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KKR Financial records $1.1bn loss for 2008

The publicly listed debt affiliate of Kohlberg Kravis Roberts has suspended its dividend to shareholders through 2009 as it tries to bolster its liquidity.

KKR Financial, a listed affiliate of Kohlberg Kravis Roberts that invests in debt, reported a $1.1 billion loss for the full-year 2008 that included a $226 million default of corporate loans issued by the Tribune Company, which collapsed into bankruptcy in December.

The company, which reported its full-year results Monday, said it was suspending its dividend through 2009.

KKR Financial’s losses included a $454.3 million impairment charge and $156.3 million on sales of assts during the fourth quarter and a write-down totaling $137.3 million on corporate loans the company designated as held for sale. Losses also included $72.9 million of realised and unrealised losses on derivative transactions.

Also, the company had three corporate loan investments, including in the Sam Zell-backed Tribune Company, worth about $313 million that defaulted.

The company’s manager, KKR Financial Advisors, has agreed to defer 50 percent of the monthly base management fee for the period of 1 January 2009 through 30 November 2009, the company said.

The company believes it has sufficient liquidity to meet its financial obligations for the next year, KKR Financial said. It entered a $300 million senior secured revolving credit facility in November from Bank of America and Citicorp North America, which was used to retire the company’s existing revolver due in June.

Also last year, KKR Financial arranged a $100 million loan on standby from its external manager, KKR Financial Advisors and the manager’s parent, KKR.

KKR last year decided to delay until next year the de-listing and acquisition of Euronext-listed KKR Private Equity Investors and subsequent public listing of the combined entities on the New York Stock Exchange.