,519 Corporate loans — 4,889,876 298,734 5,188,610 Equity investments, at estimated fair value 40,765 75,533 146,648 262,946 Interests in joint ventures and partnerships, at estimated fair value — — 888,408 888,408 Derivatives: Foreign exchange forward contracts and options — 37,120 3,637 40,757 Options — — 95 95 Total derivatives — 37,120 3,732 40,852 Total $ 40,765 $ 5,175,441 $ 1,582,129 $ 6,798,335 Liabilities: Collateralized loan obligation secured notes $ — $ 4,843,746 $ — $ 4,843,746 Derivatives: Interest rate swaps — 41,743 — 41,743 Foreign exchange forward contracts and options — 1,399 750 2,149 Total derivatives — 43,142 750 43,892 Total $ — $ 4,886,888 $ 750 $ 4,887,638 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 year ended December 31, 2016 (amounts in thousands): Assets Corporate Debt Securities Residential Mortgage-Backed Securities Corporate Loans Equity Investments, at Estimated Fair Value Interests in Joint Ventures and Partnerships Foreign Exchange Options, Net Warrants Options Beginning balance as of January 1, 2016 $ 194,986 $ 49,621 $ 298,734 $ 146,648 $ 888,408 $ 2,887 $ — $ 95 Total gains or losses (for the period): Included in earnings(1) (30,466 ) 2,486 (70,721 ) (42,515 ) (45,687 ) (1,768 ) (757 ) 906 Transfers into Level 3(2) 11,739 — — 49,065 — — — — Transfers out of Level 3 — — — — — — — — Purchases — — 7,283 1,142 79,782 — — — Sales (3,145 ) — (44,441 ) (16,289 ) — (127 ) — — Settlements 2,092 (11,444 ) (61,661 ) (5,746 ) (128,507 ) — 2,285 — Ending balance as of December 31, 2016 $ 175,206 $ 40,663 $ 129,194 $ 132,305 $ 793,996 $ 992 $ 1,528 $ 1,001 Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period(1) $ (30,466 ) $ 2,483 $ (70,721 ) $ (42,515 ) $ (45,687 ) $ (1,768 ) $ (757 ) $ 906 (1) Amounts are included in net realized and unrealized gain (loss) on investments or net realized and unrealized gain (loss) on derivatives and foreign exchange in the consolidated statements of operations. (2) Corporate debt securities and equity investments, at estimated fair value, were transferred into Level 3 because observable market data was no longer available. 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 year ended December 31, 2015 (amounts in thousands): Assets Liabilities Corporate Debt Securities Residential Mortgage- Backed Securities Corporate Loans Equity Investments, at Estimated Fair Value Interests in Joint Ventures and Partnerships Foreign Exchange Options, Net Warrants Options Collateralized Loan Obligation Secured Notes Beginning balance as of January 1, 2015 $ 317,034 $ 55,184 $ 347,077 $ 81,719 $ 718,772 $ — $ — $ 5,212 $ 5,501,099 Total gains or losses (for the period): Included in earnings(1) (37,716 ) 8,398 (69,384 ) (42,472 ) (141,386 ) 2,887 (2,412 ) (5,117 ) — Transfers into Level 3 — — — — — — — — — Transfers out of Level 3(2) — — — — — — — — (5,501,099 ) Purchases 10,001 — 12,775 — 351,184 — — — — Sales (98,539 ) — (25,511 ) — — — — — — Settlements 4,206 (13,961 ) 33,777 107,401 (40,162 ) — 2,412 — — Ending balance as of December 31, 2015 $ 194,986 $ 49,621 $ 298,734 $ 146,648 $ 888,408 $ 2,887 $ — $ 95 $ — Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period(1) $ (45,488 ) $ 2,273 $ (67,368 ) $ (41,776 ) $ (141,386 ) $ 2,887 $ (2,412 ) $ (5,117 ) $ — (1) Amounts are included in net realized and unrealized gain (loss) on investments or net realized and unrealized gain (loss) on derivatives and foreign exchange in the consolidated statements of operations. (2) CLO secured notes were transferred out of Level 3 due to the adoption of accounting guidance effective January 1, 2015, whereby the debt obligations of the Company's consolidated CLOs were measured on the basis of the estimated fair value of the financial assets of the CLOs. As such, as of December 31, 2015, these debt obligations were classified as Level 2. Refer to Note 2 to these consolidated financial statement for further discussion. There were no transfers between Level 1 and Level 2 for the Company’s financial assets and liabilities measured at fair value on a recurring and non-recurring basis for the years ended December 31, 2016 and December 31, 2015. 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 December 31, 2016 (dollar amounts in thousands): Balance as of December 31, 2016 Valuation Techniques(1) Unobservable Inputs(2) Weighted Average(3) Range Impact to Valuation from an Increase in Input(4) Assets: Corporate debt securities $ 175,206 Yield analysis Yield 14% 5% - 15% Decrease Net leverage 9x 7x-16x Decrease EBITDA multiple 6x 0x - 9x Increase Discount margin 1105 1100-1150bps Decrease Market comparables LTM EBITDA multiple 12x 12x Increase Black Scholes Options Pricing Model Risk-Free Rate 1% 1% Increase Volatility 85% 85% Decrease Broker quotes Offered quotes 102 101-103 Increase Residential mortgage – backed securities $ 40,663 Discounted cash flows Probability of default 2% 0% - 3% Decrease Loss severity 43% 35% - 50% Decrease Constant prepayment rate 18% 12% - 23% (5 ) Corporate loans $ 129,194 Yield Analysis Yield 13% 11% -16% Decrease Net leverage 11x 5x - 82x Decrease EBITDA multiple 6x 0x - 19x Increase Equity investments, at estimated fair value(6) $ 132,305 Inputs to both market comparables and discounted cash flow Illiquidity discount 8% 5% - 15% Decrease Weight ascribed to market comparables 47% 0% - 100% (7 ) Weight ascribed to discounted cash flows 53% 0% - 100% (8 ) Market comparables LTM EBITDA multiple 11x 0x - 14x Increase Forward EBITDA multiple 9x 0x - 13x Increase Discounted cash flows Weighted average cost of capital 9% 7% - 14% Decrease LTM EBITDA exit multiple 8x 7x - 10x Increase Interests in joint ventures and partnerships(10) $ 793,996 Inputs to market comparables, discounted cash flow and yield analysis Weight ascribed to market comparables 27% 0% - 100% (7 ) Weight ascribed to discounted cash flows 45% 0% - 100% (8 ) Weight ascribed to yield analysis 28% 0% - 100% (9 ) Market comparables LTM EBITDA multiple 4x 1x- 9x Increase Forward EBITDA multiple 9x 9x Increase Capitalization Rate 7% 3% - 12% Decrease Discounted cash flows Weighted average cost of capital 10% 6% - 20% Decrease Average price per BOE(11) $20.26 $18.81-$22.38 Increase Yield analysis Yield 19% 19% Decrease Net leverage 2x 2x Decrease EBITDA multiple 7x 7x Increase Foreign exchange options, net $ 992 Option pricing model Forward and spot rates 10,301 6 - 13,550 (12 ) Options(13) $ 1,001 Inputs to both market comparables and discounted cash flow Illiquidity discount 10% 10% Decrease Weight ascribed to market comparables 50% 50% (8 ) Weight ascribed to discounted cash flows 50% 50% (9 ) , Market comparables LTM EBITDA multiple 9x 9x Increase Forward EBITDA multiple 7x 7x Increase Discounted cash flows Weighted average cost of capital 15% 15% Decrease LTM EBITDA exit multiple 5x 5x 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. Of the total equity investments, at estimated fair value, $14.5 million was valued solely using a market comparables technique and $20.0 million was valued solely using a discounted cash flow technique. (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 or yield analysis approach. The opposite would be true if the market comparables approach results in a lower valuation than the discounted cash flow or yield analysis 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 or yield analysis approach. The opposite would be true if the discounted cash flow approach results in a lower valuation than the market comparables or yield analysis approach. (9) The directional change from an increase in the weight ascribed to the yield analysis approach would increase the fair value of the Level 3 investments if the yield analysis approach results in a higher valuation than the market comparables or discounted cash flow approach. The opposite would be true if the yield analysis approach results in a lower valuation than the market comparables or discounted cash flow approach. (10) Inputs exclude $408.1 million of assets, comprised of an investment that was valued using an independent third party valuation firm and interests in alternative credit funds that holds multiple investments, which are valued using Level 3 value methodologies similar to those shown for the corporate debt portfolio and equity investments. Of the total interest in joint ventures and partnerships, $43.5 million was valued solely using a discounted cash flow technique, while $9.8 million was valued solely using a market comparables technique and $24.4 million was valued solely using a yield analysis. (11) Natural resources assets with an estimated fair value of $107.3 million as of December 31, 2016 were valued using commodity prices. Commodity prices may be measured using a common volumetric equivalent where one barrel of oil equivalent (‘‘BOE’’) is determined using the ratio of six thousand cubic feet of natural gas to one barrel of oil, condensate or natural gas liquids. The price per BOE is provided to show the aggregate of all price inputs for these investments over a common volumetric equivalent although the valuations for specific investments may use price inputs specific to the asset for purposes of our valuations. The discounted cash flows include forecasted production of liquids (oil, condensate, and natural gas liquids) and natural gas with a forecasted revenue ratio of approximately 23% liquids and 77% natural gas. (12) Inputs include forward rates for investments in Chinese Yuan and Indian Rupees. (13) The total options were valued using 50% a discount cash flow technique and 50% a market comparables technique. The table above excludes warrants of $1.5 million , comprised of equity-like securities in a company that were valued using an independent third party valuation firm primarily based on the contractual agreement and public disclosures of the expected sale value. 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, 2015 (dollar amounts in thousands): Balance as of Valuation Techniques(1) Unobservable Inputs(2) Weighted Average(3) Range Impact to Valuation from an Increase in Input(4) Assets: Corporate debt securities $ 194,986 Yield analysis Yield 23% 6% - 31% Decrease Net leverage 10x 10x-12x Decrease EBITDA multiple 7x 7x - 10x Increase Discount margin 750 750bps Decrease Residential mortgage – backed securities $ 49,621 Discounted cash flows Probability of default 1% 0% - 3% Decrease Loss severity 40% 35% - 45% Decrease Constant prepayment rate 15% 12% - 18% (5 ) Corporate loans $ 298,734 Yield Analysis Yield 11% 3% - 18% Decrease Net leverage 7x 1x - 19x Decrease EBITDA multiple 9x 6x - 15x Increase Equity investments, at estimated fair value(6) $ 146,648 Inputs to market comparables, discounted cash flow and broker quotes Illiquidity discount 11% 0% - 15% Decrease Weight ascribed to market comparables 52% 0% - 100% (7 ) Weight ascribed to discounted cash flows 42% 0% - 100% (8 ) Weight ascribed to broker quotes 6% 0% - 100% (9 ) Market comparables LTM EBITDA multiple 8x 4x - 13x Increase Forward EBITDA multiple 8x 3x - 11x Increase Discounted cash flows Weighted average cost of capital 9% 7% - 14% Decrease LTM EBITDA exit multiple 8x 0x - 9x Increase Broker quotes Offered quotes 4 0 - 5 Increase Interests in joint ventures and partnerships(10) $ 888,408 Inputs to both market comparables and discounted cash flow Weight ascribed to market comparables 43% 0% - 100% (7 ) Weight ascribed to discounted cash flows 57% 0% - 100% (8 ) Market comparables LTM EBITDA multiple 5x 1x - 9x Decrease Discounted cash flows Weighted average cost of capital 8% 6% - 20% Decrease Average price per BOE(11) $20.61 $14.33 - $23.22 Increase Yield analysis Yield 16% 16% Decrease Net leverage 2x 2x Decrease EBITDA multiple 8x 8x Increase Foreign exchange options, net $ 2,887 Option pricing model Forward and spot rates 11,500 6 -14,000 (12 ) Options(13) $ 95 Inputs to both market comparables and discounted cash flow Illiquidity discount 10% 10% Decrease Weight ascribed to market comparables 50% 50% (7 ) Weight ascribed to discounted cash flows 50% 50% (8 ) , Market comparables LTM EBITDA multiple 9x 9x Increase Forward EBITDA multiple 8x 8x Increase Discounted cash flows Weighted average cost of capital 14% 14% Decrease LTM EBITDA exit multiple 8x 8x 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. Of the total equity investments, at estimated fair value, $6.4 million was valued solely using broker quotes, while $11.3 million was valued solely using a market comparables technique. (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 and broker quotes, if applicable. The opposite would be true if the market comparables approach results in a lower valuation than the discounted cash flow approach and broker quotes, if applicable. (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 and broker quotes, if applicable. The opposite would be true if the discounted cash flow approach results in a lower valuation than the market comparables approach and broker quotes, if applicable. (9) The directional change from an increase in the weight ascribed to broker quotes would increase the fair value of the Level 3 investments if the broker quotes results in a higher valuation than the market comparables and discounted cash flow approaches, if applicable. The opposite would be true if the broker quotes results in a lower valuation than the market comparables and discounted cash flow approaches, if applicable. (10) Inputs exclude an asset that was valued using an independent third party valuation firm. Of the total interest in joint ventures and partnerships, $164.4 million was valued solely using a discounted cash flow technique, while $98.9 million was valued solely using a market comparables technique and $17.5 million was valued solely using a yield analysis. (11) Natural resources assets with an estimated fair value of $114.1 million as of December 31, 2015 were valued using commodity prices. Commodity prices may be measured using a common volumetric equivalent where one BOE is determined using the ratio of six thousand cubic feet of natural gas to one barrel of oil, condensate or natural gas liquids. The price per BOE is provided to show the aggregate of all price inputs for these investments over a common volumetric equivalent although the valuations for specific investments may use price inputs specific to the asset for purposes of our valuations. The discounted cash flows include forecasted production of liquids (oil, condensate, and natural gas liquids) and natural gas with a forecasted revenue ratio of approximately 25% liquids and 75% natural gas. (12) Inputs include forward rates for investments in Chinese Yuan and Indian Rupees. (13) The total options were valued using 50% a discount cash flow technique and 50% a market comparables technique. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Commitments 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 December 31, 2016 and December 31, 2015, the Company had unfunded financing commitments for corporate loans totaling $3.2 million and $8.6 million , respectively. The Company did not have any significant losses as of December 31, 2016 , nor does it expect any significant losses related to those assets for which it committed to 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 $279.4 million as of December 31, 2016 and $163.0 million as of December 31, 2015. Guarantees As of December 31, 2016 and December 31, 2015, the Company had investments, held alongside KKR and its affiliates, in real estate entities that were financed with non-recourse debt totaling approximately $1.1 billion and $1.6 billion , 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 and environmental losses. In connection with certain of these investments, joint and several nonrecourse carve-out guarantees and environmental indemnities were provided, pursuant to which KFN guarantees losses or the full amount of the applicable loan in the event of specified bad acts or environmental matters. In addition, completion guarantees were provided for certain properties to complete all or portions of development projects, and partial payment guarantees were provided for certain investments. The Company's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against it that have not yet occurred. However, based on prior experience, the Company expects the risk of material loss to be low. Contingencies From time to time, the Company may become 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 regulation, which may result in regulatory investigations or other proceedings against it. It is inherently difficult to predict the ultimate outcome of any legal proceedings, lawsuits, claims, investigations, other proceedings, and an adverse outcome in any matter could at any time have a material effect on the Company’s financial results in any particular period. Based on current discussion and consultation with counsel, management believes that there are no such matters pending that would have a material impact on the Company’s consolidated financial statements. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
SHAREHOLDERS' EQUITY | SHAREHOLDERS’ EQUITY Preferred Shares The Company has 14.95 million of Series A LLC Preferred Shares issued and outstanding, which trade on the NYSE under the ticker symbol “KFN.PR”. 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% of $373.8 million par amount. Common Shares As a result of the Merger Transaction, disclosure related to common shares below pertains to the Predecessor Company. As of April 30, 2014, the Company's amended and restated share incentive plan (the “2007 Share Incentive Plan”) authorized a total of 8,964,625 shares. The 2007 Share Incentive Plan was terminated in May 2015, but continued to govern unvested awards with respect to restricted KKR common units. All such remaining outstanding awards vested on March 1, 2016. As of December 31, 2016, all restricted KFN common shares and KFN common share options outstanding at the time of the Merger Transaction (other than any restricted Company common shares held by the Manager) had been converted to grants in respect of KKR & Co. common units and there were no outstanding equity awards in respect of KFN common shares. The following table summarizes the restricted common share transactions that occurred prior to the Merger Transaction: Predecessor Company Manager Directors Total Unvested shares as of December 31, 2013 584,634 85,194 669,828 Issued — — — Vested (243,648 ) — (243,648 ) 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 per share at April 30, 2014. There was $2.2 million of total unrecognized compensation costs related to unvested restricted common shares granted as of April 30, 2014. These costs were expected to be recognized through 2016. The following table summarizes common share option transactions that occurred prior to the Merger Transaction: Predecessor Company Number of Options Weighted Average Exercise Price Outstanding as of December 31, 2013 1,932,279 $ 20.00 Granted — — Exercised — — Forfeited — — Outstanding as of April 30, 2014 1,932,279 $ 20.00 As of April 30, 2014, 1,932,279 common share options were fully vested and exercisable. In connection with the Merger Transaction, 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 was entitled to receive in the merger. The components of share-based compensation expense that existed prior to the Merger Transaction were as follows (amounts in thousands): Predecessor Company For the four months ended April 30, 2014 Restricted common shares granted to Manager $ 690 Restricted common shares granted to certain directors 328 Total share-based compensation expense $ 1,018 |
MANAGEMENT AGREEMENT AND RELATE
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS | 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 1 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 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 consolidated statements of operations, which are described in further detail below (amounts in thousands): Successor Company Predecessor Company Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Four months ended April 30, 2014 Base management fees, net $ 7,137 $ 9,532 $ 15,145 $ 5,253 CLO management fees 23,367 28,554 18,619 11,016 Incentive fees — — — 12,882 Manager share-based compensation — — — 690 Total related party management compensation $ 30,504 $ 38,086 $ 33,764 $ 29,841 Base Management Fees The Company pays its Manager a base management fee quarterly in arrears. Beginning in 2013, 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 2014, the Company invested in a transaction that generated placement fees paid to a minority-owned affiliate of the Manager. 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 an affiliate of the Manager as a result of this minority-ownership. The table below summarizes the aggregate base management fees (amounts in thousands): Successor Company Predecessor Company Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Four months ended April 30, 2014 Base management fees, gross $ 22,249 $ 30,620 $ 25,883 $ 13,364 CLO management fees credit(1) (15,112 ) (21,088 ) (9,968 ) (8,111 ) Other related party fees credit — — (770 ) — Total base management fees, net $ 7,137 $ 9,532 $ 15,145 $ 5,253 (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. After the Merger Transaction, the Company continued to waive these related management fees totaling $5.9 million during the eight months ended December 31, 2014 and $8.8 million during each of the years ended December 31, 2015 and 2016. 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 of $2.0 million for CLO 2005-2 during the year ended December 31, 2015. Comparatively, the collateral manager waived CLO management fees totaling $4.2 million for CLO 2005-2 and CLO 2006-1 during the eight months ended December 31, 2014 and $1.6 million during the four months ended April 30, 2014. The Company called CLO 2005-2 in November 2015 and CLO 2006-1 in February 2015 and as a result, no CLO management fees were waived during 2016. Fees Charged and Fee Credits The Company recorded management fees expense for the majority of its CLOs during the years ended December 31, 2016, 2015 and 2014. The Manager credited the Company for a portion of the CLO management fees received by an affiliate of the Manager from CLOs including CLO 2007-1, CLO 2012-1, CLO 9, CLO 10, CLO 11, CLO 13 and CLO 2016-1 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 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 Year ended Year ended December 31, 2015 Eight months ended December 31, 2014 Four months ended April 30, 2014 Charged and retained CLO management fees(1) $ 8,255 $ 7,466 $ 8,651 $ 2,905 CLO management fees credit 15,112 21,088 9,968 8,111 Total CLO management fees $ 23,367 $ 28,554 $ 18,619 $ 11,016 (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 consolidated statements of operations. Accordingly, the increase in CLO management fees is directly offset by a decrease in interest expense. Incentive Fees The Manager receives quarterly incentive compensation from the Company based on its achievement of specified levels of net income pursuant to the Management Agreement. The Manager agreed to waive incentive fees of $16.1 million for the year ended December 31, 2016, which was attributable to a non-cash item. Comparatively, the Manager earned incentive fees totaling zero for both the year ended December 31, 2015 and eight months ended December 31, 2014. Incentive fees totaled $12.9 million for the four months ended April 30, 2014. Manager Share-Based Compensation As described above in Note 2, in connection with the Merger Transaction, the Predecessor Company’s common shares were converted into 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 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. After the Effective Date, the Company did not report 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 $3.8 million and $5.5 million for the years ended December 31, 2016 and 2015, respectively. The Company incurred reimbursable general and administrative expenses to its Manager totaling $3.0 million for the eight months ended December 31, 2014 and $2.8 million for the four months ended April 30, 2014. Expenses incurred by the Manager and reimbursed by the Company are reflected in general, administrative and directors expenses on the consolidated statements of operations. Contributions and Distributions The Company made certain cash distributions on its common shares, which are all held by its Parent, totaling $80.8 million and $179.1 million for the years ended December 31, 2016 and 2015, respectively. Separately, the Company made certain asset distributions in kind on its common shares as described further below. Common shareholders of the Predecessor Company received a quarterly distribution in respect of the KKR & Co. common units that such holders received as a result of the Merger Transaction and held as of the record date, or May 9, 2014. The distribution on all KKR & Co. common units was $0.43 per common unit and was paid by KKR & Co. on May 23, 2014. The Company distributed $44.9 million in cash to its Parent in May 2014 in connection with this distribution and $76.2 million to its Parent, as the sole holder of its common shares, during the rest of 2014. In addition, during the years ended December 31, 2016 and 2015 and eight months ended December 31, 2014, certain assets were contributed from and distributed to the Parent. Specifically, during the year ended December 31, 2016, certain assets were distributed to the Parent, including CLO subordinated notes, which were previously held by the Company. The distributed CLO subordinated notes are held by an affiliate of our Parent and resulted in the de-consolidation of CLO 11 and CLO 13. Refer to Note 6 in these consolidated financial statements for additional details. 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): Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Cash $ 267,038 $ — $ 235,759 Securities — — 116,526 Loans — — 16,049 Equity investments, at estimated fair value — — 38,346 Interests in joint ventures and partnerships 64,151 251,748 67,310 Other — — 854 Total contributions from Parent $ 331,189 $ 251,748 $ 474,844 Cash $ 64,151 $ 251,748 $ 192,037 Loans 77,921 — — Equity investments, at estimated fair value 58,439 — 101,042 Oil and gas properties, net — — 179,203 CLO subordinated notes 127,581 — — Interests in joint ventures and partnerships 4,066 $ — — Total distributions to Parent $ 332,158 $ 251,748 $ 472,282 Affiliated Investments The Company has invested in corporate loans, debt securities and other investments of entities that are affiliates of the Manager. As of December 31, 2016 , the aggregate par amount of these affiliated investments totaled $20.4 million , or less than 1% of the total investment portfolio, and consisted of 2 issuers. The total affiliated investments was comprised of $20.1 million of equity investments and $0.3 million of corporate debt securities. As of December 31, 2015, the aggregate par amount of these affiliated investments totaled $734.3 million , or approximately 11% of the total investment portfolio, and consisted of 8 issuers. The total $734.3 million in affiliated investments was comprised of $723.3 million of corporate loans and $11.0 million of equity investments. In addition, the Company has invested in certain joint ventures and partnerships alongside affiliates of the Manager. As of December 31, 2016 and December 31, 2015, the estimated fair value of these interests in joint ventures and partnerships totaled $680.5 million and $805.5 million , respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
