This is a securities class action lawsuit against KKR Financial Holdings, LLC on behalf of all investors who purchased KKR Financial common stock pursuant or traceable to KKR Financial's false and misleading Registration Statement and Prospectus issued in connection with its May 4, 2007 merger and share issuance ("Merger").
KKR Financial is a specialty finance company that invests in multiple asset classes.
The class action complaint alleges that the Registration Statement was false and misleading in that it misrepresented and/or omitted material facts, including:
(a) the problematic real-estate-related assets held by KKR Financial were a much bigger risk to KKR Financial than the Registration Statement had represented;
(b) KKR Financial's capital would be insufficient given the deterioration in its portfolio which would necessitate capital preservation and the need to raise capital to the detriment of common stockholders; and
(c) KKR Financial was failing to adequately record loss reserves for its mortgage-related exposure, causing its balance sheet and financial results to be artificially inflated.
During May, June and most of July 2007, KKR Financial's stock traded above $25 per share. In late July, many mortgage-related companies' stock prices declined, including KKR Financial's. Nevertheless, KKR Financial's stock closed at $18.02 per share on August 13, 2007.
Then, on August 15, 2007, KKR Financial issued a release which revealed that KKR Financial would be selling $5.1 billion in mortgage backed securities at a loss. When this news was revealed, KKR Financial's stock price collapsed to as low as $9.39 per share, eventually closing at $10.52 per share, a decline from the prior day of 31%.
KKR Financial shares currently trade for approximately $10 per share, a 63% decline from the $26.90 per share at which they were sold to plaintiff and the Class.
Name (Stock Symbol)
KKR Financial Holdings LLC (KFN)
KKR Financial Holdings LLC is a specialty finance company that focuses on making investments that build long-term value and generate competitive risk-adjusted returns using moderate leverage. KFNs core business strategy focuses on investing in corporate debt, including senior secured loans, mezzanine loans, and high yield securities with a particular emphasis on debt issued by large capitalization firms with broad geographic and product offerings.
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