An affiliate of private equity firm Kohlberg Kravis Roberts has said it will lose about $40m from selling $5.1 billion in US residential mortgages. It has also warned that an additional $200m hit could be coming.
KKR Financial Holdings LLC, whose shares fell about 30%, blamed the estimated $40m loss on 'unprecedented disruptions' in the residential mortgage market, which have reverberated from the US to banks in Europe and Asia.
Meanwhile, KKR Financial said its $200m equity investment in its remaining $5.8 billion portfolio of residential mortgage-related assets could be erased. There also could be additional liabilities of up to $50m.
KKR said it was talking to other investors in its portfolio on how to resolve potential funding disruptions amid a rising wave of delinquencies and defaults on mortgages.
'No assurance can be made that any of the strategies being evaluated by the company will be successfully executed,' KKR Financial said in a statement.