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. As such, 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. The Company owns both REIT and domestic taxable corporate subsidiaries. The Company’s REIT subsidiaries are not expected to incur federal tax expense, but are subject to limited state income tax expense related to the 2016 tax year. The domestic taxable corporate subsidiaries taxed as regular corporations under the Code are expected to incur federal and state tax expense related to the 2016 tax year. The income tax expense (benefit) consisted of the following components (amounts in thousands): Successor Company Predecessor Company Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Four months ended April 30, 2014 Current: Federal income tax $ 114 $ 48 $ (63 ) $ (4,304 ) State income tax 52 134 126 137 Total 166 182 63 (4,167 ) Deferred: Federal income tax 1,012 843 343 4,329 State income tax 211 165 78 — Total 1,223 1,008 421 4,329 Total income tax expense (benefit) $ 1,389 $ 1,190 $ 484 $ 162 The tax provision for domestic taxable corporate subsidiaries taxed as regular corporations was based on a combined federal and state income tax rate of 39.44% at December 31, 2016, 39.16% at December 31, 2015 and 39.81% at December 31, 2014. The tax rate is equivalent to the combined federal statutory income tax rate and the state statutory income tax rate, net of federal benefit. The following table presents a reconciliation of income before taxes at the statutory rate to the effective tax expense (benefit) (amounts in thousands): Successor Company Predecessor Company Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Four months ended April 30, 2014 Income before taxes at statutory rate $ 7,969 $ (116,720 ) $ (76,561 ) $ 37,150 Income passed through to shareholders (4,694 ) 128,242 83,098 (34,377 ) REIT income not subject to tax (2,171 ) (10,574 ) (6,072 ) (2,773 ) State and local income taxes, net of federal benefit 171 194 82 88 Withholding taxes 114 48 21 25 Other — — (84 ) 49 Effective tax expense (benefit) $ 1,389 $ 1,190 $ 484 $ 162 Deferred tax assets are recognized if, in management’s judgment, their realizability is determined to be more likely than not. If a deferred tax asset is determined to be unrealizable, a valuation allowance is established. The significant components of deferred tax assets and liabilities are reflected in the following table as of December 31, 2016 and 2015 (amounts in thousands): As of December 31, 2016 As of December 31, 2015 Deferred tax assets: Unrealized losses from investments in domestic corporate subsidiaries $ — $ — Total deferred tax assets — — Deferred tax liabilities: Unrealized gains from investments in domestic corporate subsidiaries 2,653 1,008 Total deferred tax liabilities 2,653 1,008 Net deferred tax assets (liabilities) $ (2,653 ) $ (1,008 ) |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | 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”). 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, as well as interests in joint ventures and partnerships focused on the oil and gas sector. 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 income (loss) components. Net income (loss) includes (i) revenues, (ii) related investment costs and expenses, (iii) other income (loss), 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 tables present the net income (loss) components of our reportable segments reconciled to amounts reflected in the consolidated statements of operations (amounts in thousands): Successor Company Credit Natural Resources Other Reconciling Items(1) Total Consolidated Year ended December 31, 2016 Year ended December 31, 2015 Year ended December 31, 2016 Year ended December 31, 2015 Year ended December 31, 2016 Year ended December 31, 2015 Year ended December 31, 2016 Year ended December 31, 2015 Year ended December 31, 2016 Year ended December 31, 2015 Total revenues $ 268,042 $ 339,809 $ 10,131 $ 15,677 $ 13,899 $ 19,770 $ — $ — $ 292,072 $ 375,256 Total investment costs and expenses 282,616 214,464 6,224 7,625 1,650 1,568 — — 290,490 223,657 Total other income (loss) 100,547 (391,187 ) (7,126 ) (70,630 ) (6,815 ) 29,174 — — 86,606 (432,643 ) Total other expenses 64,318 50,631 635 1,179 465 412 — 219 65,418 52,441 Income tax expense (benefit) 121 154 — — 1,268 1,036 — — 1,389 1,190 Net income (loss) $ 21,534 $ (316,627 ) $ (3,854 ) $ (63,757 ) $ 3,701 $ 45,928 $ — $ (219 ) $ 21,381 $ (334,675 ) Net income (loss) attributable to noncontrolling interests (7,295 ) (16,071 ) (4,484 ) (7,358 ) — — — — (11,779 ) (23,429 ) Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries $ 28,829 $ (300,556 ) $ 630 $ (56,399 ) $ 3,701 $ 45,928 $ — $ (219 ) $ 33,160 $ (311,246 ) (1) Consists of insurance and directors’ expenses which are not allocated to individual segments. Successor Company Predecessor Company Successor Company Predecessor Company Successor Company Predecessor Company Successor Company Predecessor Company Successor Company Predecessor Company Credit Natural Resources Other Reconciling Items(1) Total Consolidated Eight months ended December 31, 2014 Four months ended April 30, 2014 Eight months ended December 31, 2014 Four months ended April 30, 2014 Eight months ended December 31, 2014 Four months ended April 30, 2014 Eight months ended December 31, 2014 Four months ended April 30, 2014 Eight months ended December 31, 2014 Four months ended April 30, 2014 Total revenues $ 279,639 $ 134,255 $ 57,616 $ 61,782 $ 13,090 $ 21,205 $ — — $ 350,345 $ 217,242 Total investment costs and expenses 142,204 62,485 38,117 38,915 815 425 — — 181,136 101,825 Total other income (loss) (241,035 ) 76,046 (115,141 ) (8,123 ) 11,794 (11,589 ) — — (344,382 ) 56,334 Total other expenses 40,703 23,121 2,219 1,633 476 230 174 40,625 43,572 65,609 Income tax expense (benefit) 49 146 — — 435 16 — — 484 162 Net income (loss) $ (144,352 ) $ 124,549 $ (97,861 ) $ 13,111 $ 23,158 $ 8,945 $ (174 ) $ (40,625 ) $ (219,229 ) $ 105,980 Net income (loss) attributable to noncontrolling interests $ (1,797 ) $ — $ (4,159 ) $ — $ — $ — $ — $ — $ (5,956 ) $ — Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries $ (142,555 ) $ 124,549 $ (93,702 ) $ 13,111 $ 23,158 $ 8,945 $ (174 ) $ (40,625 ) $ (213,273 ) $ 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 shows total assets of our reportable segments reconciled to amounts reflected in the consolidated balance sheets as of December 31, 2016 and December 31, 2015 (amounts in thousands): Successor Company Credit Natural Resources Other Reconciling Items Total Consolidated(1) As of December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015 Total assets $ 5,422,560 $ 7,303,305 $ 219,516 $ 230,815 $ 208,981 $ 254,275 $ — $ — $ 5,851,057 $ 7,788,395 (1) Total consolidated assets as of December 31, 2016 included $71.6 million of noncontrolling interests, of which $43.4 million was related to the Credit segment and $28.2 million was related to the Natural Resources segment. Total consolidated assets as of December 31, 2015 included $82.9 million of noncontrolling interests, of which $50.3 million was related to the Credit segment and $32.6 million was related to the Natural Resources segment. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share, Basic and Diluted [Abstract] | |
EARNINGS PER COMMON SHARE | EARNINGS PER COMMON SHARE Earnings per common share is not provided for the Successor Company as the Company is now a subsidiary of KKR Fund Holdings, which owns 100 common shares of the Company constituting all of its outstanding common shares. The following table presents a reconciliation of basic and diluted net income (loss) per common share for the Predecessor Company (amounts in thousands, except per share information): Predecessor Company Four months ended April 30, 2014 Net income (loss) $ 105,980 Less: Preferred share distributions 6,891 Net income (loss) available to common shares $ 99,089 Less: Dividends and undistributed earnings allocated to participating securities 292 Net income (loss) allocated to common shares $ 98,797 Basic: Basic weighted average common shares outstanding 204,276 Net income (loss) per common share $ 0.48 Diluted: Diluted weighted average common shares outstanding(1) 204,276 Net income (loss) per common share $ 0.48 Distributions declared per common share $ 0.22 (1) Potential anti-dilutive common shares excluded from diluted earnings per share related to common share options were 1,932,279 . |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS In connection with the Merger Transaction, accumulated other comprehensive loss is not provided for the Successor Company as changes in the estimated fair value of all securities and cash flow hedges are recorded in the consolidated statements of operations, within net realized and unrealized gain (loss) 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 gains on available-for-sale securities Net unrealized losses on cash flow hedges Total 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. Reclassified amounts were included in net realized and unrealized gain (loss) on investments on the consolidated statements of operations. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On March 20, 2017, the Company's board of directors approved a $16.7 million distribution to its Parent, as the holder of all of the Company's common shares, and a $17.6 million capital contribution representing additional capital account credits for the general partner interests in an alternative credit fund. On March 23, 2017, the Company announced a cash distribution on its Series A LLC Preferred Shares totaling $6.9 million , or $0.460938 per share. The distribution will be paid on April 17, 2017 to preferred shareholders as of the close of business on April 10, 2017. On February 6, 2017, the Company's board of directors declared a cash distribution for the quarter ended December 31, 2016 on its common shares totaling $53.4 million , or $534,323 per common share. The distribution was paid on February 10, 2017 to common shareholders of record as of the close of business on February 9, 2017. On December 22, 2016, the Company announced a cash distribution on its Series A LLC Preferred Shares totaling $6.9 million , or $0.460938 per share. The distribution was paid on January 17, 2017 to preferred shareholders as of the close of business on January 10, 2017. |
SUMMARY OF QUARTERLY INFORMATIO
SUMMARY OF QUARTERLY INFORMATION (UNAUDITED) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
SUMMARY OF QUARTERLY INFORMATION (UNAUDITED) | SUMMARY OF QUARTERLY INFORMATION (UNAUDITED) The following is a presentation of the results of operations for the years ended December 31, 2016 and 2015: 2016 (amounts in thousands) Fourth Quarter Third Quarter Second Quarter First Quarter Total revenues $ 62,588 $ 71,017 $ 69,162 $ 89,305 Total investment costs and expenses 48,846 130,593 58,053 52,998 Total other income (loss) 58,176 213,366 24,946 (209,882 ) Total other expenses 15,021 17,141 9,192 24,064 Income (loss) before income taxes 56,897 136,649 26,863 (197,639 ) Income tax expense (benefit) 1,176 340 (187 ) 60 Net income (loss) $ 55,721 $ 136,309 $ 27,050 $ (197,699 ) Net income (loss) attributable to noncontrolling interests 3,545 1,492 (1,281 ) (15,535 ) Net income (loss) attributable to KKR Financial Holdings LLC and subsidiaries 52,176 134,817 28,331 (182,164 ) Preferred share distributions 6,891 6,891 6,891 6,891 Net income (loss) available to common shares $ 45,285 $ 127,926 $ 21,440 $ (189,055 ) 2015 (amounts in thousands) Fourth Quarter Third Quarter Second Quarter First Quarter Total revenues $ 82,670 $ 89,109 $ 105,691 $ 97,786 Total investment costs and expenses 53,202 50,352 62,450 57,653 Total other income (loss) (186,065 ) (185,449 ) 8,035 (69,164 ) Total other expenses 11,457 11,547 12,269 17,168 Income (loss) before income taxes (168,054 ) (158,239 ) 39,007 (46,199 ) Income tax expense (benefit) 20 94 729 347 Net income (loss) $ (168,074 ) $ (158,333 ) $ 38,278 $ (46,546 ) Net income (loss) attributable to noncontrolling interests (7,977 ) (6,676 ) (2,705 ) (6,071 ) Net income (loss) attributable to KKR Financial Holdings LLC and subsidiaries (160,097 ) (151,657 ) 40,983 (40,475 ) Preferred share distributions 6,891 6,891 6,891 6,891 Net income (loss) available to common shares $ (166,988 ) $ (158,548 ) $ 34,092 $ (47,366 ) |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The 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 consolidated financial statements are the financial results of certain entities, which are not considered VIEs, 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 a result of the Merger Transaction, the Company’s 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 consolidated financial statements. This change in accounting basis is represented in the 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. 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 CLO secured notes. As such, the accounting policies followed by the Company in the preparation of its consolidated financial statements for the Successor period present all financial assets and CLO secured notes at estimated fair value. The initial fair value presentation was a result of the push down basis of accounting, while the prospective fair value presentation was for the primary purpose of reporting values 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 gain (loss) on investments and net realized and unrealized gain (loss) on debt, respectively, in the 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 Company period, all purchases and sales of assets are recorded on the trade date. Comparatively, for the Predecessor Company 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 consolidated financial statements are appropriate, actual results could differ from those estimates. |
Consolidation | Consolidation 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"), KKR CLO 9, Ltd. (“CLO 9”), KKR CLO 10, Ltd. (“CLO 10”), KKR CLO 15, Ltd. ("CLO 15") and KKR CLO 16, Ltd. ("CLO 16") (collectively the “Cash Flow CLOs”) are entities established to complete secured financing transactions. During 2016, the Company called KKR 2016-1, Ltd. ("CLO 2016-1"), KKR Financial CLO 2007-1 (“CLO 2007-1") and KKR Financial CLO 2011-1 (“CLO 2011-1") and during 2015, the Company called KKR Financial CLO 2005-2, Ltd. (“CLO 2005-2"), KKR Financial CLO 2005-1, Ltd. ("CLO 2005-1") and KKR Financial CLO 2006-1, Ltd ("CLO 2006-1"), whereby the Company repaid all senior and mezzanine notes outstanding. 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. In addition, during 2016, the Company declared a distribution in kind on its common shares of certain subordinated notes of KKR CLO 11, Ltd ("CLO 11") and KKR CLO 13, Ltd ("CLO 13") to its Parent as the sole holder of its common shares. CLO 11 and CLO 13 had previously been consolidated by the Company as they were VIEs which the Company determined it had the power to direct the activities that most significantly impacted these entities’ economic performance and the Company had 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. Following the distribution, the Company determined that it no longer met the consolidation criteria and de-consolidated CLO 11 and CLO 13, resulting in a reduction in both consolidated assets and liabilities of approximately $1.0 billion as of December 31, 2016. Also, as a result of the de-consolidation, the interest expense and management fees that were previously consolidated will no longer be included in the Company's consolidated statements of operations. The Company finances the majority of its corporate debt investments through its CLOs. As of December 31, 2016 , the Company’s Cash Flow CLOs held $3.1 billion par amount, or $3.1 billion estimated fair value, of corporate debt investments. As of December 31, 2015, the Company's CLOs held $5.5 billion par amount, or $5.1 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 December 31, 2016 and December 31, 2015, the aggregate par amount of CLO debt totaled $3.2 billion and $4.9 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 majority owned entities for which the Company is presumed to have control. The ownership interests of these entities held by third parties are reflected as noncontrolling interests in the accompanying financial statements. The Company began consolidating a majority of these non‑VIE entities as a result of the asset contributions from its Parent during the second half of 2014. For certain of these entities, the Company previously held a percentage ownership, but following the incremental contributions from its Parent, were presumed to have control. 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 gain (loss) on investments in the consolidated statements of operations. 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 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 and Interests in Joint Ventures and Partnerships, at Estimated Fair Value: Equity and interests in joint ventures and partnerships, 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. Interests in joint ventures and partnerships include certain equity investments related to the oil and gas, commercial real estate and specialty lending sectors. Valuation models are generally based on market comparables and 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. Natural resources investments are generally valued using a discounted cash flow analysis. Key inputs used in this methodology that require estimates include the weighted average cost of capital. In addition, the valuations of natural resources investments generally incorporate both commodity prices as quoted on indices and long‑term commodity price forecasts, which may be substantially different from, and are currently higher than, commodity prices on certain indices for equivalent future dates. Long‑term commodity price forecasts are utilized to capture the value of the investments across a range of commodity prices within the portfolio associated with future development and to reflect price expectations. 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. Over-the-counter (“OTC”) Derivative Contracts: OTC derivative contracts may 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: As of January 1, 2015, the Company adopted the measurement alternative issued by the FASB whereby the financial liabilities of its consolidated CLOs were measured using the fair value of the financial assets of its consolidated CLOs, which was determined to be more observable. The Company considered the fair value of these financial assets, which were classified as Level 2 assets, as more observable than the fair value of these financial liabilities, which were classified as Level 3 liabilities. As a result of this new basis of measurement, the Company's CLO secured notes were transferred from Level 3 to Level 2 during the first quarter of 2015. Prior to this adoption, CLO secured notes were initially valued at transaction price and subsequently valued using a third party valuation servicer. The approach used to estimate the fair values was the discounted cash flow method, which included consideration of the cash flows of the debt obligation based on projected quarterly interest payments and quarterly amortization. The debt obligations were discounted based on the appropriate yield curve given the debt obligation's respective maturity and credit rating. The most significant inputs to the valuation of these instruments were 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 8 to these 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 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. The Company utilizes a valuation committee, whose members consist of employees of the Manager or its affiliates. The valuation committee is responsible for coordinating and consistently implementing the Company’s quarterly valuation policies, guidelines and processes. 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. For assets classified as Level 3, valuations may be performed by the relevant investment professionals or by independent third parties with input from the relevant investment professionals and are based on various factors including evaluation of financial and operating data, company specific developments, market discount rates and valuations of comparable companies and model projections. Asset valuations are approved by the valuation committee, which may be assisted by a subcommittee for the valuation of certain investments. |
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 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 consolidated statements of operations. On the 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 Company 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 gain (loss) on investments in the consolidated statements of operations. Comparatively, the Predecessor Company reported all unrealized gains and losses in accumulated other comprehensive loss on the 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 Predecessor 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 Predecessor Company considered its intent to sell the debt security, the Predecessor 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 Predecessor Company would have been required to sell the debt security before its anticipated recovery. For equity securities, the Predecessor 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 Predecessor Company intended to sell or estimated that it was more likely than not that the Predecessor 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 Predecessor 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 Company 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 Predecessor Company and Successor Company manage the risks of these securities. All securities, at estimated fair value are included within securities on the 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 Company 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 Predecessor Company and Successor Company manage the risks of these investments. RMBS, at estimated fair value are included within securities on the consolidated balance sheets. |
Equity Investments, at Estimate Fair Value | Equity Investments, at Estimated Fair Value The Predecessor Company 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 Predecessor Company and Successor Company may have significant influence. The fair value option was elected for the equity investments for the purpose of enhancing the transparency of their financial condition as fair value is consistent with how the Predecessor Company and Successor Company manage the risks of these investments. Equity investments carried at estimated fair value are presented separately on the consolidated balance sheets. |
Interests in Joint Ventures and Partnerships | Interests in Joint Ventures and Partnerships The Predecessor Company and Successor Company both elected the fair value option of accounting for certain of their interests in joint ventures and partnerships. The fair value option of accounting was elected for 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 Predecessor Company and Successor Company manage the risks of these interests. Interests in joint ventures and partnerships are presented separately on the consolidated balance sheets. |
Equity Method Investments | Equity Method Investments The Predecessor Company and Successor Company hold certain investments where the Predecessor Company and Successor Company do not control the investee nor are the primary beneficiary, but can exert significant influence over the financial and operating policies of the investee. Significant influence typically exists if the Predecessor Company and Successor Company have a 20% to 50% ownership interest in the investee unless predominant evidence to the contrary exists. The evaluation of whether the Predecessor Company and Successor Company exerts control or significant influence over the financial and operational policies of an investee may also require significant judgment based on the facts and circumstances surrounding each individual investment. Factors include investor voting or other rights, any influence the Predecessor Company and Successor Company may have on the governing board of the investee and the relationship between the Predecessor Company and Successor Company and other investors in the entity. The fair value option was elected to account for these equity investments with any changes in estimated fair value recorded in net realized and unrealized gain (loss) on investments in the consolidated statements of operations. |
Corporate Loans, Net | Corporate Loans, Net In connection with the Successor Company’s application of acquisition accounting related to the Merger Transaction and to align more closely with KKR & Co.’s method of accounting, the Successor 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 gain (loss) on investments in the 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 Predecessor Company initially recorded corporate loans at their purchase prices. The Successor 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 Predecessor Company transferred to held for sale were transferred at the lower of cost or estimated fair value. As of the Effective Date, the Successor 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 Predecessor 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 Predecessor Company’s or Successor 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 no longer in doubt. Prior to the Effective Date, the Predecessor 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 6 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 Predecessor Company’s allowance for loan losses. The Predecessor 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 Predecessor 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 Predecessor 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 Predecessor 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 Predecessor 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 Predecessor Company and Successor 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 Predecessor 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 Predecessor's 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 Predecessor 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 Predecessor Company had determined were impaired. The Predecessor Company determined a corporate loan was impaired when management estimated that it was probable that the Predecessor Company would be unable to collect all amounts due according to the contractual terms of the corporate loan agreement. On a quarterly basis the Predecessor 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 Predecessor 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 Predecessor Company expected to recognize from the corporate loan. The expected loss was estimated as being the difference between the Predecessor 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 Predecessor 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 Predecessor Company’s consolidated balance sheets. The unallocated component of the Predecessor 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 Predecessor 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 Predecessor 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 Predecessor 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 Predecessor 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 Predecessor 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 Predecessor 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 Predecessor 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 Company 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 Predecessor Company and Successor Company manage the risks of these corporate loans. All corporate loans carried at estimated fair value are included within corporate loans, net on the 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 Gas Revenue Recognition | Oil and Gas Revenue Recognition Oil, natural gas and natural gas liquid (“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 Predecessor Company and Successor Company follow 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 Predecessor Company and Successor Company is entitled based on their 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 Predecessor Company and Successor Company have taken less than its share of production and no payables are recorded when the Predecessor Company and Successor Company have taken more than its share of production. |
