1372807--3/29/2007--Kohlberg_Capital

related topics

{loan, real, estate}

{investment, property, distribution}

{tax, income, asset}

{debt, indebtedness, cash}

{stock, price, operating}

{competitive, industry, competition}

{regulation, change, law}

{personnel, key, retain}

{operation, international, foreign}

{condition, economic, financial}

RISKS RELATED TO OUR BUSINESS We are dependent upon senior management personnel for our future success, and if we are unable to hire and retain qualified personnel or if we lose any member of our senior management team, our ability to achieve our investment objective could be significantly harmed. We operate in a highly competitive market for investment opportunities. There is a risk that we may not make distributions. Any unrealized losses we experience on our loan portfolio may be an indication of future realized losses, which could reduce our income available for distribution. We will be exposed to risks associated with changes in interest rates. If we incur additional debt, it could increase the risk of investing in our Company. Risks Related to Our Investments Our investments may be risky, and investors could lose all or part of their investments in the Company. Many of our portfolio investments will be recorded at fair value as determined in good faith by our Board of Directors. As a result, there will be uncertainty as to the value of our investments. Our portfolio is and may continue to be concentrated in a limited number of portfolio companies and industries, which will subject us to a risk of significant loss if any of these companies defaults on its obligations under any of its debt instruments or by a downturn in the particular industry. Economic recessions or downturns could impair our portfolio companies and harm our operating results. Defaults by our portfolio companies could harm our operating results. When we are a debt or minority equity investor in a portfolio company, which we expect will generally be the case, we may not be in a position to control the entity, and its management may make decisions that could decrease the value of our investment. Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity. Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies. Investments in equity securities involve a substantial degree of risk. The lack of liquidity in our investments may adversely affect our business. If we incur indebtedness or issue senior securities, we will be exposed to additional risks, including the typical risks associated with leverage. The agreements governing the Facility contain various covenants that, among other things, limit our discretion in operating our business and provide for certain minimum financial covenants. Risks Related to Our Operation as a BDC Our ability to enter into transactions with our affiliates will be restricted. Changes in the laws or regulations governing our business, or changes in the interpretations thereof, and any failure by us to comply with these laws or regulations, could negatively affect the profitability of our operations. If we are unable to qualify for tax treatment as a RIC, we will be subject to corporate-level income tax, which will adversely affect our results of operations and financial condition. Risks Related to an Investment in Our Shares Shares of closed-end investment companies, including BDCs, frequently trade at a discount to their net asset value. Our common stock price may be volatile and may fluctuate substantially. Our principal stockholders may continue to have substantial ownership in us and this could limit other investors ability to influence the outcome of key transactions, including a change of control. In addition, some of our stockholders may have interests in Kohlberg Capital that differ from those of other stockholders.

Full 10-K form ▸

1372807--3/29/2007--Kohlberg_Capital_CORP