KKR Financial Delays Debt Payments

Shares drop 18% on the news.
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KKR Financial Holdings


, a publicly-traded affiliate of buyout firm Kohlberg Kravis Roberts, has delayed repayments to some of its short-term debt holders and will try to restructure the agreement that governs the instruments.

Shares of KKR Financial were sinking 18% to $11.90 in premarket trading Wednesday.

KKR Financial, a specialty-finance company, said in a filing with the


that it has asked for more time to make payments to holders of the nonrecourse secured liquidity notes that were issued by two of its asset-backed conduit facilities.

This isn't the first time KKR Financial has run into trouble, and investors will likely take it as another sign the financial sector has yet to get a handle on problem debt.

Last summer, it said the credit market turmoil was weighing on its ability to make payments on some of its asset-backed commercial paper.

In October, the company reached a pact to extend the maturity date of the secured liquidity notes so that roughly half of the principal was due on Feb. 15 and the rest on March 13. The portion that was due last week has now been further pushed out and will mature March 3.

The holders of a majority of the notes have the right to terminate the extension period by providing one business day's notice. When the latest extension expires or is ended by the note holders, the notes will become payable, the regulatory filing said.

This article was written by a staff member of TheStreet.com.