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. 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 CLO secured notes at estimated fair value as of the Effective Date, with changes in estimated fair value recorded in net realized and unrealized gain (loss) on debt in the consolidated statements of operations. Prior to the Effective Date, the Company's CLO secured notes were carried at amortized cost. As mentioned above, beginning January 1, 2015, the Company adopted the measurement alternative issued by the FASB whereby the financial liabilities of its consolidated CLOs were measured using the fair value of the financial assets of its consolidated CLOs, which was determined to be more observable. Accordingly, these financial assets were measured at fair value and these financial liabilities were measured as (i) the sum of the fair value of the financial assets and the carrying value of any nonfinancial assets that are incidental to the operations of the CLOs less, (ii) the sum of the fair value of any beneficial interests retained by the reporting entity (other than those that represent compensation for services) and the Company’s carrying value of any beneficial interests that represent compensation for services. The resulting amount was allocated to the individual financial liabilities (other than the beneficial interests retained by the Company) using a reasonable and consistent methodology. |
Trust Preferred Securities | Trust Preferred Securities The Company also established six 30 year trusts between 2006 and 2007 for the sole purpose of issuing trust preferred securities. These trusts issued preferred securities to unaffiliated investors and common securities to the Company. The combined proceeds were invested by the trusts in junior subordinated notes issued by the Company. The junior subordinated notes are the sole assets of trusts and mature between 2036 and 2037. Interest is payable on the junior subordinated notes quarterly and based on the associated trust ranges from between LIBOR plus 2.25% and LIBOR plus 2.65% . The Company may redeem the junior subordinated notes, in whole or in part, at any time, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest to the redemption date. As of December 31, 2016, the aggregate outstanding principal amount of the junior subordinated notes was approximately $283.5 million . These trusts 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 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 consolidated balance sheets. |
Derivative Instruments | Derivative Instruments The Company recognizes all derivatives on the 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 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 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 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 (loss) attributable to noncontrolling interests on the consolidated statements of operations. Noncontrolling interests are also presented separately within equity in the 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. |
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 Series A LLC 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 Series A LLC 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 real estate investment trusts (“REITs”) 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 holders of its Series A LLC Preferred Shares. 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. |
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. After the Effective Date, the Company did not report share-based compensation. |
Earnings Per Common Share | Earnings Per Common Share In connection with the Merger Transaction, as of the Effective Date, the Company is 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 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. After the Effective Date, the Company did not report EPS. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Going Concern In August 2014, the FASB issued guidance pertaining to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The new guidance requires that management evaluate each annual and interim reporting period whether conditions exist that give rise to substantial doubt about the entity’s ability to continue as a going concern within one year from the financial statement issuance date, and if so, provide related disclosures. Substantial doubt exists when conditions and events, considered in the aggregate, indicate that it is probable that a company will be unable to meet its obligations as they become due within one year after the financial statement issuance date. The new guidance applies to all companies. The guidance is effective for annual reporting periods ending after December 15, 2016, and for annual and interim periods thereafter. This guidance has been adopted for the year ended December 31, 2016 and its adoption had no material impact on the Company's consolidated financial statements. Consolidation In February 2015, the FASB issued guidance which eliminates the presumption that a general partner should consolidate a limited partnership and also eliminates the consolidation model specific to limited partnerships. The amendments also clarify how to treat fees paid to an asset manager or other entity that makes the decisions for the investment vehicle and whether such fees should be considered in determining when a variable interest entity should be reported on an asset manager's balance sheet. The guidance is effective for reporting periods starting after December 15, 2015 and for interim periods within the fiscal year. Early adoption is permitted, and a full retrospective or modified retrospective approach is required. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. In October 2016, the FASB issued guidance that reporting entities deciding whether they are primary beneficiaries no longer have to consider indirect interests held through related parties that are under common control to be the equivalent of direct interests in their entirety. Decision makers would include those indirect interests on a proportionate basis. The guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating its potential impact on the consolidated financial statements. Financial Instruments In January 2016, the FASB issued amended guidance that (i) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (ii) eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is currently required to be disclosed for financial instruments measured at fair value; (iii) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments and (iv) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amended guidance related to equity securities without readily determinable fair values (including the disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption. The Company is currently evaluating its potential impact on its consolidated financial statements. Investments In March 2016, the FASB issued guidance which simplifies the equity method of accounting by eliminating the requirement to retrospectively apply the equity method to an investment that subsequently qualifies for such accounting as a result of an increase in the level of ownership interest or degree of influence. The guidance is effective for all entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years, with early adoption permitted for all entities. Entities are required to apply the guidance prospectively to increases in the level of ownership interest or degree of influence occurring after the effective date. Additional transition disclosures are not required upon adoption. The Company is currently evaluating its potential impact on its consolidated financial statements. Cash Flow Classification In August 2016, the FASB issued amended guidance on the classification of certain cash receipts and payments in the statement of cash flows. The amended guidance adds or clarifies guidance on eight cash flow matters: (i) debt prepayment or debt extinguishment costs, (ii) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, (iii) contingent consideration payments made after a business combination, (iv) proceeds from the settlement of insurance claims, (v) proceeds from the settlement of corporate-owned life insurance policies, (vi) distributions received from equity method investees, (vii) beneficial interests in securitization transactions and (viii) separately identifiable cash flows and application of the predominance principle. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The guidance must be applied retrospectively to all periods presented but may be applied prospectively from the earliest date practicable if retrospective application would be impracticable. The Company is currently evaluating its potential impact on its consolidated financial statements. In November 2016, the FASB issued guidance to add or clarify existing guidance on the classification and presentation of restricted cash in the statement of cash flows. The amended guidance requires the following: (i) restricted cash and restricted cash equivalents should be included in the cash and cash-equivalents balances in the statement of cash flows; (ii) changes in restricted cash and restricted cash equivalents that result from transfers between cash, cash equivalents, and restricted cash and restricted cash equivalents should not be presented as cash flow activities in the statement of cash flows (iii) a reconciliation between the statement of financial position and the statement of cash flows must be disclosed when the statement of financial position includes more than one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents; and (iv) the nature of the restrictions must be disclosed for material restricted cash and restricted cash equivalents amounts. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods therein. Early adoption is permitted. The guidance must be applied retrospectively to all periods presented. The Company is currently evaluating its potential impact on its consolidated financial statements. Income Taxes In October 2016, the FASB issued guidance which removed the prohibition against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. The Company is currently evaluating its potential impact on its consolidated financial statements. |
SECURITIES (Tables)
SECURITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
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, 2016 and December 31, 2015 , which are carried at estimated fair value (amounts in thousands): December 31, 2016 December 31, 2015 Par Amortized Cost Estimated Fair Value Par Amortized Cost Estimated Fair Value Securities, at estimated fair value $ 371,785 $ 304,628 $ 229,206 $ 520,135 $ 474,201 $ 417,519 Total $ 371,785 $ 304,628 $ 229,206 $ 520,135 $ 474,201 $ 417,519 |
Schedule of realized and unrealized gains from securities | The following table presents the Company’s realized and unrealized gains (losses) from securities (amounts in thousands): Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Net realized gains (losses) $ 5,763 $ (10,797 ) $ 2,891 Net (increase) decrease in unrealized losses (18,783 ) (36,273 ) (11,460 ) Net realized and unrealized gains (losses) $ (13,020 ) $ (47,070 ) $ (8,569 ) The following tables present the Company’s realized and unrealized gains (losses), which are accounted for similarly to securities and loans, from equity investments and interests in joint ventures and partnerships (amounts in thousands): Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Equity Investments Interests in Joint Ventures and Partnerships(1) Equity Investments Interests in Joint Ventures and Partnerships(1) Equity Investments Interests in Joint Ventures and Partnerships (1) Net realized gains (losses) $ (18,209 ) $ 18,253 $ 12,456 $ 16,986 $ (556 ) $ 4,272 Net (increase) decrease in unrealized losses (27,729 ) (60,670 ) (28,297 ) (135,811 ) (30,168 ) (112,038 ) Net realized and unrealized gains (losses) $ (45,938 ) $ (42,417 ) $ (15,841 ) $ (118,825 ) $ (30,724 ) $ (107,766 ) (1) Includes net loss attributable to noncontrolling interests of $11.8 million , $23.4 million and $6.0 million for the years ended December 31, 2016 and 2015, and eight months ended December 31, 2014, respectively. |
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, 2016 and December 31, 2015 (amounts in thousands): December 31, 2016 December 31, 2015 Pledged as collateral for collateralized loan obligation secured debt $ 13,337 $ 170,365 Total $ 13,337 $ 170,365 |
CORPORATE LOANS AND ALLOWANCE28
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 December 31, 2016 and December 31, 2015 (amounts in thousands): December 31, 2016 December 31, 2015 Par Amortized Cost Estimated Fair Value Par Amortized Cost Estimated Fair Value Corporate loans, at estimated fair value $ 3,433,059 $ 3,419,483 $ 3,305,264 $ 5,722,646 $ 5,619,815 $ 5,188,610 Total $ 3,433,059 $ 3,419,483 $ 3,305,264 $ 5,722,646 $ 5,619,815 $ 5,188,610 |
Schedule of realized and unrealized (losses) gains from corporate loans | The following tables present the Company’s realized and unrealized gains (losses) from corporate loans (amounts in thousands): Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Net realized gains (losses) $ (234,354 ) $ (51,356 ) $ 1,411 Net (increase) decrease in unrealized losses 312,340 (195,256 ) (204,006 ) Net realized and unrealized gains (losses) $ 77,986 $ (246,612 ) $ (202,595 ) |
Schedule of corporate loans pledged as collateral | The following table summarizes the corporate loans, at estimated fair value, pledged as collateral as of December 31, 2016 and December 31, 2015 (amounts in thousands): December 31, 2016 December 31, 2015 Pledged as collateral for collateralized loan obligation secured debt $ 3,048,841 $ 4,917,123 Total $ 3,048,841 $ 4,917,123 |
Predecessor Company | |
Summary of corporate loans | |
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 (amounts in thousands): For the four months ended April 30, 2014 Allowance for loan losses: Beginning balance $ 224,999 Provision for loan losses — Charge-offs (1,458 ) Ending balance $ 223,541 |
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 (dollar amounts in thousands): Four months ended April 30, 2014 Number of TDRs Pre-modification outstanding recorded investment(1) Post-modification outstanding recorded 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. |
EQUITY INVESTMENTS AND INTERE29
EQUITY INVESTMENTS AND INTERESTS IN JOINT VENTURES AND PARTNERSHIPS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of realized and unrealized gains from securities | The following table presents the Company’s realized and unrealized gains (losses) from securities (amounts in thousands): Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Net realized gains (losses) $ 5,763 $ (10,797 ) $ 2,891 Net (increase) decrease in unrealized losses (18,783 ) (36,273 ) (11,460 ) Net realized and unrealized gains (losses) $ (13,020 ) $ (47,070 ) $ (8,569 ) The following tables present the Company’s realized and unrealized gains (losses), which are accounted for similarly to securities and loans, from equity investments and interests in joint ventures and partnerships (amounts in thousands): Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Equity Investments Interests in Joint Ventures and Partnerships(1) Equity Investments Interests in Joint Ventures and Partnerships(1) Equity Investments Interests in Joint Ventures and Partnerships (1) Net realized gains (losses) $ (18,209 ) $ 18,253 $ 12,456 $ 16,986 $ (556 ) $ 4,272 Net (increase) decrease in unrealized losses (27,729 ) (60,670 ) (28,297 ) (135,811 ) (30,168 ) (112,038 ) Net realized and unrealized gains (losses) $ (45,938 ) $ (42,417 ) $ (15,841 ) $ (118,825 ) $ (30,724 ) $ (107,766 ) (1) Includes net loss attributable to noncontrolling interests of $11.8 million , $23.4 million and $6.0 million for the years ended December 31, 2016 and 2015, and eight months ended December 31, 2014, respectively. |
Summarized financial information of equity investments | The following table shows summarized financial information for the Company’s equity method investments, which were reported under the fair value option of accounting and were determined to be significant as defined by accounting guidance, assuming 100% ownership (amounts in thousands): Successor Company Credit Commercial Real Estate Natural Resources Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Revenues $ 45,332 $ 29,503 $ 14,157 $ 186,252 $ 138,431 $ 77,661 $ 6,479 $ 4,673 $ 5,057 Expenses (1) $ 55,412 $ 40,408 $ 19,325 $ 124,070 $ 148,463 $ 80,685 $ 791 $ 5,685 $ 3,600 Net income (loss) (2) $ 12,709 $ (20,796 ) $ (19,118 ) $ 62,181 $ 21,629 $ (3,024 ) $ 5,688 $ (1,012 ) $ 1,457 Predecessor Company Credit Commercial Real Estate Natural Resources Four months ended April 30, 2014 Four months ended April 30, 2014 Four months ended April 30, 2014 Revenues $ 3,967 $ 30,338 $ 2,579 Expenses (1) $ 4,350 $ 36,914 $ 1,763 Net income (loss) (2) $ 8,741 $ (6,576 ) $ 815 (1) Expenses include items such as operating costs, professional fees, management fees, depreciation and amortization, compensation, acquisition costs and other general and administrative costs for Credit and Commercial Real Estate. Expenses include items such as lease operating, production taxes, depreciation, depletion and amortization, and other general and administrative costs for Natural Resources. (2) Net income (loss) includes realized and unrealized gains and losses, as well as other than temporary impairment. The following table shows summarized financial information for the Company’s equity method investments reported under the fair value option of accounting assuming 100% ownership (amounts in thousands): Credit Commercial Real Estate Natural Resources As of December 31, 2016 2015 2016 2015 2016 2015 Total assets $ 761,512 $ 628,165 $ 710,688 $ 878,878 $ 137,518 $ 137,128 Total liabilities $ 532,693 $ 418,281 $ 682,865 $ 812,935 $ — $ 90 Redeemable stock $ — $ — $ — $ — $ — $ — Noncontrolling interests $ — $ — $ — $ — $ — $ — |
BORROWINGS (Tables)
BORROWINGS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Company's borrowings | Certain information with respect to the Company’s borrowings as of December 31, 2016 is summarized in the following table (dollar amounts in thousands): Par Carrying Value(1) Weighted Average Borrowing Rate Weighted Average Remaining Maturity (in days) Collateral(2) CLO 2012-1 secured notes $ 367,500 $ 378,978 3.01 % 2906 $ 333,931 CLO 2012-1 subordinated notes(3) 18,000 9,613 15.40 2906 16,356 CLO 2012-1 subordinated notes to affiliates(3) 19,663 10,501 — 2906 17,867 CLO 2013-1 secured notes 458,500 470,354 2.59 3118 450,836 CLO 2013-1 subordinated notes to affiliates(3) 23,063 14,970 — 3118 22,678 CLO 2013-2 secured notes 339,250 343,208 2.88 3310 323,644 CLO 2013-2 subordinated notes to affiliates(3) 30,959 19,074 — 3310 29,535 CLO 9 secured notes 463,750 471,824 2.89 3575 437,048 CLO 9 subordinated notes(3) 15,000 10,170 15.58 3575 14,136 CLO 9 subordinated notes to affiliates(3) 33,400 22,646 6.11 3575 31,477 CLO 10 secured notes 368,000 377,369 3.18 3271 356,393 CLO 10 subordinated notes to affiliates(3) 39,146 22,416 7.53 3271 37,912 CLO 15 secured notes 370,500 370,632 3.06 4309 376,971 CLO 15 subordinated notes(3) 12,100 11,430 — 4309 12,311 CLO 16 secured notes 644,300 640,386 3.16 4403 596,916 CLO 16 subordinated notes(3) 4,500 3,977 — 4403 4,169 Total collateralized loan obligation secured debt 3,207,631 3,177,548 3,062,180 CLO warehouse facility(4) 20,000 20,000 2.25 305 101,976 7.500% Senior notes 115,043 123,008 7.50 9210 — Junior subordinated notes 283,517 250,154 3.34 7218 — Total borrowings $ 3,626,191 $ 3,570,710 $ 3,164,156 (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 secured and subordinated notes are calculated pro rata based on the par amount for each respective CLO. (3) Subordinated notes to unaffiliated and affiliated parties 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 cash distributions during the year, if any. (4) Represents a $200.0 million CLO warehouse facility. Certain information with respect to the Company’s borrowings as of December 31, 2015 is summarized in the following table (dollar amounts in thousands): Par Carrying Value(1) Weighted Average Borrowing Rate Weighted Average Remaining Maturity (in days) Collateral(2) CLO 2007-1 secured notes $ 1,544,032 $ 1,630,293 2.10 % 1962 $ 1,732,855 CLO 2007-1 subordinated notes(3) 134,468 74,954 11.66 1962 150,912 CLO 2007-A subordinated notes(3) 15,096 17,060 14.49 654 48,856 CLO 2011-1 senior debt 249,301 249,301 1.67 1689 310,498 CLO 2012-1 secured notes 367,500 365,383 2.59 3272 361,684 CLO 2012-1 subordinated notes(3) 18,000 10,845 15.82 3272 17,715 CLO 2013-1 secured notes 458,500 450,280 2.05 3484 479,391 CLO 2013-2 secured notes 339,250 334,187 2.52 3676 347,989 CLO 9 secured notes 463,750 454,103 2.33 3941 463,574 CLO 9 subordinated notes(3) 15,000 9,972 15.92 3941 14,994 CLO 10 secured notes 368,000 363,977 2.75 3637 384,991 CLO 11 secured notes 507,750 491,699 2.38 4123 501,286 CLO 11 subordinated notes(3) 28,250 23,306 5.28 4123 27,890 CLO 13 secured notes 370,000 364,986 2.84 4399 323,781 CLO 13 subordinated notes(3) 4,000 3,400 — 4399 3,500 Total collateralized loan obligation secured debt 4,882,897 4,843,746 5,169,916 8.375% Senior notes 258,750 289,660 8.38 9451 — 7.500% Senior notes 115,043 123,346 7.50 9576 — Junior subordinated notes 283,517 248,498 5.43 7584 — Total borrowings $ 5,540,207 $ 5,505,250 $ 5,169,916 (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 year, if any. |
Schedule of Company's contractual obligations (excluding interest) under borrowing agreements | The table below summarizes the Company’s contractual obligations (excluding interest) under borrowing agreements as of December 31, 2016 (amounts in thousands): Payments Due by Period Total Less than 1 year 1 - 3 years 3 - 5 years More than 5 years CLO 2012-1 notes $ 405,163 $ — $ — $ — $ 405,163 CLO 2013-1 notes 481,563 — — — 481,563 CLO 2013-2 notes 370,209 — — — 370,209 CLO 9 notes 512,149 — — — 512,149 CLO 10 notes 407,147 — — — 407,147 CLO 15 notes 382,600 — — — 382,600 CLO 16 notes 648,800 — — — 648,800 CLO warehouse facility 20,000 20,000 — — — Senior notes 115,043 — — — 115,043 Junior subordinated notes 283,517 — — — 283,517 Total $ 3,626,191 $ 20,000 $ — $ — $ 3,606,191 |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
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 December 31, 2016 and December 31, 2015 (amounts in thousands): As of December 31, 2016 As of December 31, 2015 Notional Estimated Fair Value Notional Estimated Fair Value Free-Standing Derivatives: Interest rate swaps $ 141,000 $ (27,263 ) $ 297,667 $ (41,743 ) Foreign exchange forward contracts and options (460,282 ) 38,476 (375,524 ) 38,608 Common stock warrants — 1,528 — — Options — 1,001 — 95 Total $ 13,742 $ (3,040 ) |
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 gains (losses) recognized in other comprehensive income (loss) related to derivatives in cash flow hedging relationships (amounts in thousands): For the four months ended April 30, 2014 Net gains (losses) recognized in accumulated other comprehensive income (loss) on cash flow hedges $ (5,442 ) |
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 consolidated statements of operations (amounts in thousands): Successor Company Year ended December 31, 2016 Year ended December 31, 2015 Realized gains (losses) Unrealized gains (losses) Total Realized gains (losses) Unrealized gains (losses) Total Interest rate swaps $ (9,316 ) $ 13,301 $ 3,985 $ (5,297 ) $ 11,610 $ 6,313 Foreign exchange forward contracts and options(1) 18,419 (15,098 ) 3,321 30,687 (27,747 ) 2,940 Common stock warrants 142 (757 ) (615 ) — (2,412 ) (2,412 ) Total rate of return swaps — — — 304 130 434 Options — 906 906 — (5,117 ) (5,117 ) Net realized and unrealized gains (losses) $ 9,245 $ (1,648 ) $ 7,597 $ 25,694 $ (23,536 ) $ 2,158 (1) Net of foreign exchange remeasurement gain or loss on foreign denominated assets. Successor Company Predecessor Company Eight months ended December 31, 2014 Four months ended April 30, 2014 Realized gains (losses) Unrealized gains (losses) Total Realized gains (losses) Unrealized gains (losses) Total Interest rate swaps $ — $ (6,890 ) $ (6,890 ) $ — $ — $ — Commodity swaps (962 ) (698 ) (1,660 ) (2,515 ) (5,856 ) (8,371 ) Credit default swaps(1) — — — (2,167 ) 1,986 (181 ) Foreign exchange forward contracts and options(2) (6,609 ) (1,561 ) (8,170 ) (2,068 ) 2,784 716 Common stock warrants 1,237 (1,082 ) 155 — 137 137 Total rate of return swaps (286 ) (184 ) (470 ) (2,349 ) 284 (2,065 ) Options — (1,472 ) (1,472 ) — (19 ) (19 ) Net realized and unrealized gains (losses) $ (6,620 ) $ (11,887 ) $ (18,507 ) $ (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. |
FAIR VALUE OF FINANCIAL INSTR32
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
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, 2016 (amounts in thousands): As of December 31, 2016 Fair Value Hierarchy Carrying Amount Estimated Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash, restricted cash, and cash equivalents $ 1,139,549 $ 1,139,549 $ 1,139,549 $ — $ — Liabilities: Senior notes 123,008 116,699 116,699 — — Junior subordinated notes 250,154 210,084 — — 210,084 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, 2015 (amounts in thousands): As of December 31, 2015 Fair Value Hierarchy Carrying Amount Estimated Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash, restricted cash, and cash equivalents $ 807,496 $ 807,496 $ 807,496 $ — $ — Liabilities: Senior notes 413,006 394,390 394,390 — — Junior subordinated notes 248,498 216,757 — — 216,757 |
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, 2016 , 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 Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of December 31, 2016 Assets: Securities: Corporate debt securities $ — $ 13,337 $ 175,206 $ 188,543 Residential mortgage-backed securities — — 40,663 40,663 Total securities — 13,337 215,869 229,206 Corporate loans — 3,176,070 129,194 3,305,264 Equity investments, at estimated fair value 36,353 — 132,305 168,658 Interests in joint ventures and partnerships, at estimated fair value — — 793,996 793,996 Derivatives: Foreign exchange forward contracts and options — 41,636 2,282 43,918 Options — — 1,001 1,001 Warrants — — 1,528 1,528 Total derivatives — 41,636 4,811 46,447 Total $ 36,353 $ 3,231,043 $ 1,276,175 $ 4,543,571 Liabilities: Collateralized loan obligation secured notes $ — $ 3,177,548 $ — $ 3,177,548 Derivatives: Interest rate swaps — 27,263 — 27,263 Foreign exchange forward contracts and options — 4,152 1,290 5,442 Total derivatives — 31,415 1,290 32,705 Total $ — $ 3,208,963 $ 1,290 $ 3,210,253 The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2015, 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 Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Balance as of December 31, 2015 Assets: Securities: Corporate debt securities $ — $ 172,912 $ 194,986 $ 367,898 Residential mortgage-backed securities — — 49,621 49,621 Total securities — 172,912 244,607 417,519 Corporate loans — 4,889,876 298,734 5,188,610 Equity investments, at estimated fair value 40,765 75,533 146,648 262,946 Interests in joint ventures and partnerships, at estimated fair value — — 888,408 888,408 Derivatives: Foreign exchange forward contracts and options — 37,120 3,637 40,757 Options — — 95 95 Total derivatives — 37,120 3,732 40,852 Total $ 40,765 $ 5,175,441 $ 1,582,129 $ 6,798,335 Liabilities: Collateralized loan obligation secured notes $ — $ 4,843,746 $ — $ 4,843,746 Derivatives: Interest rate swaps — 41,743 — 41,743 Foreign exchange forward contracts and options — 1,399 750 2,149 Total derivatives — 43,142 750 43,892 Total $ — $ 4,886,888 $ 750 $ 4,887,638 |
