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Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-14 8C/A’ on 9/20/23

On:  Wednesday, 9/20/23, at 4:18pm ET   ·   Accession #:  1213900-23-78023   ·   File #:  333-270879

Previous ‘N-14 8C’:  ‘N-14 8C/A’ on 9/6/23   ·   Latest ‘N-14 8C’:  This Filing   ·   18 References:   To:  Kayne Anderson Energy Infrastructure Fund, Inc. – Previous ‘N-14 8C/A’ on 9/6/23 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-14 8C/A’ on 8/8/23 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-CSRS’ on 7/28/23 for 5/31/23 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-14 8C/A’ on 4/28/23 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-14 8C’ on 3/27/23 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-CSR’ on 1/26/23 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-14 8C’ on 10/25/21 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-2’ on 4/28/17 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-2’ on 2/6/15 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘POS 8C’ on 7/23/14 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘POS EX’ on 8/30/13 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-2’ on 8/28/12 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-2/A’ on 5/24/10 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-2/A’ on 3/23/07 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-2’ on 2/7/07 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-2/A’ on 9/27/04 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-2/A’ on 9/16/04 To:  Kayne Anderson Energy Infrastructure Fund, Inc. – ‘N-2/A’ on 9/1/04 

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 9/20/23  Kayne Anderson Energy Infras… Inc N-14 8C/A              2:2.1M                                   EdgarAgents LLC/FA

Document/Exhibit                   Description                      Pages   Size 

 1: N-14 8C/A   Pre-Effective Amendment to Registration Statement   HTML   2.06M 
                by a Closed-End Investment Company - Securities                  
                for a Merger                                                     
 2: EX-14.1     Code of Ethics                                      HTML      5K 

As filed with the Securities and Exchange Commission on September 20, 2023

Securities Act File No. 333-270879

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

(Check appropriate box or boxes)

Kayne Anderson Energy Infrastructure Fund, Inc. 
(Exact name of registrant as specified in charter)

811 Main Street, 14th Floor
Houston, TX 77002
(Address of Principal Executive Offices)
Registrant’s Telephone Number, Including Area Code: (713) 493-2020

Michael J. O’Neil
KA Fund Advisors, LLC
2121 Avenue of the Stars, 9th Floor
Los Angeles, California 90067
(Name and Address of Agent for Service)

Copies of Communications to:

Approximate Date of Proposed Offering: As soon as practicable after this Registration Statement is declared effective.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

EXPLANATORY NOTE

This Joint Proxy Statement/Prospectus is organized as follows:

Kayne Anderson Energy Infrastructure Fund, Inc. (NYSE: KYN)
Kayne Anderson NextGen Energy & Infrastructure, Inc. (NYSE: KMF)

, 2023

Dear Fellow Stockholder:

You are cordially invited to attend the combined Special Meeting of Stockholders (the “KYN Special Meeting”) of Kayne Anderson Energy Infrastructure Fund, Inc. (“KYN”) and Special Meeting of Stockholders (the “KMF Special Meeting,” and, together with the KYN Special Meeting, the “Meeting”) of Kayne Anderson NextGen Energy & Infrastructure, Inc. (“KMF”) to be held on:

          , 2023
8:00 a.m. Central Time

Kayne Anderson
811 Main Street, 14^th Floor
Houston, TX 77002

At the Meeting, (i) KMF stockholders will be asked to consider and approve the combination of KMF and KYN, which will be accomplished as a merger of KMF into a wholly owned subsidiary of KYN (the “Merger”), and any adjournment of the KMF Special Meeting, and (ii) KYN stockholders will be asked to consider and approve the issuance of additional shares of KYN common stock in connection with the Merger, and any adjournment of the KYN Special Meeting.

The Board of Directors of KYN and the Board of Directors of KMF each voted unanimously to approve the Merger, recommends KMF stockholders vote “FOR” the approval of the Merger and each other proposal for which you are entitled to vote and recommends KYN stockholders vote “FOR” the approval of the issuance of additional shares of KYN common stock in connection with the Merger and each other proposal for which you are entitled to vote.

Enclosed with this letter are (i) the formal notice of the Meeting, (ii) the joint proxy statement/prospectus, which gives detailed information about the Merger and the other proposals and why the Boards of Directors recommend that you vote to approve them, and (iii) a written proxy for you to sign and return. If you have any questions about the enclosed proxy or need any assistance in voting your shares, please call (877) 871-1741.

Your vote is important. Please vote your shares via the internet or by telephone or complete, sign, and date the enclosed proxy card and return it in the enclosed envelope. You may also vote in person if you are able to attend the Meeting. However, even if you plan to attend the Meeting, we urge you to cast your vote early, as your vote must be received by the KMF Special Meeting and KYN Special Meeting, as applicable, to be held at 8:00 a.m. Central Time on           , 2023. That will ensure your vote is counted should your plans change.

Sincerely,

James C. Baker, Jr.

Chairman of each of the Boards of Directors

President and Chief Executive Officer

Kayne Anderson Energy Infrastructure Fund, Inc.
Kayne Anderson NextGen Energy & Infrastructure, Inc.

