FSCO – tax information

FSCO – tax information

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FS Credit Opportunities Corp.     NYSE: FSCO

Tax information


2022

November 14, 2022

Form 8937

Risk factors and definitions

FS Credit Opportunities Corp. (FSCO or the Company) is a non-diversified, closed-end management investment company that carries out the investment strategies generally described herein. An investment in FSCO involves a high degree of risk and may be considered speculative. The following are some of the risks an investment in the Shares involves; however, investors should carefully consider all of the risks discussed in FSCO’s reports filed with the SEC before deciding to invest in the Shares.

  • Shareholders of the Company (the Shareholders) should consider that an investment in the shares of common stock of the Company (the Shares) may result in loss in principal.
  • When a Shareholder sells their Shares, the Shareholder may receive less than their purchase price and the then-current net asset value, or NAV, per Share.
  • Shares of closed-end funds frequently trade at a discount to NAV and this creates a risk of loss for investors who purchased Shares at the time of listing on the New York Stock Exchange (the Listing). This risk is separate and distinct from the risk that FSCO’s NAV will decrease.
  • Following the Listing, certain directors and officers of the Company and its affiliates expect to make commitments to an investment fund that is currently intended to be established to invest from time to time in the Shares. The investment fund would be managed by a third party and the Company-related investors would not exercise investment or voting control over the investment fund. There can be no assurances that the investment fund will be established, and if it is, the amount or timing of any purchases of the Shares.
  • FSCO’s distributions may be funded from unlimited amounts of offering proceeds or borrowings, which may constitute a return of capital and reduce the amount of capital available to FSCO for investment. Any capital returned to Shareholders through distributions will be distributed after payment of fees and expenses, as well as the sales load.
  • FSCO’s previous distributions to Shareholders were funded in significant part from the reimbursement of certain expenses, including through the waiver of certain investment advisory fees, and additional support payments that may be subject to repayment to FSCO’s affiliate, Franklin Square Holdings, L.P. (FS Investments), and FSCO’s future distributions may be funded from such waivers, reimbursements or payments. Significant portions of these distributions were not based on FSCO’s investment performance and such waivers, reimbursements and payments by FS Investments may not continue in the future. If FS Investments had not agreed to reimburse certain of FSCO’s expenses, including through the waiver of certain advisory fees payable by FSCO, and provide additional support payments, significant portions of FSCO’s distributions would have come from offering proceeds or borrowings. The repayment of any amounts owed to FS Investments will reduce the future distributions to which the Shareholders would otherwise be entitled.
  • FSCO’s investments in securities and other obligations of companies that are experiencing distress involve a substantial degree of risk, require a high level of analytical sophistication for successful investment and require active monitoring.
  • FSCO’s investments in various types of debt securities and instruments may be secured, unsecured, rated or unrated, are subject to non-payment risk, and may be speculative in nature.
  • Below investment grade instruments (commonly referred to as “high yield” securities or “junk bonds”) may be particularly susceptible to economic downturns, which could cause losses.
  • FSCO may invest in illiquid and restricted securities that may be difficult to dispose of at a fair price.
  • FSCO’s use of leverage could result in special risks for the Shareholders and can magnify the effect of any losses.
  • Investments in certain securities or other instruments of non-U.S. issuers or borrowers may involve factors not typically associated with investing in the United States or other developed countries.
  • Securities or other instruments of non-U.S. securities may be traded in underdeveloped, inefficient and less liquid markets and may experience greater price volatility, illiquidity and changes in value.
  • FS Global Advisor, LLC and certain of its affiliates may experience conflicts of interest in connection with the management of FSCO.
  • FSCO seeks to achieve its investment objectives by focusing on a limited number of opportunities across the investment universe.
  • The global outbreak of COVID-19 (commonly known as the coronavirus) has caused volatility, severe market dislocations and liquidity constraints in many markets, including securities FSCO holds, and may adversely affect FSCO’s investments and operations. Such impacts may adversely affect the performance of FSCO’s investments and FSCO.
  • The national and global political environment, including foreign relations and trading policies, as well as the impact of Russia’s invasion of Ukraine and related sanctions, and potential retaliatory actions may adversely affect the performance of FSCO’s investments and FSCO.
  • We expect that the current market conditions may have a lasting and, in some instances, permanent impact on some of our portfolio companies as they struggle to meet covenant obligations and face insolvency in future periods. Poor performance or insolvency of our portfolio companies could have a material adverse impact on our financial condition and results of operations.

CORPORATE GOVERNANCE

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