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 year ended December 31, 2016 (amounts in thousands): Assets Corporate Debt Securities Residential Mortgage-Backed Securities Corporate Loans Equity Investments, at Estimated Fair Value Interests in Joint Ventures and Partnerships Foreign Exchange Options, Net Warrants Options Beginning balance as of January 1, 2016 $ 194,986 $ 49,621 $ 298,734 $ 146,648 $ 888,408 $ 2,887 $ — $ 95 Total gains or losses (for the period): Included in earnings(1) (30,466 ) 2,486 (70,721 ) (42,515 ) (45,687 ) (1,768 ) (757 ) 906 Transfers into Level 3(2) 11,739 — — 49,065 — — — — Transfers out of Level 3 — — — — — — — — Purchases — — 7,283 1,142 79,782 — — — Sales (3,145 ) — (44,441 ) (16,289 ) — (127 ) — — Settlements 2,092 (11,444 ) (61,661 ) (5,746 ) (128,507 ) — 2,285 — Ending balance as of December 31, 2016 $ 175,206 $ 40,663 $ 129,194 $ 132,305 $ 793,996 $ 992 $ 1,528 $ 1,001 Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period(1) $ (30,466 ) $ 2,483 $ (70,721 ) $ (42,515 ) $ (45,687 ) $ (1,768 ) $ (757 ) $ 906 (1) Amounts are included in net realized and unrealized gain (loss) on investments or net realized and unrealized gain (loss) on derivatives and foreign exchange in the consolidated statements of operations. (2) Corporate debt securities and equity investments, at estimated fair value, were transferred into Level 3 because observable market data was no longer available. 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 year ended December 31, 2015 (amounts in thousands): Assets Liabilities Corporate Debt Securities Residential Mortgage- Backed Securities Corporate Loans Equity Investments, at Estimated Fair Value Interests in Joint Ventures and Partnerships Foreign Exchange Options, Net Warrants Options Collateralized Loan Obligation Secured Notes Beginning balance as of January 1, 2015 $ 317,034 $ 55,184 $ 347,077 $ 81,719 $ 718,772 $ — $ — $ 5,212 $ 5,501,099 Total gains or losses (for the period): Included in earnings(1) (37,716 ) 8,398 (69,384 ) (42,472 ) (141,386 ) 2,887 (2,412 ) (5,117 ) — Transfers into Level 3 — — — — — — — — — Transfers out of Level 3(2) — — — — — — — — (5,501,099 ) Purchases 10,001 — 12,775 — 351,184 — — — — Sales (98,539 ) — (25,511 ) — — — — — — Settlements 4,206 (13,961 ) 33,777 107,401 (40,162 ) — 2,412 — — Ending balance as of December 31, 2015 $ 194,986 $ 49,621 $ 298,734 $ 146,648 $ 888,408 $ 2,887 $ — $ 95 $ — Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period(1) $ (45,488 ) $ 2,273 $ (67,368 ) $ (41,776 ) $ (141,386 ) $ 2,887 $ (2,412 ) $ (5,117 ) $ — (1) Amounts are included in net realized and unrealized gain (loss) on investments or net realized and unrealized gain (loss) on derivatives and foreign exchange in the consolidated statements of operations. (2) CLO secured notes were transferred out of Level 3 due to the adoption of accounting guidance effective January 1, 2015, whereby the debt obligations of the Company's consolidated CLOs were measured on the basis of the estimated fair value of the financial assets of the CLOs. As such, as of December 31, 2015, these debt obligations were classified as Level 2. Refer to Note 2 to these consolidated financial statement for further discussion. |
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 December 31, 2016 (dollar amounts in thousands): Balance as of December 31, 2016 Valuation Techniques(1) Unobservable Inputs(2) Weighted Average(3) Range Impact to Valuation from an Increase in Input(4) Assets: Corporate debt securities $ 175,206 Yield analysis Yield 14% 5% - 15% Decrease Net leverage 9x 7x-16x Decrease EBITDA multiple 6x 0x - 9x Increase Discount margin 1105 1100-1150bps Decrease Market comparables LTM EBITDA multiple 12x 12x Increase Black Scholes Options Pricing Model Risk-Free Rate 1% 1% Increase Volatility 85% 85% Decrease Broker quotes Offered quotes 102 101-103 Increase Residential mortgage – backed securities $ 40,663 Discounted cash flows Probability of default 2% 0% - 3% Decrease Loss severity 43% 35% - 50% Decrease Constant prepayment rate 18% 12% - 23% (5 ) Corporate loans $ 129,194 Yield Analysis Yield 13% 11% -16% Decrease Net leverage 11x 5x - 82x Decrease EBITDA multiple 6x 0x - 19x Increase Equity investments, at estimated fair value(6) $ 132,305 Inputs to both market comparables and discounted cash flow Illiquidity discount 8% 5% - 15% Decrease Weight ascribed to market comparables 47% 0% - 100% (7 ) Weight ascribed to discounted cash flows 53% 0% - 100% (8 ) Market comparables LTM EBITDA multiple 11x 0x - 14x Increase Forward EBITDA multiple 9x 0x - 13x Increase Discounted cash flows Weighted average cost of capital 9% 7% - 14% Decrease LTM EBITDA exit multiple 8x 7x - 10x Increase Interests in joint ventures and partnerships(10) $ 793,996 Inputs to market comparables, discounted cash flow and yield analysis Weight ascribed to market comparables 27% 0% - 100% (7 ) Weight ascribed to discounted cash flows 45% 0% - 100% (8 ) Weight ascribed to yield analysis 28% 0% - 100% (9 ) Market comparables LTM EBITDA multiple 4x 1x- 9x Increase Forward EBITDA multiple 9x 9x Increase Capitalization Rate 7% 3% - 12% Decrease Discounted cash flows Weighted average cost of capital 10% 6% - 20% Decrease Average price per BOE(11) $20.26 $18.81-$22.38 Increase Yield analysis Yield 19% 19% Decrease Net leverage 2x 2x Decrease EBITDA multiple 7x 7x Increase Foreign exchange options, net $ 992 Option pricing model Forward and spot rates 10,301 6 - 13,550 (12 ) Options(13) $ 1,001 Inputs to both market comparables and discounted cash flow Illiquidity discount 10% 10% Decrease Weight ascribed to market comparables 50% 50% (8 ) Weight ascribed to discounted cash flows 50% 50% (9 ) , Market comparables LTM EBITDA multiple 9x 9x Increase Forward EBITDA multiple 7x 7x Increase Discounted cash flows Weighted average cost of capital 15% 15% Decrease LTM EBITDA exit multiple 5x 5x 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. Of the total equity investments, at estimated fair value, $14.5 million was valued solely using a market comparables technique and $20.0 million was valued solely using a discounted cash flow technique. (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 or yield analysis approach. The opposite would be true if the market comparables approach results in a lower valuation than the discounted cash flow or yield analysis 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 or yield analysis approach. The opposite would be true if the discounted cash flow approach results in a lower valuation than the market comparables or yield analysis approach. (9) The directional change from an increase in the weight ascribed to the yield analysis approach would increase the fair value of the Level 3 investments if the yield analysis approach results in a higher valuation than the market comparables or discounted cash flow approach. The opposite would be true if the yield analysis approach results in a lower valuation than the market comparables or discounted cash flow approach. (10) Inputs exclude $408.1 million of assets, comprised of an investment that was valued using an independent third party valuation firm and interests in alternative credit funds that holds multiple investments, which are valued using Level 3 value methodologies similar to those shown for the corporate debt portfolio and equity investments. Of the total interest in joint ventures and partnerships, $43.5 million was valued solely using a discounted cash flow technique, while $9.8 million was valued solely using a market comparables technique and $24.4 million was valued solely using a yield analysis. (11) Natural resources assets with an estimated fair value of $107.3 million as of December 31, 2016 were valued using commodity prices. Commodity prices may be measured using a common volumetric equivalent where one barrel of oil equivalent (‘‘BOE’’) is determined using the ratio of six thousand cubic feet of natural gas to one barrel of oil, condensate or natural gas liquids. The price per BOE is provided to show the aggregate of all price inputs for these investments over a common volumetric equivalent although the valuations for specific investments may use price inputs specific to the asset for purposes of our valuations. The discounted cash flows include forecasted production of liquids (oil, condensate, and natural gas liquids) and natural gas with a forecasted revenue ratio of approximately 23% liquids and 77% natural gas. (12) Inputs include forward rates for investments in Chinese Yuan and Indian Rupees. (13) The total options were valued using 50% a discount cash flow technique and 50% a market comparables technique. The table above excludes warrants of $1.5 million , comprised of equity-like securities in a company that were valued using an independent third party valuation firm primarily based on the contractual agreement and public disclosures of the expected sale value. 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, 2015 (dollar amounts in thousands): Balance as of Valuation Techniques(1) Unobservable Inputs(2) Weighted Average(3) Range Impact to Valuation from an Increase in Input(4) Assets: Corporate debt securities $ 194,986 Yield analysis Yield 23% 6% - 31% Decrease Net leverage 10x 10x-12x Decrease EBITDA multiple 7x 7x - 10x Increase Discount margin 750 750bps Decrease Residential mortgage – backed securities $ 49,621 Discounted cash flows Probability of default 1% 0% - 3% Decrease Loss severity 40% 35% - 45% Decrease Constant prepayment rate 15% 12% - 18% (5 ) Corporate loans $ 298,734 Yield Analysis Yield 11% 3% - 18% Decrease Net leverage 7x 1x - 19x Decrease EBITDA multiple 9x 6x - 15x Increase Equity investments, at estimated fair value(6) $ 146,648 Inputs to market comparables, discounted cash flow and broker quotes Illiquidity discount 11% 0% - 15% Decrease Weight ascribed to market comparables 52% 0% - 100% (7 ) Weight ascribed to discounted cash flows 42% 0% - 100% (8 ) Weight ascribed to broker quotes 6% 0% - 100% (9 ) Market comparables LTM EBITDA multiple 8x 4x - 13x Increase Forward EBITDA multiple 8x 3x - 11x Increase Discounted cash flows Weighted average cost of capital 9% 7% - 14% Decrease LTM EBITDA exit multiple 8x 0x - 9x Increase Broker quotes Offered quotes 4 0 - 5 Increase Interests in joint ventures and partnerships(10) $ 888,408 Inputs to both market comparables and discounted cash flow Weight ascribed to market comparables 43% 0% - 100% (7 ) Weight ascribed to discounted cash flows 57% 0% - 100% (8 ) Market comparables LTM EBITDA multiple 5x 1x - 9x Decrease Discounted cash flows Weighted average cost of capital 8% 6% - 20% Decrease Average price per BOE(11) $20.61 $14.33 - $23.22 Increase Yield analysis Yield 16% 16% Decrease Net leverage 2x 2x Decrease EBITDA multiple 8x 8x Increase Foreign exchange options, net $ 2,887 Option pricing model Forward and spot rates 11,500 6 -14,000 (12 ) Options(13) $ 95 Inputs to both market comparables and discounted cash flow Illiquidity discount 10% 10% Decrease Weight ascribed to market comparables 50% 50% (7 ) Weight ascribed to discounted cash flows 50% 50% (8 ) , Market comparables LTM EBITDA multiple 9x 9x Increase Forward EBITDA multiple 8x 8x Increase Discounted cash flows Weighted average cost of capital 14% 14% Decrease LTM EBITDA exit multiple 8x 8x 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. Of the total equity investments, at estimated fair value, $6.4 million was valued solely using broker quotes, while $11.3 million was valued solely using a market comparables technique. (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 and broker quotes, if applicable. The opposite would be true if the market comparables approach results in a lower valuation than the discounted cash flow approach and broker quotes, if applicable. (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 and broker quotes, if applicable. The opposite would be true if the discounted cash flow approach results in a lower valuation than the market comparables approach and broker quotes, if applicable. (9) The directional change from an increase in the weight ascribed to broker quotes would increase the fair value of the Level 3 investments if the broker quotes results in a higher valuation than the market comparables and discounted cash flow approaches, if applicable. The opposite would be true if the broker quotes results in a lower valuation than the market comparables and discounted cash flow approaches, if applicable. (10) Inputs exclude an asset that was valued using an independent third party valuation firm. Of the total interest in joint ventures and partnerships, $164.4 million was valued solely using a discounted cash flow technique, while $98.9 million was valued solely using a market comparables technique and $17.5 million was valued solely using a yield analysis. (11) Natural resources assets with an estimated fair value of $114.1 million as of December 31, 2015 were valued using commodity prices. Commodity prices may be measured using a common volumetric equivalent where one BOE is determined using the ratio of six thousand cubic feet of natural gas to one barrel of oil, condensate or natural gas liquids. The price per BOE is provided to show the aggregate of all price inputs for these investments over a common volumetric equivalent although the valuations for specific investments may use price inputs specific to the asset for purposes of our valuations. The discounted cash flows include forecasted production of liquids (oil, condensate, and natural gas liquids) and natural gas with a forecasted revenue ratio of approximately 25% liquids and 75% natural gas. (12) Inputs include forward rates for investments in Chinese Yuan and Indian Rupees. (13) The total options were valued using 50% a discount cash flow technique and 50% a market comparables technique. |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Schedule of restricted common share transactions | The following table summarizes the restricted common share transactions that occurred prior to the Merger Transaction: Predecessor Company Manager Directors Total Unvested shares as of December 31, 2013 584,634 85,194 669,828 Issued — — — Vested (243,648 ) — (243,648 ) Unvested shares as of April 30, 2014 340,986 85,194 426,180 |
Schedule of common share option transactions | The following table summarizes common share option transactions that occurred prior to the Merger Transaction: Predecessor Company Number of Options Weighted Average Exercise Price Outstanding as of December 31, 2013 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 | The components of share-based compensation expense that existed prior to the Merger Transaction were as follows (amounts in thousands): Predecessor Company For the four months ended April 30, 2014 Restricted common shares granted to Manager $ 690 Restricted common shares granted to certain directors 328 Total share-based compensation expense $ 1,018 |
MANAGEMENT AGREEMENT AND RELA34
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 consolidated statements of operations, which are described in further detail below (amounts in thousands): Successor Company Predecessor Company Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Four months ended April 30, 2014 Base management fees, net $ 7,137 $ 9,532 $ 15,145 $ 5,253 CLO management fees 23,367 28,554 18,619 11,016 Incentive fees — — — 12,882 Manager share-based compensation — — — 690 Total related party management compensation $ 30,504 $ 38,086 $ 33,764 $ 29,841 |
Schedule of estimate 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): Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Cash $ 267,038 $ — $ 235,759 Securities — — 116,526 Loans — — 16,049 Equity investments, at estimated fair value — — 38,346 Interests in joint ventures and partnerships 64,151 251,748 67,310 Other — — 854 Total contributions from Parent $ 331,189 $ 251,748 $ 474,844 Cash $ 64,151 $ 251,748 $ 192,037 Loans 77,921 — — Equity investments, at estimated fair value 58,439 — 101,042 Oil and gas properties, net — — 179,203 CLO subordinated notes 127,581 — — Interests in joint ventures and partnerships 4,066 $ — — Total distributions to Parent $ 332,158 $ 251,748 $ 472,282 |
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 Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Four months ended April 30, 2014 Base management fees, gross $ 22,249 $ 30,620 $ 25,883 $ 13,364 CLO management fees credit(1) (15,112 ) (21,088 ) (9,968 ) (8,111 ) Other related party fees credit — — (770 ) — Total base management fees, net $ 7,137 $ 9,532 $ 15,145 $ 5,253 (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 Year ended Year ended December 31, 2015 Eight months ended December 31, 2014 Four months ended April 30, 2014 Charged and retained CLO management fees(1) $ 8,255 $ 7,466 $ 8,651 $ 2,905 CLO management fees credit 15,112 21,088 9,968 8,111 Total CLO management fees $ 23,367 $ 28,554 $ 18,619 $ 11,016 (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. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income tax expense (benefit) | The income tax expense (benefit) consisted of the following components (amounts in thousands): Successor Company Predecessor Company Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Four months ended April 30, 2014 Current: Federal income tax $ 114 $ 48 $ (63 ) $ (4,304 ) State income tax 52 134 126 137 Total 166 182 63 (4,167 ) Deferred: Federal income tax 1,012 843 343 4,329 State income tax 211 165 78 — Total 1,223 1,008 421 4,329 Total income tax expense (benefit) $ 1,389 $ 1,190 $ 484 $ 162 |
Schedule of reconciliation of income before taxes at the statutory rate to the effective tax expense | The following table presents a reconciliation of income before taxes at the statutory rate to the effective tax expense (benefit) (amounts in thousands): Successor Company Predecessor Company Year ended December 31, 2016 Year ended December 31, 2015 Eight months ended December 31, 2014 Four months ended April 30, 2014 Income before taxes at statutory rate $ 7,969 $ (116,720 ) $ (76,561 ) $ 37,150 Income passed through to shareholders (4,694 ) 128,242 83,098 (34,377 ) REIT income not subject to tax (2,171 ) (10,574 ) (6,072 ) (2,773 ) State and local income taxes, net of federal benefit 171 194 82 88 Withholding taxes 114 48 21 25 Other — — (84 ) 49 Effective tax expense (benefit) $ 1,389 $ 1,190 $ 484 $ 162 |
Schedule of components of deferred tax assets and liabilities | The significant components of deferred tax assets and liabilities are reflected in the following table as of December 31, 2016 and 2015 (amounts in thousands): As of December 31, 2016 As of December 31, 2015 Deferred tax assets: Unrealized losses from investments in domestic corporate subsidiaries $ — $ — Total deferred tax assets — — Deferred tax liabilities: Unrealized gains from investments in domestic corporate subsidiaries 2,653 1,008 Total deferred tax liabilities 2,653 1,008 Net deferred tax assets (liabilities) $ (2,653 ) $ (1,008 ) |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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 tables present the net income (loss) components of our reportable segments reconciled to amounts reflected in the consolidated statements of operations (amounts in thousands): Successor Company Credit Natural Resources Other Reconciling Items(1) Total Consolidated Year ended December 31, 2016 Year ended December 31, 2015 Year ended December 31, 2016 Year ended December 31, 2015 Year ended December 31, 2016 Year ended December 31, 2015 Year ended December 31, 2016 Year ended December 31, 2015 Year ended December 31, 2016 Year ended December 31, 2015 Total revenues $ 268,042 $ 339,809 $ 10,131 $ 15,677 $ 13,899 $ 19,770 $ — $ — $ 292,072 $ 375,256 Total investment costs and expenses 282,616 214,464 6,224 7,625 1,650 1,568 — — 290,490 223,657 Total other income (loss) 100,547 (391,187 ) (7,126 ) (70,630 ) (6,815 ) 29,174 — — 86,606 (432,643 ) Total other expenses 64,318 50,631 635 1,179 465 412 — 219 65,418 52,441 Income tax expense (benefit) 121 154 — — 1,268 1,036 — — 1,389 1,190 Net income (loss) $ 21,534 $ (316,627 ) $ (3,854 ) $ (63,757 ) $ 3,701 $ 45,928 $ — $ (219 ) $ 21,381 $ (334,675 ) Net income (loss) attributable to noncontrolling interests (7,295 ) (16,071 ) (4,484 ) (7,358 ) — — — — (11,779 ) (23,429 ) Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries $ 28,829 $ (300,556 ) $ 630 $ (56,399 ) $ 3,701 $ 45,928 $ — $ (219 ) $ 33,160 $ (311,246 ) (1) Consists of insurance and directors’ expenses which are not allocated to individual segments Successor Company Predecessor Company Successor Company Predecessor Company Successor Company Predecessor Company Successor Company Predecessor Company Successor Company Predecessor Company Credit Natural Resources Other Reconciling Items(1) Total Consolidated Eight months ended December 31, 2014 Four months ended April 30, 2014 Eight months ended December 31, 2014 Four months ended April 30, 2014 Eight months ended December 31, 2014 Four months ended April 30, 2014 Eight months ended December 31, 2014 Four months ended April 30, 2014 Eight months ended December 31, 2014 Four months ended April 30, 2014 Total revenues $ 279,639 $ 134,255 $ 57,616 $ 61,782 $ 13,090 $ 21,205 $ — — $ 350,345 $ 217,242 Total investment costs and expenses 142,204 62,485 38,117 38,915 815 425 — — 181,136 101,825 Total other income (loss) (241,035 ) 76,046 (115,141 ) (8,123 ) 11,794 (11,589 ) — — (344,382 ) 56,334 Total other expenses 40,703 23,121 2,219 1,633 476 230 174 40,625 43,572 65,609 Income tax expense (benefit) 49 146 — — 435 16 — — 484 162 Net income (loss) $ (144,352 ) $ 124,549 $ (97,861 ) $ 13,111 $ 23,158 $ 8,945 $ (174 ) $ (40,625 ) $ (219,229 ) $ 105,980 Net income (loss) attributable to noncontrolling interests $ (1,797 ) $ — $ (4,159 ) $ — $ — $ — $ — $ — $ (5,956 ) $ — Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries $ (142,555 ) $ 124,549 $ (93,702 ) $ 13,111 $ 23,158 $ 8,945 $ (174 ) $ (40,625 ) $ (213,273 ) $ 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 shows total assets of our reportable segments reconciled to amounts reflected in the consolidated balance sheets as of December 31, 2016 and December 31, 2015 (amounts in thousands): Successor Company Credit Natural Resources Other Reconciling Items Total Consolidated(1) As of December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015 December 31, 2016 December 31, 2015 Total assets $ 5,422,560 $ 7,303,305 $ 219,516 $ 230,815 $ 208,981 $ 254,275 $ — $ — $ 5,851,057 $ 7,788,395 (1) Total consolidated assets as of December 31, 2016 included $71.6 million of noncontrolling interests, of which $43.4 million was related to the Credit segment and $28.2 million was related to the Natural Resources segment. Total consolidated assets as of December 31, 2015 included $82.9 million of noncontrolling interests, of which $50.3 million was related to the Credit segment and $32.6 million was related to the Natural Resources segment. |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Earnings Per Share, Basic and Diluted [Abstract] | |
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 (loss) per common share for the Predecessor Company (amounts in thousands, except per share information): Predecessor Company Four months ended April 30, 2014 Net income (loss) $ 105,980 Less: Preferred share distributions 6,891 Net income (loss) available to common shares $ 99,089 Less: Dividends and undistributed earnings allocated to participating securities 292 Net income (loss) allocated to common shares $ 98,797 Basic: Basic weighted average common shares outstanding 204,276 Net income (loss) per common share $ 0.48 Diluted: Diluted weighted average common shares outstanding(1) 204,276 Net income (loss) per common share $ 0.48 Distributions declared per common share $ 0.22 (1) Potential anti-dilutive common shares excluded from diluted earnings per share related to common share options were 1,932,279 . |
ACCUMULATED OTHER COMPREHENSI38
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
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 gains on available-for-sale securities Net unrealized losses on cash flow hedges Total 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. Reclassified amounts were included in net realized and unrealized gain (loss) on investments on the consolidated statements of operations. |
SUMMARY OF QUARTERLY INFORMAT39
SUMMARY OF QUARTERLY INFORMATION (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | The following is a presentation of the results of operations for the years ended December 31, 2016 and 2015: 2016 (amounts in thousands) Fourth Quarter Third Quarter Second Quarter First Quarter Total revenues $ 62,588 $ 71,017 $ 69,162 $ 89,305 Total investment costs and expenses 48,846 130,593 58,053 52,998 Total other income (loss) 58,176 213,366 24,946 (209,882 ) Total other expenses 15,021 17,141 9,192 24,064 Income (loss) before income taxes 56,897 136,649 26,863 (197,639 ) Income tax expense (benefit) 1,176 340 (187 ) 60 Net income (loss) $ 55,721 $ 136,309 $ 27,050 $ (197,699 ) Net income (loss) attributable to noncontrolling interests 3,545 1,492 (1,281 ) (15,535 ) Net income (loss) attributable to KKR Financial Holdings LLC and subsidiaries 52,176 134,817 28,331 (182,164 ) Preferred share distributions 6,891 6,891 6,891 6,891 Net income (loss) available to common shares $ 45,285 $ 127,926 $ 21,440 $ (189,055 ) 2015 (amounts in thousands) Fourth Quarter Third Quarter Second Quarter First Quarter Total revenues $ 82,670 $ 89,109 $ 105,691 $ 97,786 Total investment costs and expenses 53,202 50,352 62,450 57,653 Total other income (loss) (186,065 ) (185,449 ) 8,035 (69,164 ) Total other expenses 11,457 11,547 12,269 17,168 Income (loss) before income taxes (168,054 ) (158,239 ) 39,007 (46,199 ) Income tax expense (benefit) 20 94 729 347 Net income (loss) $ (168,074 ) $ (158,333 ) $ 38,278 $ (46,546 ) Net income (loss) attributable to noncontrolling interests (7,977 ) (6,676 ) (2,705 ) (6,071 ) Net income (loss) attributable to KKR Financial Holdings LLC and subsidiaries (160,097 ) (151,657 ) 40,983 (40,475 ) Preferred share distributions 6,891 6,891 6,891 6,891 Net income (loss) available to common shares $ (166,988 ) $ (158,548 ) $ 34,092 $ (47,366 ) |
ORGANIZATION (Details)
ORGANIZATION (Details) | Apr. 30, 2014 | Dec. 31, 2016 |
Series A LLC Preferred Shares | ||
Definitive merger agreement | ||
Preferred shares, dividend rate (as a percent) | 7.375% | |
Predecessor Company | Series A LLC Preferred Shares | ||
Definitive merger agreement | ||
Preferred shares, dividend rate (as a percent) | 7.375% | |
Predecessor Company | KFN | KKR & Co. | ||
Definitive merger agreement | ||
Stock exchange ratio to be applied in the merger transaction | 0.51 |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Collateralized Debt Obligation disclosures | ||
Decrease in consolidated assets | $ (5,851,057) | $ (7,788,395) |
Decrease in total liabilities | $ (3,982,872) | (5,837,405) |
Percentage of voting interest required to consolidate non-VIEs (greater than) | 50.00% | |
Collateralized Debt Obligation (CLOs) VIEs | ||
Collateralized Debt Obligation disclosures | ||
Corporate debt investment, par amount | $ 3,100,000 | 5,500,000 |
Estimated fair value of corporate debt investments | 3,100,000 | 5,100,000 |
Collateralized Debt Obligation (CLOs) VIEs | Nonaffiliates | ||
Collateralized Debt Obligation disclosures | ||
Collateralized loan obligation secured notes | 3,200,000 | 4,900,000 |
Successor Company | ||
Collateralized Debt Obligation disclosures | ||
Collateralized loan obligation secured notes | 3,626,191 | $ 5,540,207 |
Cumulative-Effect Adjustment of Deconsolidation of VIE | ||
Collateralized Debt Obligation disclosures | ||
Decrease in consolidated assets | 1,000,000 | |
Decrease in total liabilities | $ 1,000,000 |
SUMMARY OF SIGNIFICANT ACCOUN42
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) | 4 Months Ended | 12 Months Ended |
Apr. 30, 2014componentcategorygrade | Dec. 31, 2016approachclassmethod | |
Fair Value of Financial Instruments | ||
Number of approaches used to determine fair value of investments | approach | 2 | |
Corporate Loans | ||
Period for determination of non-accrual status (in days) | 90 days | |
Number of methods interest income recognized | method | 2 | |
Sustained period of repayment performance | 6 months | |
Allowance for Loan Losses | ||
Number of classes of financing receivables | class | 1 | |
Predecessor Company | ||
Summary of corporate loans | ||
Number of loan categories | category | 3 | |
Allowance for Loan Losses | ||
Number of components in the loans receivable allowance for loan losses (in components) | component | 2 | |
Number of internally assigned risk grades | grade | 3 |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) $ in Thousands | 12 Months Ended | 24 Months Ended | |
Dec. 31, 2016USD ($) | Dec. 31, 2007trust | Dec. 31, 2015USD ($) | |
Series A LLC Preferred Shares | |||
Preferred Shares | |||
Preferred shares, dividend rate (as a percent) | 7.375% | ||
Junior subordinated notes | |||
Preferred Shares | |||
Number of 30 year trusts established | trust | 6 | ||
Debt redemption percentage | 100.00% | ||
Outstanding principal amount | $ 283,500 | ||
Successor Company | |||
Preferred Shares | |||
Outstanding principal amount | $ 3,570,710 | $ 5,505,250 | |
Minimum | LIBOR | Junior subordinated notes | |||
Preferred Shares | |||
Variable interest rate spread | 2.25% | ||
Maximum | LIBOR | Junior subordinated notes | |||
Preferred Shares | |||
Variable interest rate spread | 2.65% |
SUMMARY OF SIGNIFICANT ACCOUN44
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) | Apr. 30, 2014 |
Predecessor Company | KFN | KKR & Co. | |
Merger transaction | |
Exchange ratio of share based awards under merger transaction | 0.51 |
SUMMARY OF SIGNIFICANT ACCOUN45
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 5) | Dec. 31, 2016shares |
KKR Fund Holdings | |
Earnings per common share | |
Number of common shares held (in shares) | 100 |
SECURITIES (Details)
SECURITIES (Details) - Successor Company - USD ($) $ in Thousands | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Securities Available-for-Sale | |||
Par | $ 371,785 | $ 520,135 | |
Amortized Cost | 304,628 | 474,201 | |
Estimated Fair Value | 229,206 | 417,519 | |
Net realized and unrealized gains | |||
Net realized gains (losses) | $ 2,891 | 5,763 | (10,797) |
Net (increase) decrease in unrealized losses | (11,460) | (18,783) | (36,273) |
Net realized and unrealized gains (losses) | $ (8,569) | (13,020) | (47,070) |
Securities, at estimated fair value | |||
Securities Available-for-Sale | |||
Par | 371,785 | 520,135 | |
Amortized Cost | 304,628 | 474,201 | |
Estimated Fair Value | $ 229,206 | $ 417,519 |
SECURITIES (Details 2)
SECURITIES (Details 2) - security | Dec. 31, 2016 | Dec. 31, 2015 |
Successor Company | Corporate Debt Securities | ||
Gross unrealized losses and estimated fair value of available-for-sale securities | ||
Number of corporate debt securities in default | 0 | 0 |
SECURITIES (Details 3)
SECURITIES (Details 3) - Successor Company - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Concentration risk | ||
Securities | $ 229,206 | $ 417,519 |
Estimated fair value of securities pledged as collateral | ||
Pledged as collateral for collateralized loan obligation secured debt | 13,337 | 170,365 |
Total | $ 13,337 | $ 170,365 |
Corporate Debt Securities | Percent to total investment in corporate loans, debt securities and other investments | Top three largest | ||
Concentration risk | ||
Concentration risk of total fair value (as a percent) | 71.00% | 52.00% |
Securities | $ 134,700 | $ 192,500 |
Corporate Debt Securities | Percent to total investment in corporate loans, debt securities and other investments | Ten issuers | ||
Concentration risk | ||
Concentration risk of total fair value (as a percent) | 97.00% | 89.00% |
SECURITIES (Details 4)
SECURITIES (Details 4) | 4 Months Ended | ||
Apr. 30, 2014USD ($)security | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Troubled Debt Restructurings | |||
Estimated fair value of new securities received from the security TDR exchange | $ 168,658,000 | $ 262,946,000 | |
Predecessor Company | |||
Troubled Debt Restructurings | |||
Available-for-sale securities, gross realized gain | $ 2,500,000 | ||
Available-for-sale securities, gross realized losses | 0 | ||
Predecessor Company | Equity Investments, at Estimated Fair Value | |||
Troubled Debt Restructurings | |||
Estimated fair value of new securities received from the security TDR exchange | $ 16,100,000 | ||
Number of securities modified as TDRs in default within a twelve month period subsequent to their original restructuring | security | 0 | ||
Predecessor Company | Securities Available- For-Sale | |||
Troubled Debt Restructurings | |||
Modified amortized cost of security | $ 24,100,000 | ||
Securities Available- For-Sale | Predecessor Company | |||
Troubled Debt Restructurings | |||
Other-than-temporarily impaired loss | $ 4,400,000 |
CORPORATE LOANS AND ALLOWANCE50
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details) - Corporate Loan Portfolio Segment - Successor Company - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Summary of corporate loans | ||
Par | $ 3,433,059 | $ 5,722,646 |
Amortized Cost | 3,419,483 | 5,619,815 |
Estimated Fair Value | 3,305,264 | 5,188,610 |
Corporate loans, at estimated fair value | ||
Summary of corporate loans | ||
Par | 3,433,059 | 5,722,646 |
Amortized Cost | 3,419,483 | 5,619,815 |
Estimated Fair Value | $ 3,305,264 | $ 5,188,610 |
CORPORATE LOANS AND ALLOWANCE51
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 2) - Successor Company - USD ($) $ in Thousands | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Corporate loans | |||
Net realized and unrealized (losses) gains | |||
Credit risk, loss | $ 135,100 | $ 12,100 | $ 137,700 |
Corporate Loan Portfolio Segment | Corporate loans, at estimated fair value | |||
Net realized and unrealized (losses) gains | |||
Net realized gains (losses) | 1,411 | (234,354) | (51,356) |
Net (increase) decrease in unrealized losses | (204,006) | 312,340 | (195,256) |
Net realized and unrealized gains (losses) | $ (202,595) | $ 77,986 | $ (246,612) |
CORPORATE LOANS AND ALLOWANCE52
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 3) - Successor Company $ in Millions | Dec. 31, 2016USD ($)loan | Dec. 31, 2015USD ($)issuerloan |
Recorded investment in impaired loans and related allowances for credit losses | ||
Number of loans in default | loan | 0 | 1 |
Estimated fair value of corporate loans in default | $ 113.6 | |
Number of issuers in default | issuer | 1 | |
Corporate Loan Portfolio Segment | Corporate loans, at estimated fair value | ||
Recorded investment in impaired loans and related allowances for credit losses | ||
Par amount of non-accrual loans | $ 114.1 | $ 435.2 |
Estimated fair value of non-accrual loans | 26 | 127.5 |
Par amount of non-accrual and past due loans | $ 0 | 374.7 |
Estimated fair value of past due loans | $ 118.2 |
CORPORATE LOANS AND ALLOWANCE53
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 4) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Concentration risk | ||
Estimated fair value of corporate loans | $ 3,305,264 | $ 5,188,610 |
Corporate Loan Portfolio Segment | Successor Company | Corporate loans, at estimated fair value | Percent to total investment in corporate loans, debt securities and other investments | Top Twenty Issuers | ||
Concentration risk | ||
Concentration risk (as a percent) | 21.00% | |
Corporate Loan Portfolio Segment | Successor Company | Corporate loans, at estimated fair value | Percent to total investment in corporate loans, debt securities and other investments | Single Issuer of the Top Twenty Issuers | ||
Concentration risk | ||
Concentration risk (as a percent) | 2.00% | |
Corporate Loan Portfolio Segment | Successor Company | Corporate loans, at estimated fair value | Percent to total investment in corporate loans, debt securities and other investments | Top three largest | ||
Concentration risk | ||
Concentration risk (as a percent) | 8.00% | |
Corporate Loan Portfolio Segment | Successor Company | Corporate Loans Held for Sale | Percent to total investment in corporate loans, debt securities and other investments | Top Twenty Issuers | ||
Concentration risk | ||
Concentration risk (as a percent) | 31.00% | |
Corporate Loan Portfolio Segment | Successor Company | Corporate Loans Held for Sale | Percent to total investment in corporate loans, debt securities and other investments | Top three largest | ||
Concentration risk | ||
Estimated fair value of corporate loans | $ 434,600 |
CORPORATE LOANS AND ALLOWANCE54
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 5) - Successor Company - Estimated Fair Value - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Pledged assets | ||
Pledged as collateral for collateralized loan obligation secured debt | $ 3,048,841 | $ 4,917,123 |
Total | $ 3,048,841 | $ 4,917,123 |
CORPORATE LOANS AND ALLOWANCE55
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 6) - Predecessor Company $ in Thousands | 4 Months Ended |
Apr. 30, 2014USD ($) | |
Allowance for loan losses: | |
Charge-offs | $ (1,500) |
Corporate Loan Portfolio Segment | Corporate Loans | |
Allowance for loan losses: | |
Beginning balance | 224,999 |
Provision for loan losses | 0 |
Charge-offs | (1,458) |
Ending balance | $ 223,541 |
CORPORATE LOANS AND ALLOWANCE56
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 7) - Predecessor Company | 4 Months Ended |
Apr. 30, 2014USD ($)componentclass | |
Summary of corporate loans | |
Number of components in the loans receivable allowance for loan losses (in components) | component | 2 |
Interest income recognized using accrual method | $ 4,500,000 |
Number of classifications of non-accrual loans | class | 3 |
Corporate loans transferred from held for investment to held for sale | $ 348,808,000 |
Corporate loans transferred from held for sale to held for investment | 0 |
Net charge for lower of cost or estimated fair value adjustment | (5,038,000) |
Corporate Loans Held for Sale | |
Summary of corporate loans | |
Net charge for lower of cost or estimated fair value adjustment | 5,000,000 |
Corporate loans held for sale | 546,100,000 |
Corporate loans | |
Summary of corporate loans | |
Credit risk, gain (loss) | 2,800,000 |
Corporate Loan Portfolio Segment | |
Summary of corporate loans | |
Interest income recognized using cash basis method | 5,300,000 |
Corporate Loan Portfolio Segment | Corporate Loans | |
Summary of corporate loans | |
Interest income recognized using cash basis method | 4,500,000 |
Corporate loans transferred from held for investment to held for sale | 348,800,000 |
Corporate Loan Portfolio Segment | Corporate Loans Held for Sale | |
Summary of corporate loans | |
Interest income recognized using cash basis method | 700,000 |
Corporate Loan Portfolio Segment | Corporate loans, at estimated fair value | |
Summary of corporate loans | |
Interest income recognized using cash basis method | $ 100,000 |
CORPORATE LOANS AND ALLOWANCE57
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 8) - Predecessor Company | 4 Months Ended |
Apr. 30, 2014USD ($)issuerloan | |
Troubled debt restructurings: | |
Sustained period of repayment performance for determining the reclassification of restructured loans from non-accrual to accrual status (in months) | 6 months |
Pre-modification outstanding recorded investment | $ 195,400,000 |
Number of issuers troubled debt restructurings | issuer | 2 |
Higher coupon rate for extended period (as a percent) | 4.00% |
Charge-offs recorded related to TDR's | $ 1,100,000 |
Charge-offs related to TDR's as a percentage of charge-offs related to loans and losses (as a percent) | 76.00% |
Charge-offs recorded | $ 1,500,000 |
Lending commitment to borrower whose loans had been modified in the troubled debt restructuring | $ 0 |
Number of loans modified as TDRs in default | loan | 0 |
Modified amortized cost of corporate loans that did not qualify as TDRs | $ 1,100,000,000 |
Minimum | |
Troubled debt restructurings: | |
Financing receivable modifications extension period of maturity date (in years) | 3 years |
Maximum | |
Troubled debt restructurings: | |
Financing receivable modifications extension period of maturity date (in years) | 5 years |
Corporate Loans | |
Troubled debt restructurings: | |
Number of TDRs identified as impaired (in issuers) | loan | 1 |
Corporate Loan Portfolio Segment | |
Troubled debt restructurings: | |
Pre-modification outstanding recorded investment | $ 195,422,000 |
Post-modification outstanding recorded investment | $ 24,571,000 |
Number of issuers troubled debt restructurings | issuer | 2 |
Corporate Loan Portfolio Segment | Corporate Loans | |
Troubled debt restructurings: | |
Number of TDRs (loans) | loan | 1 |
Pre-modification outstanding recorded investment | $ 154,075,000 |
Post-modification outstanding recorded investment | 0 |
Estimated fair value of equity received from the TDRs excluded from post-modification outstanding recorded investment | 92,000,000 |
Charge-offs recorded | $ 1,458,000 |
Corporate Loan Portfolio Segment | Corporate loans, at estimated fair value | |
Troubled debt restructurings: | |
Number of TDRs (loans) | loan | 2 |
Pre-modification outstanding recorded investment | $ 41,347,000 |
Post-modification outstanding recorded investment | 24,571,000 |
Estimated fair value of equity received from the TDRs excluded from post-modification outstanding recorded investment | $ 12,300,000 |
Number of loans carried at estimated fair value | loan | 2 |
EQUITY INVESTMENTS AND INTERE58
EQUITY INVESTMENTS AND INTERESTS IN JOINT VENTURES AND PARTNERSHIPS (Details) - USD ($) | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Apr. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Equity Method Investments and Joint Ventures [Abstract] | ||||
Interests in joint ventures and partnerships, at estimated fair value | $ 793,996,000 | $ 888,408,000 | ||
Equity investments, at estimated fair value | 168,658,000 | 262,946,000 | ||
Estimate fair value of equity method investments | $ 408,300,000 | 506,500,000 | ||
Maritime Credit Corporation | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership percentage | 31.00% | |||
LCI Helicopters Limited | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership percentage | 33.00% | |||
Mineral Acquisition Company | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership percentage | 70.00% | |||
Equity Investments | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Net realized gains (losses) | $ (556,000) | $ (18,209,000) | 12,456,000 | |
Net (increase) decrease in unrealized losses | (30,168,000) | (27,729,000) | (28,297,000) | |
Interests in Joint Ventures and Partnerships | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Net realized gains (losses) | 4,272,000 | 18,253,000 | 16,986,000 | |
Net (increase) decrease in unrealized losses | $ (112,038,000) | $ (60,670,000) | $ (135,811,000) | |
Predecessor Company | Equity Investments | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Net realized gains (losses) | $ 12,000,000 | |||
Net (increase) decrease in unrealized losses | (12,400,000) | |||
Predecessor Company | Interests in Joint Ventures and Partnerships | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Net realized gains (losses) | 0 | |||
Net (increase) decrease in unrealized losses | $ (1,400,000) |
EQUITY INVESTMENTS AND INTERE59
EQUITY INVESTMENTS AND INTERESTS IN JOINT VENTURES AND PARTNERSHIPS (Details 2) - USD ($) $ in Thousands | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Gain (Loss) on Investments [Line Items] | |||
Net loss attributable to noncontrolling interests | $ 6,000 | $ 11,800 | $ 23,400 |
Equity Investments | |||
Gain (Loss) on Investments [Line Items] | |||
Net realized gains (losses) | (556) | (18,209) | 12,456 |
Net (increase) decrease in unrealized losses | (30,168) | (27,729) | (28,297) |
Net realized and unrealized gains (losses) | (30,724) | (45,938) | (15,841) |
Interests in Joint Ventures and Partnerships | |||
Gain (Loss) on Investments [Line Items] | |||
Net realized gains (losses) | 4,272 | 18,253 | 16,986 |
Net (increase) decrease in unrealized losses | (112,038) | (60,670) | (135,811) |
Net realized and unrealized gains (losses) | $ (107,766) | $ (42,417) | $ (118,825) |
EQUITY INVESTMENTS AND INTERE60
EQUITY INVESTMENTS AND INTERESTS IN JOINT VENTURES AND PARTNERSHIPS (Details 3) - USD ($) $ in Thousands | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Apr. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Credit | ||||
Equity Method Investment, Summarized Financial Information [Abstract] | ||||
Total assets | $ 761,512 | $ 628,165 | ||
Total liabilities | 532,693 | 418,281 | ||
Redeemable stock | 0 | 0 | ||
Noncontrolling interests | 0 | 0 | ||
Credit | Successor Company | ||||
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | ||||
Revenues | $ 14,157 | 45,332 | 29,503 | |
Expenses | 19,325 | 55,412 | 40,408 | |
Net income (loss) (2) | (19,118) | 12,709 | (20,796) | |
Credit | Predecessor Company | ||||
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | ||||
Revenues | $ 3,967 | |||
Expenses | 4,350 | |||
Net income (loss) (2) | 8,741 | |||
Commercial Real Estate | ||||
Equity Method Investment, Summarized Financial Information [Abstract] | ||||
Total assets | 710,688 | 878,878 | ||
Total liabilities | 682,865 | 812,935 | ||
Redeemable stock | 0 | 0 | ||
Noncontrolling interests | 0 | 0 | ||
Commercial Real Estate | Successor Company | ||||
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | ||||
Revenues | 77,661 | 186,252 | 138,431 | |
Expenses | 80,685 | 124,070 | 148,463 | |
Net income (loss) (2) | (3,024) | 62,181 | 21,629 | |
Commercial Real Estate | Predecessor Company | ||||
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | ||||
Revenues | 30,338 | |||
Expenses | 36,914 | |||
Net income (loss) (2) | (6,576) | |||
Natural Resources | ||||
Equity Method Investment, Summarized Financial Information [Abstract] | ||||
Total assets | 137,518 | 137,128 | ||
Total liabilities | 0 | 90 | ||
Redeemable stock | 0 | 0 | ||
Noncontrolling interests | 0 | 0 | ||
Natural Resources | Successor Company | ||||
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | ||||
Revenues | 5,057 | 6,479 | 4,673 | |
Expenses | 3,600 | 791 | 5,685 | |
Net income (loss) (2) | $ 1,457 | $ 5,688 | $ (1,012) | |
Natural Resources | Predecessor Company | ||||
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract] | ||||
Revenues | 2,579 | |||
Expenses | 1,763 | |||
Net income (loss) (2) | $ 815 |
BORROWINGS (Details)
BORROWINGS (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Nov. 15, 2016 | Nov. 01, 2016 | |
Details of Company's borrowings | ||||
Carrying value | $ 3,087,941,000 | $ 4,843,746,000 | ||
8.375% Senior notes | ||||
Details of Company's borrowings | ||||
Stated interest rate | 8.375% | |||
7.500% Senior notes | ||||
Details of Company's borrowings | ||||
Stated interest rate | 7.50% | 7.50% | ||
Junior subordinated notes | ||||
Details of Company's borrowings | ||||
Total borrowings, carrying value | $ 283,500,000 | |||
Successor Company | ||||
Details of Company's borrowings | ||||
Total borrowings | 3,626,191,000 | $ 5,540,207,000 | ||
Total borrowings, carrying value | 3,570,710,000 | 5,505,250,000 | ||
Collateral amount | 3,164,156,000 | 5,169,916,000 | ||
Successor Company | CLO 2007-1 secured notes | ||||
Details of Company's borrowings | ||||
Par | 1,544,032,000 | |||
Carrying value | $ 1,630,293,000 | |||
Weighted Average Borrowing Rate (as a percent) | 2.10% | |||
Weighted Average Remaining Maturity (in days) | 1962 days | |||
Collateral amount | $ 1,732,855,000 | |||
Successor Company | CLO 2007-1 subordinated notes | ||||
Details of Company's borrowings | ||||
Par | 134,468,000 | |||
Carrying value | $ 74,954,000 | |||
Weighted Average Borrowing Rate (as a percent) | 11.66% | |||
Weighted Average Remaining Maturity (in days) | 1962 days | |||
Collateral amount | $ 150,912,000 | |||
Successor Company | CLO 2007-A notes | ||||
Details of Company's borrowings | ||||
Par | 15,096,000 | |||
Carrying value | $ 17,060,000 | |||
Weighted Average Borrowing Rate (as a percent) | 14.49% | |||
Weighted Average Remaining Maturity (in days) | 654 days | |||
Collateral amount | $ 48,856,000 | |||
Successor Company | CLO 2011-1 senior debt | ||||
Details of Company's borrowings | ||||
Par | 249,301,000 | |||
Carrying value | $ 249,301,000 | |||
Weighted Average Borrowing Rate (as a percent) | 1.67% | |||
Weighted Average Remaining Maturity (in days) | 1689 days | |||
Collateral amount | $ 310,498,000 | |||
Successor Company | CLO 2012-1 secured notes | ||||
Details of Company's borrowings | ||||
Par | 367,500,000 | 367,500,000 | ||
Carrying value | $ 378,978,000 | $ 365,383,000 | ||
Weighted Average Borrowing Rate (as a percent) | 3.01% | 2.59% | ||
Weighted Average Remaining Maturity (in days) | 2906 days | 3272 days | ||
Collateral amount | $ 333,931,000 | $ 361,684,000 | ||
Successor Company | CLO 2012-1 subordinated notes | ||||
Details of Company's borrowings | ||||
Par | 18,000,000 | 18,000,000 | ||
Carrying value | $ 9,613,000 | $ 10,845,000 | ||
Weighted Average Borrowing Rate (as a percent) | 15.40% | 15.82% | ||
Weighted Average Remaining Maturity (in days) | 2906 days | 3272 days | ||
Collateral amount | $ 16,356,000 | $ 17,715,000 | ||
Successor Company | CLO 2012-1 subordinated notes to affiliates | ||||
Details of Company's borrowings | ||||
Par | 19,663,000 | |||
Carrying value | $ 10,501,000 | |||
Weighted Average Borrowing Rate (as a percent) | 0.00% | |||
Weighted Average Remaining Maturity (in days) | 2906 days | |||
Collateral amount | $ 17,867,000 | |||
Successor Company | CLO 2013-1 secured notes | ||||
Details of Company's borrowings | ||||
Par | 458,500,000 | 458,500,000 | ||
Carrying value | $ 470,354,000 | $ 450,280,000 | ||
Weighted Average Borrowing Rate (as a percent) | 2.59% | 2.05% | ||
Weighted Average Remaining Maturity (in days) | 3118 days | 3484 days | ||
Collateral amount | $ 450,836,000 | $ 479,391,000 | ||
Successor Company | CLO 2013-1 subordinated notes to affiliates | ||||
Details of Company's borrowings | ||||
Par | 23,063,000 | |||
Carrying value | $ 14,970,000 | |||
Weighted Average Borrowing Rate (as a percent) | 0.00% | |||
Weighted Average Remaining Maturity (in days) | 3118 days | |||
Collateral amount | $ 22,678,000 | |||
Successor Company | CLO 2013-2 secured notes | ||||
Details of Company's borrowings | ||||
Par | 339,250,000 | 339,250,000 | ||
Carrying value | $ 343,208,000 | $ 334,187,000 | ||
Weighted Average Borrowing Rate (as a percent) | 2.88% | 2.52% | ||
Weighted Average Remaining Maturity (in days) | 3310 days | 3676 days | ||
Collateral amount | $ 323,644,000 | $ 347,989,000 | ||
Successor Company | CLO 2013-2 subordinated notes to affiliates | ||||
Details of Company's borrowings | ||||
Par | 30,959,000 | |||
Carrying value | $ 19,074,000 | |||
Weighted Average Borrowing Rate (as a percent) | 0.00% | |||
Weighted Average Remaining Maturity (in days) | 3310 days | |||
Collateral amount | $ 29,535,000 | |||
Successor Company | CLO 9 secured notes | ||||
Details of Company's borrowings | ||||
Par | 463,750,000 | 463,750,000 | ||
Carrying value | $ 471,824,000 | $ 454,103,000 | ||
Weighted Average Borrowing Rate (as a percent) | 2.89% | 2.33% | ||
Weighted Average Remaining Maturity (in days) | 3575 days | 3941 days | ||
Collateral amount | $ 437,048,000 | $ 463,574,000 | ||
Successor Company | CLO 9 subordinated notes | ||||
Details of Company's borrowings | ||||
Par | 15,000,000 | 15,000,000 | ||
Carrying value | $ 10,170,000 | $ 9,972,000 | ||
Weighted Average Borrowing Rate (as a percent) | 15.58% | 15.92% | ||
Weighted Average Remaining Maturity (in days) | 3575 days | 3941 days | ||
Collateral amount | $ 14,136,000 | $ 14,994,000 | ||
Successor Company | CLO 9 subordinated notes to affiliates | ||||
Details of Company's borrowings | ||||
Par | 33,400,000 | |||
Carrying value | $ 22,646,000 | |||
Weighted Average Borrowing Rate (as a percent) | 6.11% | |||
Weighted Average Remaining Maturity (in days) | 3575 days | |||
Collateral amount | $ 31,477,000 | |||
Successor Company | CLO 10 senior notes | ||||
Details of Company's borrowings | ||||
Par | 368,000,000 | 368,000,000 | ||
Carrying value | $ 377,369,000 | $ 363,977,000 | ||
Weighted Average Borrowing Rate (as a percent) | 3.18% | 2.75% | ||
Weighted Average Remaining Maturity (in days) | 3271 days | 3637 days | ||
Collateral amount | $ 356,393,000 | $ 384,991,000 | ||
Successor Company | CLO 10 subordinated notes to affiliates | ||||
Details of Company's borrowings | ||||
Par | 39,146,000 | |||
Carrying value | $ 22,416,000 | |||
Weighted Average Borrowing Rate (as a percent) | 7.53% | |||
Weighted Average Remaining Maturity (in days) | 3271 days | |||
Collateral amount | $ 37,912,000 | |||
Successor Company | CLO 11 senior secured notes | ||||
Details of Company's borrowings | ||||
Par | 507,750,000 | |||
Carrying value | $ 491,699,000 | |||
Weighted Average Borrowing Rate (as a percent) | 2.38% | |||
Weighted Average Remaining Maturity (in days) | 4123 days | |||
Collateral amount | $ 501,286,000 | |||
Successor Company | CLO 11 subordinated notes | ||||
Details of Company's borrowings | ||||
Par | 28,250,000 | |||
Carrying value | $ 23,306,000 | |||
Weighted Average Borrowing Rate (as a percent) | 5.28% | |||
Weighted Average Remaining Maturity (in days) | 4123 days | |||
Collateral amount | $ 27,890,000 | |||
Successor Company | CLO 13 secured notes | ||||
Details of Company's borrowings | ||||
Par | 370,000,000 | |||
Carrying value | $ 364,986,000 | |||
Weighted Average Borrowing Rate (as a percent) | 2.84% | |||
Weighted Average Remaining Maturity (in days) | 4399 days | |||
Collateral amount | $ 323,781,000 | |||
Successor Company | CLO 13 subordinated notes | ||||
Details of Company's borrowings | ||||
Par | 4,000,000 | |||
Carrying value | $ 3,400,000 | |||
Weighted Average Borrowing Rate (as a percent) | 0.00% | |||
Weighted Average Remaining Maturity (in days) | 4399 days | |||
Collateral amount | $ 3,500,000 | |||
Successor Company | CLO 15 secured notes | ||||
Details of Company's borrowings | ||||
Par | 370,500,000 | |||
Carrying value | $ 370,632,000 | |||
Weighted Average Borrowing Rate (as a percent) | 3.06% | |||
Weighted Average Remaining Maturity (in days) | 4309 days | |||
Collateral amount | $ 376,971,000 | |||
Successor Company | CLO 15 subordinated notes | ||||
Details of Company's borrowings | ||||
Par | 12,100,000 | |||
Carrying value | $ 11,430,000 | |||
Weighted Average Borrowing Rate (as a percent) | 0.00% | |||
Weighted Average Remaining Maturity (in days) | 4309 days | |||
Collateral amount | $ 12,311,000 | |||
Successor Company | CLO 16 secured notes | ||||
Details of Company's borrowings | ||||
Par | 644,300,000 | |||
Carrying value | $ 640,386,000 | |||
Weighted Average Borrowing Rate (as a percent) | 3.16% | |||
Weighted Average Remaining Maturity (in days) | 4403 days | |||
Collateral amount | $ 596,916,000 | |||
Successor Company | CLO 16 Subordinated Notes | ||||
Details of Company's borrowings | ||||
Par | 4,500,000 | |||
Carrying value | $ 3,977,000 | |||
Weighted Average Borrowing Rate (as a percent) | 0.00% | |||
Weighted Average Remaining Maturity (in days) | 4403 days | |||
Collateral amount | $ 4,169,000 | |||
Successor Company | Collaterized loan obligation secured notes | ||||
Details of Company's borrowings | ||||
Par | 3,207,631,000 | 4,882,897,000 | ||
Carrying value | 3,177,548,000 | 4,843,746,000 | ||
Collateral amount | 3,062,180,000 | 5,169,916,000 | ||
Successor Company | CLO 17 Warehouse Facility | ||||
Details of Company's borrowings | ||||
Maximum borrowing capacity | $ 200,000,000 | |||
Successor Company | CLO Warehouse Facility | ||||
Details of Company's borrowings | ||||
Par | 20,000,000 | |||
Carrying value | $ 20,000,000 | |||
Weighted Average Borrowing Rate (as a percent) | 2.25% | |||
Weighted Average Remaining Maturity (in days) | 305 days | |||
Collateral amount | $ 101,976,000 | |||
Successor Company | 8.375% Senior notes | ||||
Details of Company's borrowings | ||||
Par | 258,750,000 | $ 258,800,000 | ||
Carrying value | $ 289,660,000 | |||
Weighted Average Borrowing Rate (as a percent) | 8.38% | |||
Weighted Average Remaining Maturity (in days) | 9451 days | |||
Stated interest rate | 8.375% | |||
Successor Company | 7.500% Senior notes | ||||
Details of Company's borrowings | ||||
Par | 115,043,000 | $ 115,043,000 | ||
Carrying value | $ 123,008,000 | $ 123,346,000 | ||
Weighted Average Borrowing Rate (as a percent) | 7.50% | 7.50% | ||
Weighted Average Remaining Maturity (in days) | 9210 days | 9576 days | ||
Successor Company | Junior subordinated notes | ||||
Details of Company's borrowings | ||||
Par | $ 283,517,000 | $ 283,517,000 | ||
Carrying value | $ 250,154,000 | $ 248,498,000 | ||
Weighted Average Borrowing Rate (as a percent) | 3.34% | 5.43% | ||
Weighted Average Remaining Maturity (in days) | 7218 days | 7584 days |
BORROWINGS (Details 2)
BORROWINGS (Details 2) - USD ($) | Dec. 15, 2016 | Sep. 14, 2016 | Jun. 07, 2016 | Dec. 16, 2015 | May 07, 2015 | Oct. 31, 2016 | Aug. 31, 2016 | Apr. 30, 2016 | Mar. 31, 2016 | Nov. 30, 2015 | Jul. 31, 2015 | Feb. 28, 2015 | Apr. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | May 31, 2016 |
Successor Company | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Collateralized loan obligation secured debt repaid | $ 1,045,041,000 | $ 2,142,035,000 | $ 1,672,467,000 | ||||||||||||||
Reduction in CLO obligations | (3,570,710,000) | (5,505,250,000) | |||||||||||||||
Successor Company | Collateralized Loan Obligation Secured Notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Fair value, option, credit risk, gains (losses) on liabilities | 0 | ||||||||||||||||
Fair value, option, credit risk, unrealized gain (loss) on liabilities | $ 27,000,000 | ||||||||||||||||
Successor Company | CLO 2007-1 secured notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Collateralized loan obligation secured debt repaid | $ 945,600,000 | ||||||||||||||||
Derivative, notional amount terminated | $ 142,300,000 | ||||||||||||||||
Par amount of notes issued | 1,544,032,000 | ||||||||||||||||
Successor Company | CLO 16 subordinated notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Collateralized loan obligation secured debt repaid | 8,200,000 | ||||||||||||||||
Successor Company | CLO 16 subordinated notes | Nonaffiliates | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | $ 25,700,000 | ||||||||||||||||
Successor Company | CLO 2007-1 subordinated notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Collateralized loan obligation secured debt repaid | $ 134,500,000 | ||||||||||||||||
Par amount of notes issued | 134,468,000 | ||||||||||||||||
Successor Company | CLO 2005-2 senior secured notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Collateralized loan obligation secured debt repaid | $ 140,200,000 | ||||||||||||||||
Successor Company | CLO 2005-1 senior secured notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Collateralized loan obligation secured debt repaid | $ 142,400,000 | ||||||||||||||||
Successor Company | CLO 2005-2 Class E Secured Notes - 2 | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 30,000,000 | ||||||||||||||||
Proceeds from senior notes | 30,200,000 | ||||||||||||||||
Successor Company | CLO 2006-1 senior secured notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Collateralized loan obligation secured debt repaid | $ 181,800,000 | ||||||||||||||||
Derivative, notional amount terminated | $ 84,000,000 | ||||||||||||||||
Successor Company | CLO 2007-1 mezzanine notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Collateralized loan obligation secured debt repaid | 887,100,000 | ||||||||||||||||
Successor Company | Notes CLO 2016-1 | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Collateralized loan obligation secured debt repaid | 348,400,000 | ||||||||||||||||
Par amount of notes issued | 426,400,000 | ||||||||||||||||
Successor Company | CLO 16 senior secured notes | Nonaffiliates | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | $ 330,900,000 | ||||||||||||||||
Successor Company | CLO 16 senior secured notes | Nonaffiliates | Three Month LIBOR | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | 1.70% | ||||||||||||||||
Successor Company | CLO 2011-1 senior debt | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Collateralized loan obligation secured debt repaid | $ 249,300,000 | 153,200,000 | |||||||||||||||
Par amount of notes issued | 249,301,000 | ||||||||||||||||
Successor Company | CLO 2007-1 Class D and E secured notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 35,000,000 | ||||||||||||||||
Proceeds from senior notes | 35,100,000 | ||||||||||||||||
Successor Company | CLO 2013-2 secured notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 339,250,000 | 339,250,000 | |||||||||||||||
Successor Company | CLO 9 secured notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 463,750,000 | 463,750,000 | |||||||||||||||
Successor Company | CLO 9 subordinated notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 15,000,000 | 15,000,000 | |||||||||||||||
Successor Company | CLO 10 senior notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 368,000,000 | 368,000,000 | |||||||||||||||
Successor Company | CLO 11 notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | $ 564,500,000 | ||||||||||||||||
Successor Company | CLO 11 senior secured notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 507,750,000 | ||||||||||||||||
Successor Company | CLO 11 senior secured notes | Nonaffiliates | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | $ 507,800,000 | ||||||||||||||||
Successor Company | CLO 11 senior secured notes | Nonaffiliates | Three Month LIBOR | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | 2.06% | ||||||||||||||||
Successor Company | CLO 11 subordinated notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 28,250,000 | ||||||||||||||||
Successor Company | CLO 11 subordinated notes | Nonaffiliates | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | $ 28,300,000 | ||||||||||||||||
Successor Company | CLO 13 notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | $ 412,000,000 | ||||||||||||||||
Successor Company | CLO 13 secured notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Collateralized loan obligation secured debt repaid | 2,000,000 | ||||||||||||||||
Par amount of notes issued | 370,000,000 | ||||||||||||||||
Successor Company | CLO 13 secured notes | Nonaffiliates | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 370,000,000 | ||||||||||||||||
Floating rate senior secured note | 350,000,000 | ||||||||||||||||
Fixed rate senior secured note | $ 20,000,000 | ||||||||||||||||
Fixed rate (as a percent) | 3.83% | ||||||||||||||||
Successor Company | CLO 13 secured notes | Nonaffiliates | Three Month LIBOR | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | 2.19% | ||||||||||||||||
Successor Company | CLO 13 subordinated notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 4,000,000 | ||||||||||||||||
Successor Company | CLO 13 subordinated notes | Nonaffiliates | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | $ 4,000,000 | ||||||||||||||||
Successor Company | CLO 13 Class F Notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 7,000,000 | ||||||||||||||||
Proceeds from senior notes | 5,900,000 | ||||||||||||||||
Successor Company | Subordinated Notes to Affiliate | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 106,500,000 | $ 96,500,000 | |||||||||||||||
Successor Company | CLO 16 notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | $ 711,300,000 | ||||||||||||||||
Successor Company | CLO 16 secured notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 644,300,000 | ||||||||||||||||
Successor Company | CLO 16 secured notes | Nonaffiliates | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 644,300,000 | ||||||||||||||||
Floating rate senior secured note | 634,800,000 | ||||||||||||||||
Fixed rate senior secured note | $ 9,500,000 | ||||||||||||||||
Fixed rate (as a percent) | 4.80% | ||||||||||||||||
Successor Company | CLO 16 secured notes | Nonaffiliates | Three Month LIBOR | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | 2.04% | ||||||||||||||||
Successor Company | CLO 16 Subordinated Notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 4,500,000 | ||||||||||||||||
Successor Company | CLO 16 Subordinated Notes | Nonaffiliates | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | $ 4,500,000 | ||||||||||||||||
Successor Company | CLO 2007-A notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Collateralized loan obligation secured debt repaid | $ 15,100,000 | ||||||||||||||||
Par amount of notes issued | $ 15,096,000 | ||||||||||||||||
Successor Company | CLO 15 notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | $ 410,800,000 | ||||||||||||||||
Successor Company | CLO 15 secured notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 370,500,000 | ||||||||||||||||
Successor Company | CLO 15 secured notes | Nonaffiliates | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | $ 370,500,000 | ||||||||||||||||
Successor Company | CLO 15 secured notes | Nonaffiliates | Three Month LIBOR | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | 2.05% | ||||||||||||||||
Successor Company | CLO 15 subordinated notes | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | 12,100,000 | ||||||||||||||||
Successor Company | CLO 15 subordinated notes | Nonaffiliates | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Par amount of notes issued | $ 12,100,000 | ||||||||||||||||
Predecessor Company | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Collateralized loan obligation secured debt repaid | $ 221,914,000 | ||||||||||||||||
Cumulative-Effect Adjustment of Deconsolidation of VIE | |||||||||||||||||
Details of Company's borrowings | |||||||||||||||||
Reduction in CLO obligations | $ 967,300,000 |
BORROWINGS (Details 3)
BORROWINGS (Details 3) - Successor Company - USD ($) | Nov. 01, 2016 | Jul. 22, 2015 | Mar. 02, 2015 |
CLO 17 Warehouse Facility | |||
Details of Company's borrowings | |||
Maximum borrowing capacity | $ 200,000,000 | ||
CLO 13 Warehouse Facility | |||
Details of Company's borrowings | |||
Maximum borrowing capacity | $ 350,000,000 | ||
CLO 11 Warehouse Facility | |||
Details of Company's borrowings | |||
Maximum borrowing capacity | $ 570,000,000 | ||
Minimum | CLO 17 Warehouse Facility | Three Month LIBOR | |||
Details of Company's borrowings | |||
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | 1.25% | ||
Minimum | CLO 13 Warehouse Facility | Three Month LIBOR | |||
Details of Company's borrowings | |||
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | 1.50% | ||
Minimum | CLO 11 Warehouse Facility | Three Month LIBOR | |||
Details of Company's borrowings | |||
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | 1.25% | ||
Maximum | CLO 17 Warehouse Facility | Three Month LIBOR | |||
Details of Company's borrowings | |||
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | 2.20% | ||
Maximum | CLO 13 Warehouse Facility | Three Month LIBOR | |||
Details of Company's borrowings | |||
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | 2.25% | ||
Maximum | CLO 11 Warehouse Facility | Three Month LIBOR | |||
Details of Company's borrowings | |||
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | 1.75% |
BORROWINGS (Details 4)
BORROWINGS (Details 4) - USD ($) | Nov. 15, 2016 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 |
Successor Company | ||||
Details of Company's borrowings | ||||
Gain on redemption of debt | $ 0 | $ 29,846,000 | $ 0 | |
8.375% Senior notes | ||||
Details of Company's borrowings | ||||
Stated interest rate | 8.375% | |||
8.375% Senior notes | Successor Company | ||||
Details of Company's borrowings | ||||
Par | $ 258,800,000 | $ 258,750,000 | ||
Stated interest rate | 8.375% | |||
Gain on redemption of debt | $ 29,800,000 |
BORROWINGS (Details 5)
BORROWINGS (Details 5) $ in Thousands | Dec. 31, 2016USD ($) |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
Total | $ 3,626,191 |
Less than 1 year | 20,000 |
1 - 3 years | 0 |
3 - 5 years | 0 |
More than 5 years | 3,606,191 |
CLO 2012-1 secured notes | |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
Total | 405,163 |
Less than 1 year | 0 |
1 - 3 years | 0 |
3 - 5 years | 0 |
More than 5 years | 405,163 |
CLO 2013-1 secured notes | |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
Total | 481,563 |
Less than 1 year | 0 |
1 - 3 years | 0 |
3 - 5 years | 0 |
More than 5 years | 481,563 |
CLO 2013-2 secured notes | |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
Total | 370,209 |
Less than 1 year | 0 |
1 - 3 years | 0 |
3 - 5 years | 0 |
More than 5 years | 370,209 |
CLO 9 notes | |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
Total | 512,149 |
Less than 1 year | 0 |
1 - 3 years | 0 |
3 - 5 years | 0 |
More than 5 years | 512,149 |
CLO 10 notes | |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
Total | 407,147 |
Less than 1 year | 0 |
1 - 3 years | 0 |
3 - 5 years | 0 |
More than 5 years | 407,147 |
CLO 15 notes | |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
Total | 382,600 |
Less than 1 year | 0 |
1 - 3 years | 0 |
3 - 5 years | 0 |
More than 5 years | 382,600 |
CLO 16 notes | |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
Total | 648,800 |
Less than 1 year | 0 |
1 - 3 years | 0 |
3 - 5 years | 0 |
More than 5 years | 648,800 |
CLO warehouse facility | |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
Total | 20,000 |
Less than 1 year | 20,000 |
1 - 3 years | 0 |
3 - 5 years | 0 |
More than 5 years | 0 |
Senior notes | |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
Total | 115,043 |
Less than 1 year | 0 |
1 - 3 years | 0 |
3 - 5 years | 0 |
More than 5 years | 115,043 |
Junior subordinated notes | |
Long-term Debt, Fiscal Year Maturity [Abstract] | |
Total | 283,517 |
Less than 1 year | 0 |
1 - 3 years | 0 |
3 - 5 years | 0 |
More than 5 years | $ 283,517 |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) - Successor Company - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ||
Estimated Fair Value | $ 13,742 | $ (3,040) |
Foreign exchange forward contracts and options | ||
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ||
Derivative liability, notional amount | (460,300) | (375,500) |
Free-Standing Derivatives: | Interest rate swaps | ||
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ||
Derivative asset, notional amount | 141,000 | 297,667 |
Estimated Fair Value | (27,263) | (41,743) |
Free-Standing Derivatives: | Foreign exchange forward contracts and options | ||
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ||
Derivative liability, notional amount | (460,282) | (375,524) |
Estimated Fair Value | 38,476 | 38,608 |
Free-Standing Derivatives: | Common stock warrants | ||
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ||
Estimated Fair Value | 1,528 | 0 |
Free-Standing Derivatives: | Options | ||
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ||
Estimated Fair Value | $ 1,001 | $ 95 |
DERIVATIVE INSTRUMENTS (Detai67
DERIVATIVE INSTRUMENTS (Details 2) $ in Thousands | 4 Months Ended |
Apr. 30, 2014USD ($) | |
Predecessor Company | |
Net gains (losses) recognized in accumulated other comprehensive income (loss) on cash flow hedges | |
Net gains (losses) recognized in accumulated other comprehensive income (loss) on cash flow hedges | $ (5,442) |
DERIVATIVE INSTRUMENTS (Detai68
DERIVATIVE INSTRUMENTS (Details 3) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Successor Company | Foreign exchange forward contracts and options | ||
Notional amount | ||
Notional amount of liability | $ 460,300 | $ 375,500 |
Counterparty One | ||
Notional amount | ||
Net asset | 2,600 | 2,400 |
Derivative, collateral, right to reclaim cash | 3,400 | 20,700 |
Counterparty Two | ||
Notional amount | ||
Net asset | 1,000 | 1,600 |
Derivative, collateral, right to reclaim cash | 8,000 | |
Derivative, collateral, obligation to return cash | 100 | |
Counterparty Three | ||
Notional amount | ||
Net asset | 7,500 | 9,100 |
Derivative, collateral, obligation to return cash | 11,300 | 23,600 |
Free-Standing Derivatives | Successor Company | Interest rate swaps | ||
Notional amount | ||
Notional | 141,000 | 297,700 |
Free-Standing Derivatives | Successor Company | Foreign exchange forward contracts and options | ||
Notional amount | ||
Notional amount of liability | $ 460,282 | $ 375,524 |
DERIVATIVE INSTRUMENTS (Detai69
DERIVATIVE INSTRUMENTS (Details 4) - Free-Standing Derivatives - USD ($) $ in Thousands | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Apr. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Predecessor Company | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | $ (9,099) | |||
Unrealized gains (losses) | (684) | |||
Total | (9,783) | |||
Predecessor Company | Interest rate swaps | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | 0 | |||
Unrealized gains (losses) | 0 | |||
Total | 0 | |||
Predecessor Company | Commodity swaps | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | (2,515) | |||
Unrealized gains (losses) | (5,856) | |||
Total | (8,371) | |||
Predecessor Company | Credit default swaps | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | (2,167) | |||
Unrealized gains (losses) | 1,986 | |||
Total | (181) | |||
Predecessor Company | Foreign exchange forward contracts and options | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | (2,068) | |||
Unrealized gains (losses) | 2,784 | |||
Total | 716 | |||
Predecessor Company | Common stock warrants | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | 0 | |||
Unrealized gains (losses) | 137 | |||
Total | 137 | |||
Predecessor Company | Total rate of return swaps | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | (2,349) | |||
Unrealized gains (losses) | 284 | |||
Total | (2,065) | |||
Predecessor Company | Options | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | 0 | |||
Unrealized gains (losses) | (19) | |||
Total | $ (19) | |||
Successor Company | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | $ (6,620) | $ 9,245 | $ 25,694 | |
Unrealized gains (losses) | (11,887) | (1,648) | (23,536) | |
Total | (18,507) | 7,597 | 2,158 | |
Successor Company | Interest rate swaps | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | 0 | (9,316) | (5,297) | |
Unrealized gains (losses) | (6,890) | 13,301 | 11,610 | |
Total | (6,890) | 3,985 | 6,313 | |
Successor Company | Commodity swaps | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | (962) | |||
Unrealized gains (losses) | (698) | |||
Total | (1,660) | |||
Successor Company | Credit default swaps | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | 0 | |||
Unrealized gains (losses) | 0 | |||
Total | 0 | |||
Successor Company | Foreign exchange forward contracts and options | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | (6,609) | 18,419 | 30,687 | |
Unrealized gains (losses) | (1,561) | (15,098) | (27,747) | |
Total | (8,170) | 3,321 | 2,940 | |
Successor Company | Common stock warrants | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | 1,237 | 142 | 0 | |
Unrealized gains (losses) | (1,082) | (757) | (2,412) | |
Total | 155 | (615) | (2,412) | |
Successor Company | Total rate of return swaps | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | (286) | 0 | 304 | |
Unrealized gains (losses) | (184) | 0 | 130 | |
Total | (470) | 0 | 434 | |
Successor Company | Options | ||||
Effect on income from free-standing derivatives | ||||
Realized gains (losses) | 0 | 0 | 0 | |
Unrealized gains (losses) | (1,472) | 906 | (5,117) | |
Total | $ (1,472) | $ 906 | $ (5,117) |
FAIR VALUE OF FINANCIAL INSTR70
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Liabilities: | ||
Senior notes | $ 123,008 | $ 413,006 |
Junior subordinated notes | 250,154 | 248,498 |
Successor Company | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Cash, restricted cash, and cash equivalents | 1,139,549 | 807,496 |
Liabilities: | ||
Senior notes | 116,699 | 394,390 |
Junior subordinated notes | 0 | 0 |
Successor Company | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Cash, restricted cash, and cash equivalents | 0 | 0 |
Liabilities: | ||
Senior notes | 0 | 0 |
Junior subordinated notes | 0 | 0 |
Successor Company | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Cash, restricted cash, and cash equivalents | 0 | 0 |
Liabilities: | ||
Senior notes | 0 | 0 |
Junior subordinated notes | 210,084 | 216,757 |
Successor Company | Carrying Amount | ||
Assets: | ||
Cash, restricted cash, and cash equivalents | 1,139,549 | 807,496 |
Liabilities: | ||
Senior notes | 123,008 | 413,006 |
Junior subordinated notes | 250,154 | 248,498 |
Successor Company | Estimated Fair Value | ||
Assets: | ||
Cash, restricted cash, and cash equivalents | 1,139,549 | 807,496 |
Liabilities: | ||
Senior notes | 116,699 | 394,390 |
Junior subordinated notes | $ 210,084 | $ 216,757 |
FAIR VALUE OF FINANCIAL INSTR71
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Assets: | ||
Total securities | $ 229,206 | $ 417,519 |
Corporate loans | 3,305,264 | 5,188,610 |
Equity investments, at estimated fair value | 168,658 | 262,946 |
Interests in joint ventures and partnerships, at estimated fair value | 793,996 | 888,408 |
Derivatives: | ||
Total derivative assets | 46,447 | 40,852 |
Liabilities: | ||
Collateralized loan obligation secured notes | 3,087,941 | 4,843,746 |
Derivatives: | ||
Total derivatives | 32,705 | 43,892 |
Successor Company | ||
Assets: | ||
Corporate debt securities | 229,206 | 417,519 |
Successor Company | Recurring basis | Estimated Fair Value | ||
Assets: | ||
Total securities | 229,206 | 417,519 |
Corporate loans | 3,305,264 | 5,188,610 |
Equity investments, at estimated fair value | 168,658 | 262,946 |
Interests in joint ventures and partnerships, at estimated fair value | 793,996 | 888,408 |
Derivatives: | ||
Total derivative assets | 46,447 | 40,852 |
Total | 4,543,571 | 6,798,335 |
Liabilities: | ||
Collateralized loan obligation secured notes | 3,177,548 | 4,843,746 |
Derivatives: | ||
Total derivatives | 32,705 | 43,892 |
Total | 3,210,253 | 4,887,638 |
Successor Company | Recurring basis | Estimated Fair Value | Corporate Debt Securities | ||
Assets: | ||
Corporate debt securities | 188,543 | 367,898 |
Successor Company | Recurring basis | Estimated Fair Value | Residential Mortgage- Backed Securities | ||
Assets: | ||
Residential mortgage-backed securities | 40,663 | 49,621 |
Successor Company | Recurring basis | Estimated Fair Value | Interest rate swaps | ||
Derivatives: | ||
Derivative liabilities | 27,263 | 41,743 |
Successor Company | Recurring basis | Estimated Fair Value | Foreign exchange forward contracts | ||
Derivatives: | ||
Derivative assets | 43,918 | 40,757 |
Derivatives: | ||
Derivative liabilities | 5,442 | 2,149 |
Successor Company | Recurring basis | Estimated Fair Value | Options | ||
Derivatives: | ||
Derivative assets | 1,001 | 95 |
Successor Company | Recurring basis | Estimated Fair Value | Warrants | ||
Derivatives: | ||
Derivative assets | 1,528 | |
Successor Company | Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Total securities | 0 | 0 |
Corporate loans | 0 | 0 |
Equity investments, at estimated fair value | 36,353 | 40,765 |
Interests in joint ventures and partnerships, at estimated fair value | 0 | 0 |
Derivatives: | ||
Total derivative assets | 0 | 0 |
Total | 36,353 | 40,765 |
Liabilities: | ||
Collateralized loan obligation secured notes | 0 | 0 |
Derivatives: | ||
Total derivatives | 0 | 0 |
Total | 0 | 0 |
Successor Company | Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate Debt Securities | ||
Assets: | ||
Corporate debt securities | 0 | 0 |
Successor Company | Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Residential Mortgage- Backed Securities | ||
Assets: | ||
Residential mortgage-backed securities | 0 | 0 |
Successor Company | Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Interest rate swaps | ||
Derivatives: | ||
Derivative liabilities | 0 | 0 |
Successor Company | Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Foreign exchange forward contracts | ||
Derivatives: | ||
Derivative assets | 0 | 0 |
Derivatives: | ||
Derivative liabilities | 0 | 0 |
Successor Company | Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Options | ||
Derivatives: | ||
Derivative assets | 0 | 0 |
Successor Company | Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Warrants | ||
Derivatives: | ||
Derivative assets | 0 | |
Successor Company | Recurring basis | Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Total securities | 13,337 | 172,912 |
Corporate loans | 3,176,070 | 4,889,876 |
Equity investments, at estimated fair value | 0 | 75,533 |
Interests in joint ventures and partnerships, at estimated fair value | 0 | 0 |
Derivatives: | ||
Total derivative assets | 41,636 | 37,120 |
Total | 3,231,043 | 5,175,441 |
Liabilities: | ||
Collateralized loan obligation secured notes | 3,177,548 | 4,843,746 |
Derivatives: | ||
Total derivatives | 31,415 | 43,142 |
Total | 3,208,963 | 4,886,888 |
Successor Company | Recurring basis | Significant Other Observable Inputs (Level 2) | Corporate Debt Securities | ||
Assets: | ||
Corporate debt securities | 13,337 | 172,912 |
Successor Company | Recurring basis | Significant Other Observable Inputs (Level 2) | Residential Mortgage- Backed Securities | ||
Assets: | ||
Residential mortgage-backed securities | 0 | 0 |
Successor Company | Recurring basis | Significant Other Observable Inputs (Level 2) | Interest rate swaps | ||
Derivatives: | ||
Derivative liabilities | 27,263 | 41,743 |
Successor Company | Recurring basis | Significant Other Observable Inputs (Level 2) | Foreign exchange forward contracts | ||
Derivatives: | ||
Derivative assets | 41,636 | 37,120 |
Derivatives: | ||
Derivative liabilities | 4,152 | 1,399 |
Successor Company | Recurring basis | Significant Other Observable Inputs (Level 2) | Options | ||
Derivatives: | ||
Derivative assets | 0 | 0 |
Successor Company | Recurring basis | Significant Other Observable Inputs (Level 2) | Warrants | ||
Derivatives: | ||
Derivative assets | 0 | |
Successor Company | Recurring basis | Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Total securities | 215,869 | 244,607 |
Corporate loans | 129,194 | 298,734 |
Equity investments, at estimated fair value | 132,305 | 146,648 |
Interests in joint ventures and partnerships, at estimated fair value | 793,996 | 888,408 |
Derivatives: | ||
Total derivative assets | 4,811 | 3,732 |
Total | 1,276,175 | 1,582,129 |
Liabilities: | ||
Collateralized loan obligation secured notes | 0 | 0 |
Derivatives: | ||
Total derivatives | 1,290 | 750 |
Total | 1,290 | 750 |
Successor Company | Recurring basis | Significant Unobservable Inputs (Level 3) | Corporate Debt Securities | ||
Assets: | ||
Corporate debt securities | 175,206 | 194,986 |
Successor Company | Recurring basis | Significant Unobservable Inputs (Level 3) | Residential Mortgage- Backed Securities | ||
Assets: | ||
Residential mortgage-backed securities | 40,663 | 49,621 |
Successor Company | Recurring basis | Significant Unobservable Inputs (Level 3) | Interest rate swaps | ||
Derivatives: | ||
Derivative liabilities | 0 | 0 |
Successor Company | Recurring basis | Significant Unobservable Inputs (Level 3) | Foreign exchange forward contracts | ||
Derivatives: | ||
Derivative assets | 2,282 | 3,637 |
Derivatives: | ||
Derivative liabilities | 1,290 | 750 |
Successor Company | Recurring basis | Significant Unobservable Inputs (Level 3) | Options | ||
Derivatives: | ||
Derivative assets | 1,001 | $ 95 |
Successor Company | Recurring basis | Significant Unobservable Inputs (Level 3) | Warrants | ||
Derivatives: | ||
Derivative assets | $ 1,528 |
FAIR VALUE OF FINANCIAL INSTR72
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 3) - Successor Company - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of liabilities measured on Level 3 basis | ||
Transfers from Level 1 into Level 2 | $ 0 | $ 0 |
Transfers from Level 2 into Level 1 | 0 | 0 |
Collateralized Loan Obligation Secured Notes | ||
Reconciliation of liabilities measured on Level 3 basis | ||
Balance at the beginning of the period | 0 | 5,501,099,000 |
Included in earnings | 0 | |
Transfers into Level 3 | 0 | |
Transfers out of level 3 | (5,501,099,000) | |
Purchases | 0 | |
Sales | 0 | |
Settlements | 0 | |
Balance at the end of the period | 0 | |
Change in unrealized gains or losses for the period included in earnings for liabilities held at the end of the reporting period | 0 | |
Corporate Debt Securities | ||
Reconciliation of assets measured on Level 3 basis | ||
Balance at the beginning of the period | 194,986,000 | 317,034,000 |
Included in earnings | (30,466,000) | (37,716,000) |
Transfers into Level 3 | 11,739,000 | 0 |
Transfers out of Level 3 | 0 | 0 |
Purchases | 0 | 10,001,000 |
Sales | (3,145,000) | (98,539,000) |
Settlements | 2,092,000 | 4,206,000 |
Balance at the end of the period | 175,206,000 | 194,986,000 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | (30,466,000) | (45,488,000) |
Residential Mortgage- Backed Securities | ||
Reconciliation of assets measured on Level 3 basis | ||
Balance at the beginning of the period | 49,621,000 | 55,184,000 |
Included in earnings | 2,486,000 | 8,398,000 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Settlements | (11,444,000) | (13,961,000) |
Balance at the end of the period | 40,663,000 | 49,621,000 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | 2,483,000 | 2,273,000 |
Corporate loans, at estimated fair value | ||
Reconciliation of assets measured on Level 3 basis | ||
Balance at the beginning of the period | 298,734,000 | 347,077,000 |
Included in earnings | (70,721,000) | (69,384,000) |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Purchases | 7,283,000 | 12,775,000 |
Sales | (44,441,000) | (25,511,000) |
Settlements | (61,661,000) | 33,777,000 |
Balance at the end of the period | 129,194,000 | 298,734,000 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | (70,721,000) | (67,368,000) |
Equity Investments, at Estimated Fair Value | ||
Reconciliation of assets measured on Level 3 basis | ||
Balance at the beginning of the period | 146,648,000 | 81,719,000 |
Included in earnings | (42,515,000) | (42,472,000) |
Transfers into Level 3 | 49,065,000 | 0 |
Transfers out of Level 3 | 0 | 0 |
Purchases | 1,142,000 | 0 |
Sales | (16,289,000) | 0 |
Settlements | (5,746,000) | 107,401,000 |
Balance at the end of the period | 132,305,000 | 146,648,000 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | (42,515,000) | (41,776,000) |
Interests in Joint Ventures and Partnerships | ||
Reconciliation of assets measured on Level 3 basis | ||
Balance at the beginning of the period | 888,408,000 | 718,772,000 |
Included in earnings | (45,687,000) | (141,386,000) |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Purchases | 79,782,000 | 351,184,000 |
Sales | 0 | 0 |
Settlements | (128,507,000) | (40,162,000) |
Balance at the end of the period | 793,996,000 | 888,408,000 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | (45,687,000) | (141,386,000) |
Foreign Exchange Options, Net | ||
Reconciliation of assets measured on Level 3 basis | ||
Balance at the beginning of the period | 2,887,000 | 0 |
Included in earnings | (1,768,000) | 2,887,000 |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Purchases | 0 | 0 |
Sales | (127,000) | 0 |
Settlements | 0 | 0 |
Balance at the end of the period | 992,000 | 2,887,000 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | (1,768,000) | 2,887,000 |
Warrants | ||
Reconciliation of assets measured on Level 3 basis | ||
Balance at the beginning of the period | 0 | 0 |
Included in earnings | (757,000) | (2,412,000) |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Settlements | 2,285,000 | 2,412,000 |
Balance at the end of the period | 1,528,000 | 0 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | (757,000) | (2,412,000) |
Options | ||
Reconciliation of assets measured on Level 3 basis | ||
Balance at the beginning of the period | 95,000 | 5,212,000 |
Included in earnings | 906,000 | (5,117,000) |
Transfers into Level 3 | 0 | 0 |
Transfers out of Level 3 | 0 | 0 |
Purchases | 0 | 0 |
Sales | 0 | 0 |
Settlements | 0 | 0 |
Balance at the end of the period | 1,001,000 | 95,000 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | $ 906,000 | $ (5,117,000) |
FAIR VALUE OF FINANCIAL INSTR73
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 4) - Successor Company | 12 Months Ended | |
Dec. 31, 2016USD ($)$ / shares$ / barrel | Dec. 31, 2015USD ($)$ / shares$ / barrel | |
Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Weight ascribed to each valuation technique | 0.00% | 0.00% |
Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Weight ascribed to each valuation technique | 100.00% | 100.00% |
Significant Unobservable Inputs (Level 3) | Corporate Debt Securities | ||
Valuation techniques used for assets, measured at fair value | ||
Assets, fair value (in dollars) | $ 175,206,000 | $ 194,986,000 |
Significant Unobservable Inputs (Level 3) | Residential Mortgage- Backed Securities | ||
Valuation techniques used for assets, measured at fair value | ||
Assets, fair value (in dollars) | 40,663,000 | 49,621,000 |
Significant Unobservable Inputs (Level 3) | Corporate loans, at estimated fair value | ||
Valuation techniques used for assets, measured at fair value | ||
Assets, fair value (in dollars) | 129,194,000 | 298,734,000 |
Significant Unobservable Inputs (Level 3) | Equity Investments, at estimated fair value | ||
Valuation techniques used for assets, measured at fair value | ||
Assets, fair value (in dollars) | $ 132,305,000 | $ 146,648,000 |
Significant Unobservable Inputs (Level 3) | Equity Investments, at estimated fair value | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Illiquidity discount | 5.00% | 5.00% |
Significant Unobservable Inputs (Level 3) | Corporate Debt Securities and Equity Investments | ||
Valuation techniques used for assets, measured at fair value | ||
Assets, fair value (in dollars) | $ 408,100,000 | |
Significant Unobservable Inputs (Level 3) | Interests in Joint Ventures and Partnerships | ||
Valuation techniques used for assets, measured at fair value | ||
Assets, fair value (in dollars) | 793,996,000 | $ 888,408,000 |
Significant Unobservable Inputs (Level 3) | Options | ||
Valuation techniques used for assets, measured at fair value | ||
Assets, fair value (in dollars) | 1,001,000 | $ 95,000 |
Significant Unobservable Inputs (Level 3) | Common stock warrants | ||
Valuation techniques used for assets, measured at fair value | ||
Assets, fair value (in dollars) | $ 1,500,000 | |
Significant Unobservable Inputs (Level 3) | Yield analysis | Corporate Debt Securities | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
Yield | 14.00% | 23.00% |
Net leverage | 9 | 10 |
EBITDA multiple | 6 | 7 |
Discount margin | 11.05% | 7.50% |
Significant Unobservable Inputs (Level 3) | Yield analysis | Corporate Debt Securities | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Yield | 5.00% | 6.00% |
Net leverage | 7 | 10 |
EBITDA multiple | 0 | 7 |
Discount margin | 11.00% | 7.50% |
Significant Unobservable Inputs (Level 3) | Yield analysis | Corporate Debt Securities | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Yield | 15.00% | 31.00% |
Net leverage | 16 | 12 |
EBITDA multiple | 9 | 10 |
Discount margin | 11.50% | 7.50% |
Significant Unobservable Inputs (Level 3) | Yield analysis | Corporate loans, at estimated fair value | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
Yield | 13.00% | 11.00% |
Net leverage | 11 | 7 |
EBITDA multiple | 6 | 9 |
Significant Unobservable Inputs (Level 3) | Yield analysis | Corporate loans, at estimated fair value | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Yield | 11.00% | 3.00% |
Net leverage | 5 | 1 |
EBITDA multiple | 0 | 6 |
Significant Unobservable Inputs (Level 3) | Yield analysis | Corporate loans, at estimated fair value | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Yield | 16.00% | 18.00% |
Net leverage | 82 | 19 |
EBITDA multiple | 19 | 15 |
Significant Unobservable Inputs (Level 3) | Yield analysis | Interests in Joint Ventures and Partnerships | ||
Valuation techniques used for assets, measured at fair value | ||
Assets, fair value (in dollars) | $ 24,400,000 | $ 17,500,000 |
Significant Unobservable Inputs (Level 3) | Yield analysis | Interests in Joint Ventures and Partnerships | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
Yield | 19.00% | 16.00% |
Net leverage | 2 | 2 |
EBITDA multiple | 7 | 8 |
Significant Unobservable Inputs (Level 3) | Yield analysis | Interests in Joint Ventures and Partnerships | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Yield | 19.00% | 16.00% |
Net leverage | 2 | 2 |
EBITDA multiple | 7 | 8 |
Significant Unobservable Inputs (Level 3) | Yield analysis | Interests in Joint Ventures and Partnerships | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Yield | 19.00% | 16.00% |
Net leverage | 2 | 2 |
EBITDA multiple | 7 | 8 |
Significant Unobservable Inputs (Level 3) | Market comparables | Corporate Debt Securities | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
LTM EBITDA multiple | 12 | |
Significant Unobservable Inputs (Level 3) | Market comparables | Corporate Debt Securities | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
LTM EBITDA multiple | 12 | |
Significant Unobservable Inputs (Level 3) | Market comparables | Corporate Debt Securities | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
LTM EBITDA multiple | 12 | |
Significant Unobservable Inputs (Level 3) | Market comparables | Equity Investments, at estimated fair value | ||
Valuation techniques used for assets, measured at fair value | ||
Assets, fair value (in dollars) | $ 20,000,000 | $ 11,300,000 |
Significant Unobservable Inputs (Level 3) | Market comparables | Equity Investments, at estimated fair value | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
LTM EBITDA multiple | 11 | 8 |
Forward EBITDA multiple | 9 | 8 |
Significant Unobservable Inputs (Level 3) | Market comparables | Equity Investments, at estimated fair value | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
LTM EBITDA multiple | 0 | 4 |
Forward EBITDA multiple | 0 | 3 |
Significant Unobservable Inputs (Level 3) | Market comparables | Equity Investments, at estimated fair value | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
LTM EBITDA multiple | 14 | 13 |
Forward EBITDA multiple | 13 | 11 |
Significant Unobservable Inputs (Level 3) | Market comparables | Interests in Joint Ventures and Partnerships | ||
Valuation techniques used for assets, measured at fair value | ||
Assets, fair value (in dollars) | $ 9,800,000 | $ 98,900,000 |
Significant Unobservable Inputs (Level 3) | Market comparables | Interests in Joint Ventures and Partnerships | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
LTM EBITDA multiple | 4 | 5 |
Forward EBITDA multiple | 9 | |
Capitalization Rate | 7.00% | |
Significant Unobservable Inputs (Level 3) | Market comparables | Interests in Joint Ventures and Partnerships | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
LTM EBITDA multiple | 1 | 1 |
Forward EBITDA multiple | 9 | |
Capitalization Rate | 3.00% | |
Significant Unobservable Inputs (Level 3) | Market comparables | Interests in Joint Ventures and Partnerships | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
LTM EBITDA multiple | 9 | 9 |
Forward EBITDA multiple | 9 | |
Capitalization Rate | 12.00% | |
Significant Unobservable Inputs (Level 3) | Market comparables | Options | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
LTM EBITDA multiple | 9 | 9 |
Forward EBITDA multiple | 7 | 8 |
Significant Unobservable Inputs (Level 3) | Market comparables | Options | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
LTM EBITDA multiple | 9 | 9 |
Forward EBITDA multiple | 7 | 8 |
Significant Unobservable Inputs (Level 3) | Market comparables | Options | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
LTM EBITDA multiple | 9 | 9 |
Forward EBITDA multiple | 7 | 8 |
Significant Unobservable Inputs (Level 3) | Black Scholes Options Pricing Model | Corporate Debt Securities | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
Risk-Free Rate | 1.00% | |
Volatility | 85.00% | |
Significant Unobservable Inputs (Level 3) | Black Scholes Options Pricing Model | Corporate Debt Securities | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Risk-Free Rate | 1.00% | |
Volatility | 85.00% | |
Significant Unobservable Inputs (Level 3) | Black Scholes Options Pricing Model | Corporate Debt Securities | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Risk-Free Rate | 1.00% | |
Volatility | 85.00% | |
Significant Unobservable Inputs (Level 3) | Broker quotes | Corporate Debt Securities | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
Offered quotes (in dollars per share) | $ / shares | $ 102 | |
Significant Unobservable Inputs (Level 3) | Broker quotes | Corporate Debt Securities | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Offered quotes (in dollars per share) | $ / shares | 101 | |
Significant Unobservable Inputs (Level 3) | Broker quotes | Corporate Debt Securities | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Offered quotes (in dollars per share) | $ / shares | $ 103 | |
Significant Unobservable Inputs (Level 3) | Broker quotes | Equity Investments, at estimated fair value | ||
Valuation techniques used for assets, measured at fair value | ||
Assets, fair value (in dollars) | $ 14,500,000 | $ 6,400,000 |
Significant Unobservable Inputs (Level 3) | Broker quotes | Equity Investments, at estimated fair value | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
Offered quotes (in dollars per share) | $ / shares | $ 4 | |
Significant Unobservable Inputs (Level 3) | Broker quotes | Equity Investments, at estimated fair value | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Offered quotes (in dollars per share) | $ / shares | 0 | |
Significant Unobservable Inputs (Level 3) | Broker quotes | Equity Investments, at estimated fair value | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Offered quotes (in dollars per share) | $ / shares | $ 5 | |
Significant Unobservable Inputs (Level 3) | Discounted cash flows | Residential Mortgage- Backed Securities | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
Probability of default | 2.00% | 1.00% |
Loss severity | 43.00% | 40.00% |
Constant prepayment rate | 18.00% | 15.00% |
Significant Unobservable Inputs (Level 3) | Discounted cash flows | Residential Mortgage- Backed Securities | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Probability of default | 0.00% | 0.00% |
Loss severity | 35.00% | 35.00% |
Constant prepayment rate | 12.00% | 12.00% |
Significant Unobservable Inputs (Level 3) | Discounted cash flows | Residential Mortgage- Backed Securities | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Probability of default | 3.00% | 3.00% |
Loss severity | 50.00% | 45.00% |
Constant prepayment rate | 23.00% | 18.00% |
Significant Unobservable Inputs (Level 3) | Discounted cash flows | Equity Investments, at estimated fair value | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
Weighted average cost of capital | 9.00% | 9.00% |
LTM EBITDA exit multiple | 8 | 8 |
Significant Unobservable Inputs (Level 3) | Discounted cash flows | Equity Investments, at estimated fair value | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Weighted average cost of capital | 7.00% | 7.00% |
LTM EBITDA exit multiple | 7 | 0 |
Significant Unobservable Inputs (Level 3) | Discounted cash flows | Equity Investments, at estimated fair value | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Weighted average cost of capital | 14.00% | 14.00% |
LTM EBITDA exit multiple | 10 | 9 |
Significant Unobservable Inputs (Level 3) | Discounted cash flows | Interests in Joint Ventures and Partnerships | ||
Valuation techniques used for assets, measured at fair value | ||
Assets, fair value (in dollars) | $ 43,500,000 | $ 164,400,000 |
Significant Unobservable Inputs (Level 3) | Discounted cash flows | Interests in Joint Ventures and Partnerships | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
Weighted average cost of capital | 10.00% | 8.00% |
Average Price Per B O E | $ / barrel | 20.26 | 20.61 |
Significant Unobservable Inputs (Level 3) | Discounted cash flows | Interests in Joint Ventures and Partnerships | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Weighted average cost of capital | 6.00% | 6.00% |
Average Price Per B O E | $ / barrel | 18.81 | 14.33 |
Significant Unobservable Inputs (Level 3) | Discounted cash flows | Interests in Joint Ventures and Partnerships | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Weighted average cost of capital | 20.00% | 20.00% |
Average Price Per B O E | $ / barrel | 22.38 | 23.22 |
Significant Unobservable Inputs (Level 3) | Discounted cash flows | Options | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
Weighted average cost of capital | 15.00% | 14.00% |
LTM EBITDA exit multiple | 5 | 8 |
Significant Unobservable Inputs (Level 3) | Discounted cash flows | Options | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Weighted average cost of capital | 15.00% | 14.00% |
LTM EBITDA exit multiple | 5 | 8 |
Significant Unobservable Inputs (Level 3) | Discounted cash flows | Options | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Weighted average cost of capital | 15.00% | 14.00% |
LTM EBITDA exit multiple | 5 | 8 |
Significant Unobservable Inputs (Level 3) | Inputs to market comparables, discounted cash flow and broker quotes | Equity Investments, at estimated fair value | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
Weight ascribed to market comparables | 52.00% | |
Weight ascribed to discounted cash flows | 42.00% | |
Illiquidity discount | 11.00% | |
Weight ascribed to broker quotes | 6.00% | |
Significant Unobservable Inputs (Level 3) | Inputs to market comparables, discounted cash flow and broker quotes | Equity Investments, at estimated fair value | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Weight ascribed to market comparables | 0.00% | |
Weight ascribed to discounted cash flows | 0.00% | |
Illiquidity discount | 0.00% | |
Weight ascribed to broker quotes | 0.00% | |
Significant Unobservable Inputs (Level 3) | Inputs to market comparables, discounted cash flow and broker quotes | Equity Investments, at estimated fair value | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Weight ascribed to market comparables | 100.00% | |
Weight ascribed to discounted cash flows | 100.00% | |
Illiquidity discount | 15.00% | |
Weight ascribed to broker quotes | 100.00% | |
Significant Unobservable Inputs (Level 3) | Inputs to both market comparables and discounted cash flow | Equity Investments, at estimated fair value | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
Weight ascribed to market comparables | 47.00% | |
Weight ascribed to discounted cash flows | 53.00% | |
Illiquidity discount | 8.00% | |
Significant Unobservable Inputs (Level 3) | Inputs to both market comparables and discounted cash flow | Equity Investments, at estimated fair value | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Weight ascribed to market comparables | 0.00% | |
Weight ascribed to discounted cash flows | 0.00% | |
Illiquidity discount | 5.00% | |
Significant Unobservable Inputs (Level 3) | Inputs to both market comparables and discounted cash flow | Equity Investments, at estimated fair value | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Weight ascribed to market comparables | 100.00% | |
Weight ascribed to discounted cash flows | 100.00% | |
Illiquidity discount | 15.00% | |
Significant Unobservable Inputs (Level 3) | Inputs to both market comparables and discounted cash flow | Interests in Joint Ventures and Partnerships | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
Weight ascribed to market comparables | 27.00% | 43.00% |
Weight ascribed to discounted cash flows | 45.00% | 57.00% |
Weight ascribed to yield analysis | 28.00% | |
Significant Unobservable Inputs (Level 3) | Inputs to both market comparables and discounted cash flow | Interests in Joint Ventures and Partnerships | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Weight ascribed to market comparables | 0.00% | 0.00% |
Weight ascribed to discounted cash flows | 0.00% | 0.00% |
Weight ascribed to yield analysis | 0.00% | |
Significant Unobservable Inputs (Level 3) | Inputs to both market comparables and discounted cash flow | Interests in Joint Ventures and Partnerships | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Weight ascribed to market comparables | 100.00% | 100.00% |
Weight ascribed to discounted cash flows | 100.00% | 100.00% |
Weight ascribed to yield analysis | 100.00% | |
Significant Unobservable Inputs (Level 3) | Inputs to both market comparables and discounted cash flow | Options | ||
Valuation techniques used for assets, measured at fair value | ||
Weight ascribed to market comparables | 50.00% | 50.00% |
Weight ascribed to discounted cash flows | 50.00% | 50.00% |
Significant Unobservable Inputs (Level 3) | Inputs to both market comparables and discounted cash flow | Options | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
Weight ascribed to market comparables | 50.00% | 50.00% |
Weight ascribed to discounted cash flows | 50.00% | 50.00% |
Illiquidity discount | 10.00% | 10.00% |
Significant Unobservable Inputs (Level 3) | Inputs to both market comparables and discounted cash flow | Options | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Weight ascribed to market comparables | 50.00% | 50.00% |
Weight ascribed to discounted cash flows | 50.00% | 50.00% |
Illiquidity discount | 10.00% | 10.00% |
Significant Unobservable Inputs (Level 3) | Inputs to both market comparables and discounted cash flow | Options | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Weight ascribed to market comparables | 50.00% | 50.00% |
Weight ascribed to discounted cash flows | 50.00% | 50.00% |
Illiquidity discount | 10.00% | 10.00% |
Crude Oil | ||
Valuation techniques used for assets, measured at fair value | ||
Percentage of share in total revenue | 23.00% | 25.00% |
Natural Gas | ||
Valuation techniques used for assets, measured at fair value | ||
Percentage of share in total revenue | 77.00% | 75.00% |
Natural Resources | ||
Valuation techniques used for assets, measured at fair value | ||
Assets, fair value (in dollars) | $ 107,300,000 | $ 114,100,000 |
Foreign Exchange Options, Net | Significant Unobservable Inputs (Level 3) | ||
Valuation techniques used for assets, measured at fair value | ||
Assets, fair value (in dollars) | 992,000 | 2,887,000 |
Foreign Exchange Options, Net | Significant Unobservable Inputs (Level 3) | Option pricing model | Weighted Average | ||
Valuation techniques used for assets, measured at fair value | ||
Forward and spot rates | 10,301 | 11,500 |
Foreign Exchange Options, Net | Significant Unobservable Inputs (Level 3) | Option pricing model | Minimum | ||
Valuation techniques used for assets, measured at fair value | ||
Forward and spot rates | 6 | 6 |
Foreign Exchange Options, Net | Significant Unobservable Inputs (Level 3) | Option pricing model | Maximum | ||
Valuation techniques used for assets, measured at fair value | ||
Forward and spot rates | $ 13,550 | $ 14,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Debt Instrument | ||
Estimated future contributions for interests in joint ventures and partnerships | $ 279.4 | $ 163 |
Guarantees | ||
Non-recourse debt | 1,100 | 1,600 |
Corporate loans, at estimated fair value | ||
Debt Instrument | ||
Unfunded financing commitments for corporate loans | $ 3.2 | $ 8.6 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 22, 2016 | Apr. 30, 2014 | Apr. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 |
Stock-based compensation | ||||||
Preferred shares, shares issued (in shares) | 14,950,000 | 14,950,000 | ||||
Series A LLC Preferred Shares | ||||||
Stock-based compensation | ||||||
Preferred shares, dividend rate (as a percent) | 7.375% | |||||
Dividends, preferred stock | $ 373,800 | |||||
Successor Company | ||||||
Stock-based compensation | ||||||
Dividends, preferred stock | $ 20,673 | $ 27,564 | $ 27,564 | |||
Successor Company | Series A LLC Preferred Shares | ||||||
Stock-based compensation | ||||||
Preferred shares, shares issued (in shares) | 14,950,000 | |||||
Dividends, preferred stock | $ 6,900 | |||||
Predecessor Company | ||||||
Stock-based compensation | ||||||
Dividends, preferred stock | $ 6,891 | |||||
Predecessor Company | Series A LLC Preferred Shares | ||||||
Stock-based compensation | ||||||
Preferred shares, dividend rate (as a percent) | 7.375% | |||||
Predecessor Company | Restricted common shares | ||||||
Restricted common share transactions | ||||||
Unvested beginning balance (in shares) | 669,828 | 426,180 | ||||
Issued (in shares) | 0 | |||||
Vested (in shares) | (243,648) | |||||
Unvested ending balance (in shares) | 426,180 | 426,180 | ||||
Unrecognized compensation cost (in dollars) | $ 2,200 | $ 2,200 | ||||
Predecessor Company | Restricted common shares | Manager | ||||||
Restricted common share transactions | ||||||
Unvested beginning balance (in shares) | 584,634 | 340,986 | ||||
Issued (in shares) | 0 | |||||
Vested (in shares) | (243,648) | |||||
Unvested ending balance (in shares) | 340,986 | 340,986 | ||||
Value of unvested restricted common shares granted (in dollars per share) | $ 11.54 | $ 11.54 | ||||
Predecessor Company | Restricted common shares | Directors | ||||||
Restricted common share transactions | ||||||
Unvested beginning balance (in shares) | 85,194 | 85,194 | ||||
Issued (in shares) | 0 | |||||
Vested (in shares) | 0 | |||||
Unvested ending balance (in shares) | 85,194 | 85,194 | ||||
Predecessor Company | Common share options | ||||||
Stock-based compensation | ||||||
Authorized shares available to satisfy awards as of the balance sheet date (in shares) | 8,964,625 | 8,964,625 |
SHAREHOLDERS' EQUITY (Details 2
SHAREHOLDERS' EQUITY (Details 2) - Predecessor Company - Common share options | 4 Months Ended |
Apr. 30, 2014$ / sharesshares | |
Number of Options | |
Outstanding at the beginning of the period (in shares) | 1,932,279 |
Granted (in shares) | 0 |
Exercised (in shares) | 0 |
Forfeited (in shares) | 0 |
Outstanding at the end of the period (in shares) | 1,932,279 |
Exercisable at the end of the period (in shares) | 1,932,279 |
Weighted Average Exercise Price | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 20 |
Granted (in dollars per share) | $ / shares | 0 |
Exercised (in dollars per share) | $ / shares | 0 |
Forfeited (in dollars per share) | $ / shares | 0 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 20 |
SHAREHOLDERS' EQUITY (Details 3
SHAREHOLDERS' EQUITY (Details 3) - Predecessor Company - Restricted common shares $ in Thousands | 4 Months Ended |
Apr. 30, 2014USD ($) | |
Stock-based compensation | |
Total share-based compensation expense | $ 1,018 |
Manager | |
Stock-based compensation | |
Total share-based compensation expense | 690 |
Directors | |
Stock-based compensation | |
Total share-based compensation expense | $ 328 |
MANAGEMENT AGREEMENT AND RELA78
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Details) | 1 Months Ended | 3 Months Ended | 4 Months Ended | 7 Months Ended | 8 Months Ended | 12 Months Ended | ||
May 31, 2014USD ($) | Sep. 30, 2007USD ($) | Apr. 30, 2014USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2016USD ($)issuerperiod$ / shares | Dec. 31, 2015USD ($)issuer | May 23, 2014$ / shares | |
Management Agreement and Related Party Transactions | ||||||||
Payments of Ordinary Dividends, Common Stock | $ 80,800,000 | $ 179,100,000 | ||||||
Successor Company | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Related party transaction expense | $ 33,764,000 | 30,504,000 | 38,086,000 | |||||
Payments of Ordinary Dividends, Common Stock | 121,088,000 | 80,811,000 | 179,081,000 | |||||
Distribution to parent | $ 44,900,000 | $ 76,200,000 | 617,080,000 | $ 412,969,000 | 430,829,000 | |||
Distributions to parent per unit (in dollars per share) | $ / shares | $ 0.43 | |||||||
Successor Company | CLO management fees | Maximum | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Entity's percentage in subordinated notes | 100.00% | |||||||
Successor Company | CLO management fees | CLO 2013-1 and CLO 2013-2 | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Entity's percentage in subordinated notes | 100.00% | |||||||
Successor Company | Manager | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Renewal period (in years) | 1 year | |||||||
Votes for termination, minimum (as a percent) | 66.70% | |||||||
Notice period for termination (in days) | 180 days | |||||||
Multiplier used to determine termination fee | 4 | |||||||
Number of 12 month periods considered for calculation of termination fee (in periods) | period | 2 | |||||||
Specified period for which average annual incentive fee to be considered (in months) | 12 months | |||||||
Successor Company | Manager | Base Management Fees | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Common share closing price, minimum (in dollars per share) | $ / shares | $ 20 | |||||||
Number of consecutive trading days | 5 days | |||||||
Fees, waived | 5,900,000 | $ 8,800,000 | 8,800,000 | |||||
Related party transaction expense | 15,145,000 | 7,137,000 | 9,532,000 | |||||
Successor Company | Manager | Incentive fees | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Fees, waived | 16,100,000 | |||||||
Related party transaction expense | 0 | 0 | 0 | |||||
Successor Company | Manager | Manager share-based compensation | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Related party transaction expense | 0 | 0 | 0 | |||||
Successor Company | Manager | Reimbursable General And Administrative Expenses | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Related party transaction expense | 3,000,000 | 3,800,000 | 5,500,000 | |||||
Successor Company | Collateral manager | CLO management fees | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Fees, waived | 4,200,000 | 0 | 2,000,000 | |||||
Related party transaction expense | $ 18,619,000 | 23,367,000 | 28,554,000 | |||||
Predecessor Company | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Related party transaction expense | $ 29,841,000 | |||||||
Payments of Ordinary Dividends, Common Stock | 45,061,000 | |||||||
Predecessor Company | Manager | Base Management Fees | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Common shares offering | $ 230,400,000 | |||||||
Common share right offering | $ 270,000,000 | |||||||
Fees, waived | 2,900,000 | |||||||
Related party transaction expense | 5,253,000 | |||||||
Predecessor Company | Manager | Incentive fees | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Related party transaction expense | 12,882,000 | |||||||
Predecessor Company | Manager | Manager share-based compensation | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Related party transaction expense | 690,000 | |||||||
Predecessor Company | Manager | Reimbursable General And Administrative Expenses | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Related party transaction expense | 2,800,000 | |||||||
Predecessor Company | Collateral manager | CLO management fees | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Fees, waived | 1,600,000 | |||||||
Related party transaction expense | 11,016,000 | |||||||
Restricted common shares | Predecessor Company | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Share-based compensation | 1,018,000 | |||||||
Restricted common shares | Predecessor Company | Manager | Manager share-based compensation | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Share-based compensation | $ 700,000 | |||||||
Affiliated Entity | Successor Company | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Estimated fair value | $ 20,400,000 | $ 734,300,000 | ||||||
Investment in affiliates, number of issuers | issuer | 2 | 8 | ||||||
Percent to total investment in corporate loans, debt securities and other investments | Affiliated Investments | Affiliated Entity | Successor Company | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Concentration risk (as a percent) | 1.00% | 11.00% | ||||||
Corporate loans, at estimated fair value | Affiliated Entity | Successor Company | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Estimated fair value | $ 20,100,000 | |||||||
Equity Investments, at Estimated Fair Value | Affiliated Entity | Successor Company | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Estimated fair value | 300,000 | $ 11,000,000 | ||||||
Corporate loans | Affiliated Entity | Successor Company | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Estimated fair value | 723,300,000 | |||||||
Joint Ventures And Partnerships | Affiliated Entity | Successor Company | ||||||||
Management Agreement and Related Party Transactions | ||||||||
Estimated fair value | $ 680,500,000 | $ 805,500,000 |
MANAGEMENT AGREEMENT AND RELA79
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Details 2) - USD ($) | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Apr. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Successor Company | ||||
Management Agreement and Related Party Transactions | ||||
Total CLO management fees | $ 33,764,000 | $ 30,504,000 | $ 38,086,000 | |
Successor Company | Manager | Base Management Fees | ||||
Management Agreement and Related Party Transactions | ||||
Total CLO management fees | 15,145,000 | 7,137,000 | 9,532,000 | |
Successor Company | Manager | Incentive fees | ||||
Management Agreement and Related Party Transactions | ||||
Total CLO management fees | 0 | 0 | 0 | |
Successor Company | Manager | Manager share-based compensation | ||||
Management Agreement and Related Party Transactions | ||||
Total CLO management fees | 0 | 0 | 0 | |
Successor Company | Collateral manager | CLO management fees | ||||
Management Agreement and Related Party Transactions | ||||
Total CLO management fees | $ 18,619,000 | $ 23,367,000 | $ 28,554,000 | |
Predecessor Company | ||||
Management Agreement and Related Party Transactions | ||||
Total CLO management fees | $ 29,841,000 | |||
Predecessor Company | Manager | Base Management Fees | ||||
Management Agreement and Related Party Transactions | ||||
Total CLO management fees | 5,253,000 | |||
Predecessor Company | Manager | Incentive fees | ||||
Management Agreement and Related Party Transactions | ||||
Total CLO management fees | 12,882,000 | |||
Predecessor Company | Manager | Manager share-based compensation | ||||
Management Agreement and Related Party Transactions | ||||
Total CLO management fees | 690,000 | |||
Predecessor Company | Collateral manager | CLO management fees | ||||
Management Agreement and Related Party Transactions | ||||
Total CLO management fees | $ 11,016,000 |
MANAGEMENT AGREEMENT AND RELA80
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Details 3) - USD ($) $ in Thousands | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Apr. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Successor Company | ||||
Management Agreement and Related Party Transactions | ||||
Total CLO management fees | $ 33,764 | $ 30,504 | $ 38,086 | |
Successor Company | Manager | Base Management Fees | ||||
Management Agreement and Related Party Transactions | ||||
Base management fees, gross | 25,883 | 22,249 | 30,620 | |
CLO management fees credit | (9,968) | (15,112) | (21,088) | |
Other related party fees credit | (770) | 0 | 0 | |
Total CLO management fees | $ 15,145 | $ 7,137 | $ 9,532 | |
Predecessor Company | ||||
Management Agreement and Related Party Transactions | ||||
Total CLO management fees | $ 29,841 | |||
Predecessor Company | Manager | Base Management Fees | ||||
Management Agreement and Related Party Transactions | ||||
Base management fees, gross | 13,364 | |||
CLO management fees credit | (8,111) | |||
Other related party fees credit | 0 | |||
Total CLO management fees | $ 5,253 |
MANAGEMENT AGREEMENT AND RELA81
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Details 4) - USD ($) $ in Thousands | 4 Months Ended | 8 Months Ended | 12 Months Ended | |
Apr. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Successor Company | ||||
Management Agreement and Related Party Transactions | ||||
Total CLO management fees | $ 33,764 | $ 30,504 | $ 38,086 | |
Successor Company | Collateral manager | CLO management fees | ||||
Management Agreement and Related Party Transactions | ||||
Charged and retained CLO management fees | 8,651 | 8,255 | 7,466 | |
CLO management fees credit | 9,968 | 15,112 | 21,088 | |
Total CLO management fees | $ 18,619 | $ 23,367 | $ 28,554 | |
Predecessor Company | ||||
Management Agreement and Related Party Transactions | ||||
Total CLO management fees | $ 29,841 | |||
Predecessor Company | Collateral manager | CLO management fees | ||||
Management Agreement and Related Party Transactions | ||||
Charged and retained CLO management fees | 2,905 | |||
CLO management fees credit | 8,111 | |||
Total CLO management fees | $ 11,016 |
MANAGEMENT AGREEMENT AND RELA82
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Details 5) - Successor Company - USD ($) $ in Thousands | 8 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Contributions and Distribution | |||
Contributions from parent | $ 239,085 | $ 64,151 | $ 251,748 |
Distributions to parent | 292,425 | 268,007 | 0 |
Majority Shareholder | |||
Contributions and Distribution | |||
Contributions from parent | 474,844 | 331,189 | 251,748 |
Distributions to parent | 472,282 | 332,158 | 251,748 |
Majority Shareholder | Asset Contribution, Cash | |||
Contributions and Distribution | |||
Contributions from parent | 235,759 | 267,038 | 0 |
Majority Shareholder | Asset Contribution, Securities | |||
Contributions and Distribution | |||
Contributions from parent | 116,526 | 0 | 0 |
Majority Shareholder | Asset Contribution, Loans | |||
Contributions and Distribution | |||
Contributions from parent | 16,049 | 0 | 0 |
Majority Shareholder | Asset Contribution, Equity Investments, at Estimated Fair Value | |||
Contributions and Distribution | |||
Contributions from parent | 38,346 | 0 | 0 |
Majority Shareholder | Asset Contribution, Interests in Joint Ventures and Partnerships | |||
Contributions and Distribution | |||
Contributions from parent | 67,310 | 64,151 | 251,748 |
Majority Shareholder | Asset Contribution, Other | |||
Contributions and Distribution | |||
Contributions from parent | 854 | 0 | 0 |
Majority Shareholder | Asset Distribution, Cash | |||
Contributions and Distribution | |||
Distributions to parent | 192,037 | 64,151 | 251,748 |
Majority Shareholder | Asset Distribution, Loans | |||
Contributions and Distribution | |||
Distributions to parent | 0 | 77,921 | 0 |
Majority Shareholder | Asset Distribution, Equity Investments at Estimated Fair Value | |||
Contributions and Distribution | |||
Distributions to parent | 101,042 | 58,439 | 0 |
Majority Shareholder | Asset Distribution, Oil and Gas Properties, Net | |||
Contributions and Distribution | |||
Distributions to parent | 179,203 | 0 | 0 |
Majority Shareholder | Asset Distribution, CLO Subordinated Notes | |||
Contributions and Distribution | |||
Distributions to parent | 0 | 127,581 | 0 |
Majority Shareholder | Asset Distribution, Interests in Joint Ventures and Partnerships | |||
Contributions and Distribution | |||
Distributions to parent | $ 0 | $ 4,066 | $ 0 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 8 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Apr. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||||||||||||
Combined federal and state income tax rate (as a percent) | 39.44% | 39.16% | 39.81% | ||||||||||
Successor Company | |||||||||||||
Current: | |||||||||||||
Federal income tax | $ (63) | $ 114 | $ 48 | ||||||||||
State income tax | 126 | 52 | 134 | ||||||||||
Total | 63 | 166 | 182 | ||||||||||
Deferred: | |||||||||||||
Federal income tax | 343 | 1,012 | 843 | ||||||||||
State income tax | 78 | 211 | 165 | ||||||||||
Total | 421 | 1,223 | 1,008 | ||||||||||
Effective tax expense (benefit) | $ 1,176 | $ 340 | $ (187) | $ 60 | $ 20 | $ 94 | $ 729 | $ 347 | $ 484 | $ 1,389 | $ 1,190 | ||
Predecessor Company | |||||||||||||
Current: | |||||||||||||
Federal income tax | $ (4,304) | ||||||||||||
State income tax | 137 | ||||||||||||
Total | (4,167) | ||||||||||||
Deferred: | |||||||||||||
Federal income tax | 4,329 | ||||||||||||
State income tax | 0 | ||||||||||||
Total | 4,329 | ||||||||||||
Effective tax expense (benefit) | $ 162 |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 8 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Apr. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Successor Company | ||||||||||||
Effective Income Tax Rate Reconciliation, Amount [Abstract] | ||||||||||||
Income before taxes at statutory rate | $ (76,561) | $ 7,969 | $ (116,720) | |||||||||
Income passed through to shareholders | 83,098 | (4,694) | 128,242 | |||||||||
REIT income not subject to tax | (6,072) | (2,171) | (10,574) | |||||||||
State and local income taxes, net of federal benefit | 82 | 171 | 194 | |||||||||
Withholding taxes | 21 | 114 | 48 | |||||||||
Other | (84) | 0 | 0 | |||||||||
Effective tax expense (benefit) | $ 1,176 | $ 340 | $ (187) | $ 60 | $ 20 | $ 94 | $ 729 | $ 347 | $ 484 | $ 1,389 | $ 1,190 | |
Predecessor Company | ||||||||||||
Effective Income Tax Rate Reconciliation, Amount [Abstract] | ||||||||||||
Income before taxes at statutory rate | $ 37,150 | |||||||||||
Income passed through to shareholders | (34,377) | |||||||||||
REIT income not subject to tax | (2,773) | |||||||||||
State and local income taxes, net of federal benefit | 88 | |||||||||||
Withholding taxes | 25 | |||||||||||
Other | 49 | |||||||||||
Effective tax expense (benefit) | $ 162 |
INCOME TAXES (Details 3)
INCOME TAXES (Details 3) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||
Unrealized losses from investments in domestic corporate subsidiaries | $ 0 | $ 0 |
Total deferred tax assets | 0 | 0 |
Deferred tax liabilities: | ||
Unrealized gains from investments in domestic corporate subsidiaries | 2,653 | 1,008 |
Total deferred tax liabilities | 2,653 | 1,008 |
Net deferred tax assets (liabilities) | $ (2,653) | $ (1,008) |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 8 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Apr. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information | ||||||||||||
Net income (loss) attributable to noncontrolling interests | $ (6,000) | $ (11,800) | $ (23,400) | |||||||||
Total assets | $ 5,851,057 | $ 7,788,395 | 5,851,057 | 7,788,395 | ||||||||
Predecessor Company | ||||||||||||
Segment Reporting Information | ||||||||||||
Total revenues | $ 217,242 | |||||||||||
Total investment costs and expenses | 101,825 | |||||||||||
Total other income (loss) | 56,334 | |||||||||||
Total other expenses | 65,609 | |||||||||||
Income tax expense (benefit) | 162 | |||||||||||
Net income (loss) | 105,980 | |||||||||||
Net income (loss) attributable to noncontrolling interests | 0 | |||||||||||
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries | 105,980 | |||||||||||
Total CLO management fees | 29,841 | |||||||||||
Predecessor Company | Reportable Segments | Credit | ||||||||||||
Segment Reporting Information | ||||||||||||
Total revenues | 134,255 | |||||||||||
Total investment costs and expenses | 62,485 | |||||||||||
Total other income (loss) | 76,046 | |||||||||||
Total other expenses | 23,121 | |||||||||||
Income tax expense (benefit) | 146 | |||||||||||
Net income (loss) | 124,549 | |||||||||||
Net income (loss) attributable to noncontrolling interests | 0 | |||||||||||
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries | 124,549 | |||||||||||
Predecessor Company | Reportable Segments | Natural Resources | ||||||||||||
Segment Reporting Information | ||||||||||||
Total revenues | 61,782 | |||||||||||
Total investment costs and expenses | 38,915 | |||||||||||
Total other income (loss) | (8,123) | |||||||||||
Total other expenses | 1,633 | |||||||||||
Income tax expense (benefit) | 0 | |||||||||||
Net income (loss) | 13,111 | |||||||||||
Net income (loss) attributable to noncontrolling interests | 0 | |||||||||||
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries | 13,111 | |||||||||||
Predecessor Company | Reportable Segments | Other | ||||||||||||
Segment Reporting Information | ||||||||||||
Total revenues | 21,205 | |||||||||||
Total investment costs and expenses | 425 | |||||||||||
Total other income (loss) | (11,589) | |||||||||||
Total other expenses | 230 | |||||||||||
Income tax expense (benefit) | 16 | |||||||||||
Net income (loss) | 8,945 | |||||||||||
Net income (loss) attributable to noncontrolling interests | 0 | |||||||||||
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries | 8,945 | |||||||||||
Predecessor Company | Reconciling Items | ||||||||||||
Segment Reporting Information | ||||||||||||
Total revenues | 0 | |||||||||||
Total investment costs and expenses | 0 | |||||||||||
Total other income (loss) | 0 | |||||||||||
Total other expenses | 40,625 | |||||||||||
Income tax expense (benefit) | 0 | |||||||||||
Net income (loss) | (40,625) | |||||||||||
Net income (loss) attributable to noncontrolling interests | 0 | |||||||||||
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries | (40,625) | |||||||||||
Total CLO management fees | 12,900 | |||||||||||
Successor Company | ||||||||||||
Segment Reporting Information | ||||||||||||
Total revenues | 62,588 | $ 71,017 | $ 69,162 | $ 89,305 | 82,670 | $ 89,109 | $ 105,691 | $ 97,786 | 350,345 | 292,072 | 375,256 | |
Total investment costs and expenses | 48,846 | 130,593 | 58,053 | 52,998 | 53,202 | 50,352 | 62,450 | 57,653 | 181,136 | 290,490 | 223,657 | |
Total other income (loss) | 58,176 | 213,366 | 24,946 | (209,882) | (186,065) | (185,449) | 8,035 | (69,164) | (344,382) | 86,606 | (432,643) | |
Total other expenses | 15,021 | 17,141 | 9,192 | 24,064 | 11,457 | 11,547 | 12,269 | 17,168 | 43,572 | 65,418 | 52,441 | |
Income tax expense (benefit) | 1,176 | 340 | (187) | 60 | 20 | 94 | 729 | 347 | 484 | 1,389 | 1,190 | |
Net income (loss) | 55,721 | 136,309 | 27,050 | (197,699) | (168,074) | (158,333) | 38,278 | (46,546) | (219,229) | 21,381 | (334,675) | |
Net income (loss) attributable to noncontrolling interests | 3,545 | 1,492 | (1,281) | (15,535) | (7,977) | (6,676) | (2,705) | (6,071) | (5,956) | (11,779) | (23,429) | |
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries | 52,176 | $ 134,817 | $ 28,331 | $ (182,164) | (160,097) | $ (151,657) | $ 40,983 | $ (40,475) | (213,273) | 33,160 | (311,246) | |
Total CLO management fees | 33,764 | 30,504 | 38,086 | |||||||||
Successor Company | Reportable Segments | Credit | ||||||||||||
Segment Reporting Information | ||||||||||||
Total revenues | 279,639 | 268,042 | 339,809 | |||||||||
Total investment costs and expenses | 142,204 | 282,616 | 214,464 | |||||||||
Total other income (loss) | (241,035) | 100,547 | (391,187) | |||||||||
Total other expenses | 40,703 | 64,318 | 50,631 | |||||||||
Income tax expense (benefit) | 49 | 121 | 154 | |||||||||
Net income (loss) | (144,352) | 21,534 | (316,627) | |||||||||
Net income (loss) attributable to noncontrolling interests | (1,797) | (7,295) | (16,071) | |||||||||
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries | (142,555) | 28,829 | (300,556) | |||||||||
Total assets | 5,422,560 | 7,303,305 | 5,422,560 | 7,303,305 | ||||||||
Successor Company | Reportable Segments | Natural Resources | ||||||||||||
Segment Reporting Information | ||||||||||||
Total revenues | 57,616 | 10,131 | 15,677 | |||||||||
Total investment costs and expenses | 38,117 | 6,224 | 7,625 | |||||||||
Total other income (loss) | (115,141) | (7,126) | (70,630) | |||||||||
Total other expenses | 2,219 | 635 | 1,179 | |||||||||
Income tax expense (benefit) | 0 | 0 | 0 | |||||||||
Net income (loss) | (97,861) | (3,854) | (63,757) | |||||||||
Net income (loss) attributable to noncontrolling interests | (4,159) | (4,484) | (7,358) | |||||||||
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries | (93,702) | 630 | (56,399) | |||||||||
Total assets | 219,516 | 230,815 | 219,516 | 230,815 | ||||||||
Successor Company | Reportable Segments | Other | ||||||||||||
Segment Reporting Information | ||||||||||||
Total revenues | 13,090 | 13,899 | 19,770 | |||||||||
Total investment costs and expenses | 815 | 1,650 | 1,568 | |||||||||
Total other income (loss) | 11,794 | (6,815) | 29,174 | |||||||||
Total other expenses | 476 | 465 | 412 | |||||||||
Income tax expense (benefit) | 435 | 1,268 | 1,036 | |||||||||
Net income (loss) | 23,158 | 3,701 | 45,928 | |||||||||
Net income (loss) attributable to noncontrolling interests | 0 | 0 | 0 | |||||||||
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries | 23,158 | 3,701 | 45,928 | |||||||||
Total assets | 208,981 | 254,275 | 208,981 | 254,275 | ||||||||
Successor Company | Reconciling Items | ||||||||||||
Segment Reporting Information | ||||||||||||
Total revenues | 0 | 0 | 0 | |||||||||
Total investment costs and expenses | 0 | 0 | 0 | |||||||||
Total other income (loss) | 0 | 0 | 0 | |||||||||
Total other expenses | 174 | 0 | 219 | |||||||||
Income tax expense (benefit) | 0 | 0 | 0 | |||||||||
Net income (loss) | (174) | 0 | (219) | |||||||||
Net income (loss) attributable to noncontrolling interests | 0 | 0 | 0 | |||||||||
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries | (174) | 0 | (219) | |||||||||
Total assets | 0 | 0 | 0 | 0 | ||||||||
Noncontrolling interests | Successor Company | ||||||||||||
Segment Reporting Information | ||||||||||||
Net income (loss) | $ (5,956) | (11,779) | (23,429) | |||||||||
Total assets | 71,600 | 82,900 | 71,600 | 82,900 | ||||||||
Noncontrolling interests | Successor Company | Reportable Segments | Credit | ||||||||||||
Segment Reporting Information | ||||||||||||
Total assets | 43,400 | 50,300 | 43,400 | 50,300 | ||||||||
Noncontrolling interests | Successor Company | Reportable Segments | Natural Resources | ||||||||||||
Segment Reporting Information | ||||||||||||
Total assets | $ 28,200 | $ 32,600 | $ 28,200 | $ 32,600 | ||||||||
Merger Transaction Costs | Predecessor Company | Reconciling Items | ||||||||||||
Segment Reporting Information | ||||||||||||
Total CLO management fees | $ 22,700 |
EARNINGS PER COMMON SHARE (Deta
EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 4 Months Ended | |
Apr. 30, 2014 | Dec. 31, 2016 | |
KKR Fund Holdings | ||
Earnings per common share | ||
Number of common shares held (in shares) | 100 | |
Predecessor Company | ||
Reconciliation of basic and diluted net income and distributions per common share | ||
Net income (loss) | $ 105,980 | |
Less: Preferred share distributions | 6,891 | |
Net income (loss) available to common shares | 99,089 | |
Less: Dividends and undistributed earnings allocated to participating securities | 292 | |
Net income (loss) allocated to common shares | $ 98,797 | |
Basic: | ||
Basic weighted average common shares outstanding (in shares) | 204,276,000 | |
Net income (loss) per common share (in dollars per share) | $ 0.48 | |
Diluted: | ||
Diluted weighted average common shares outstanding (in shares) | 204,276,000 | |
Net income (loss) per common share (in dollars per share) | $ 0.48 | |
Distribution declared (in dollars per share) | $ 0.22 | |
Anti-dilutive securities | ||
Anti-dilutive securities excluded from diluted earnings per share calculations (in shares) | 1,932,279 |
ACCUMULATED OTHER COMPREHENSI88
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands | 4 Months Ended | 12 Months Ended |
Apr. 30, 2014 | Dec. 31, 2016 | |
Components of changes in accumulated other comprehensive income (loss) | ||
Beginning balance | $ 1,950,990 | |
Other comprehensive income (loss): | ||
Ending balance | $ 1,868,185 | |
Predecessor Company | ||
Components of changes in accumulated other comprehensive income (loss) | ||
Beginning balance | $ 2,527,734 | |
Other comprehensive income (loss): | ||
Total other comprehensive income (loss) | (10,695) | |
Ending balance | 2,572,085 | |
Impairment charge for investments which were determined to be other-than-temporary | 4,400 | |
Predecessor Company | Net unrealized gains on available-for-sale securities | ||
Components of changes in accumulated other comprehensive income (loss) | ||
Beginning balance | 23,567 | |
Other comprehensive income (loss): | ||
Other comprehensive loss before reclassifications | (2,614) | |
Amounts reclassified from accumulated other comprehensive loss | (2,639) | |
Total other comprehensive income (loss) | (5,253) | |
Ending balance | 18,314 | |
Predecessor Company | Net unrealized losses on cash flow hedges | ||
Components of changes in accumulated other comprehensive income (loss) | ||
Beginning balance | (39,219) | |
Other comprehensive income (loss): | ||
Other comprehensive loss before reclassifications | (5,442) | |
Amounts reclassified from accumulated other comprehensive loss | 0 | |
Total other comprehensive income (loss) | (5,442) | |
Ending balance | (44,661) | |
Predecessor Company | Accumulated Other Comprehensive Loss | ||
Components of changes in accumulated other comprehensive income (loss) | ||
Beginning balance | (15,652) | |
Other comprehensive income (loss): | ||
Other comprehensive loss before reclassifications | (8,056) | |
Amounts reclassified from accumulated other comprehensive loss | (2,639) | |
Total other comprehensive income (loss) | (10,695) | |
Ending balance | $ (26,347) |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 23, 2017 | Mar. 20, 2017 | Feb. 06, 2017 | Dec. 22, 2016 | May 31, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 |
Series A LLC Preferred Shares | |||||||||
Subsequent events | |||||||||
Distributions declared on preferred shares | $ 373,800 | ||||||||
Successor Company | |||||||||
Subsequent events | |||||||||
Distribution to parent | $ 44,900 | $ 76,200 | $ 617,080 | 412,969 | $ 430,829 | ||||
Contributions from parent | 239,085 | 64,151 | 251,748 | ||||||
Distributions declared on preferred shares | $ 20,673 | $ 27,564 | $ 27,564 | ||||||
Successor Company | Series A LLC Preferred Shares | |||||||||
Subsequent events | |||||||||
Distributions declared on preferred shares | $ 6,900 | ||||||||
Cash distribution declared (in dollars per share) | $ 0.460938 | ||||||||
Successor Company | Subsequent Event | |||||||||
Subsequent events | |||||||||
Contributions from parent | $ 17,600 | ||||||||
Successor Company | Subsequent Event | Common Shares | |||||||||
Subsequent events | |||||||||
Distribution to parent | $ 16,700 | ||||||||
Cash distribution declared (in dollars per share) | $ 534,323 | ||||||||
Distributions declared on common shares | $ 53,400 | ||||||||
Successor Company | Subsequent Event | Series A LLC Preferred Shares | |||||||||
Subsequent events | |||||||||
Distributions declared on preferred shares | $ 6,900 | ||||||||
Cash distribution declared (in dollars per share) | $ 0.460938 |
SUMMARY OF QUARTERLY INFORMAT90
SUMMARY OF QUARTERLY INFORMATION (UNAUDITED) (Details) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Entity Information [Line Items] | |||||||||||
Net income (loss) attributable to noncontrolling interests | $ (6,000) | $ (11,800) | $ (23,400) | ||||||||
Successor Company | |||||||||||
Entity Information [Line Items] | |||||||||||
Total revenues | $ 62,588 | $ 71,017 | $ 69,162 | $ 89,305 | $ 82,670 | $ 89,109 | $ 105,691 | $ 97,786 | 350,345 | 292,072 | 375,256 |
Total investment costs and expenses | 48,846 | 130,593 | 58,053 | 52,998 | 53,202 | 50,352 | 62,450 | 57,653 | 181,136 | 290,490 | 223,657 |
Total other income (loss) | 58,176 | 213,366 | 24,946 | (209,882) | (186,065) | (185,449) | 8,035 | (69,164) | (344,382) | 86,606 | (432,643) |
Total other expenses | 15,021 | 17,141 | 9,192 | 24,064 | 11,457 | 11,547 | 12,269 | 17,168 | 43,572 | 65,418 | 52,441 |
Income (loss) before income taxes | 56,897 | 136,649 | 26,863 | (197,639) | (168,054) | (158,239) | 39,007 | (46,199) | (218,745) | 22,770 | (333,485) |
Income tax expense (benefit) | 1,176 | 340 | (187) | 60 | 20 | 94 | 729 | 347 | 484 | 1,389 | 1,190 |
Net income (loss) | 55,721 | 136,309 | 27,050 | (197,699) | (168,074) | (158,333) | 38,278 | (46,546) | (219,229) | 21,381 | (334,675) |
Net income (loss) attributable to noncontrolling interests | 3,545 | 1,492 | (1,281) | (15,535) | (7,977) | (6,676) | (2,705) | (6,071) | (5,956) | (11,779) | (23,429) |
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries | 52,176 | 134,817 | 28,331 | (182,164) | (160,097) | (151,657) | 40,983 | (40,475) | (213,273) | 33,160 | (311,246) |
Preferred share distributions | 6,891 | 6,891 | 6,891 | 6,891 | 6,891 | 6,891 | 6,891 | 6,891 | 20,673 | 27,564 | 27,564 |
Net income (loss) available to common shares | $ 45,285 | $ 127,926 | $ 21,440 | $ (189,055) | $ (166,988) | $ (158,548) | $ 34,092 | $ (47,366) | $ (233,946) | $ 5,596 | $ (338,810) |