NOTICE OF KYN SPECIAL MEETING OF STOCKHOLDERS
NOTICE OF KMF SPECIAL MEETING OF STOCKHOLDERS

NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the “KYN Special Meeting”) of Kayne Anderson Energy Infrastructure Fund, Inc. (“KYN”), a Maryland corporation, and a Special Meeting of Stockholders (the “KMF Special Meeting,” and, together with the KYN Special Meeting, the “Meeting”) of Kayne Anderson NextGen Energy & Infrastructure, Inc. (“KMF”), a Maryland corporation, will be held on           , 2023 at 8:00 a.m. Central Time at the offices of Kayne Anderson, at 811 Main Street, 14^th Floor, Houston, TX 77002. The Meeting is being held for the following purposes:

For KMF:

For KYN:

The foregoing items of business are more fully described in the joint proxy statement/prospectus accompanying this notice.

Stockholders of record of KYN or KMF as of the close of business on June 20, 2023 are entitled to notice of and to vote (on KYN’s or KMF’s matters, as applicable) at the Meeting (or any adjournment or postponement of the Meeting thereof).

EACH OF The Boards of Directors unanimously recommend stockholders vote “FOR” each proposal.

It is important that your shares be represented at the Meeting in person or by proxy. We urge you to complete, sign, date, and return the enclosed proxy card in the postage-paid envelope provided or vote via telephone or the Internet pursuant to the instructions on the enclosed proxy card so you will be represented at the Meeting. If you attend the Meeting and wish to vote, you will be able to do so and your vote at the Meeting will revoke any proxy you may have submitted. Merely attending the Meeting, however, will not revoke any previously submitted proxy.

By Order of each of the Boards of Directors,

Houston, Texas

The information contained in this joint proxy statement/prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This joint proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to completion, dated September 20, 2023

JOINT PROXY STATEMENT/PROSPECTUS



Kayne Anderson Energy Infrastructure Fund, Inc.
Kayne Anderson NextGen Energy & Infrastructure, Inc.

811 Main Street, 14th Floor
Houston, TX 77002
(713) 493-2020

SPECIAL MEETING OF STOCKHOLDERS OF KYN
SPECIAL MEETING OF STOCKHOLDERS OF KMF
          , 2023

This joint proxy statement/prospectus is being sent to you by the Board of Directors of Kayne Anderson Energy Infrastructure Fund, Inc. (“KYN”) and the Board of Directors of Kayne Anderson NextGen Energy & Infrastructure, Inc. (“KMF”), each a Maryland corporation. The Boards of Directors are asking you to complete and return the enclosed proxy card, permitting your votes to be cast at the Special Meeting of Stockholders of KYN (the “KYN Special Meeting”) and the Special Meeting of Stockholders of KMF (the “KMF Special Meeting,” and, together with the KYN Special Meeting, the “Meeting”) to be held on:

          , 2023
8:00 a.m. Central Time

Kayne Anderson
811 Main Street, 14^th Floor
Houston, TX 77002

Stockholders of record of KYN or KMF at the close of business on June 20, 2023 (the “Record Date”) are entitled to vote (on KYN’s or KMF’s matters, as applicable) at the Meeting. As a stockholder, for each applicable proposal, you are entitled to one vote for each share of common stock and one vote for each share of preferred stock you hold. This joint proxy statement/prospectus and the enclosed proxy are first being mailed to stockholders on or about           , 2023.

Each Company is managed by KA Fund Advisors, LLC (“KAFA”), an affiliate of Kayne Anderson Capital Advisors, L.P. (“KACALP” and, together with its affiliates, “Kayne Anderson”). KAFA is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. Kayne Anderson is a leading alternative investment adviser focused on real estate, credit, infrastructure/energy, renewables, and growth equity. Kayne Anderson’s investment philosophy is to pursue niches, with an emphasis on cash flow, where our knowledge and sourcing advantages enable us to seek to deliver above average, risk-adjusted investment returns. As responsible stewards of capital, Kayne Anderson’s philosophy extends to promoting responsible investment practices and sustainable business practices to create long-term value for our investors. Kayne Anderson manages over $31 billion in assets (as of June 30, 2023) for institutional investors, family offices, high net worth, and retail clients and employs over 325 professionals in five core offices across the United States. Kayne Anderson may be contacted at the address listed above.

This joint proxy statement/prospectus sets forth the information that you should know in order to evaluate each of the following proposals. The following table presents a summary of the proposals and the classes of stockholders being solicited with respect to each proposal. This joint proxy statement/prospectus relates to the proposed combination of KMF and KYN, which will be accomplished as a merger of KMF into a wholly owned subsidiary of KYN (the “Merger”). In accordance with the opinion described in “Proposal One: Merger—Material U.S. Federal Income Tax Consequences of the Merger,” the Merger will qualify as a tax-free merger for federal income tax purposes. This means it is expected that stockholders will recognize no gain or loss for federal income tax purposes as a result of the Merger, except that gain (but not loss) will be recognized by KMF stockholders in an amount not to exceed the amount of cash received as part of the Cash Consideration (as defined in this joint proxy statement/prospectus) (other than cash received in lieu of a fractional share) and gain or loss generally will be recognized by KMF stockholders with respect to cash received in lieu of fractional shares of KYN common stock.

Please refer to the discussion of each proposal in this joint proxy statement/prospectus for information regarding votes required for the approval of each proposal, as well as information regarding the change in fees and expenses borne by KMF stockholders as a result of the Merger as described under “Special Factors—Reasons for the Merger and Board Considerations”.

The Agreement and Plan of Merger between KYN and KMF is sometimes referred to herein as the “Merger Agreement.” KMF and KYN are sometimes referred to herein as a “Company” and collectively as the “Companies.” KYN following the Merger is sometimes referred to herein as the “Combined Company.”

Additional Information

This joint proxy statement/prospectus sets forth the information stockholders should know before voting on the proposals. The Merger constitutes an offering of common stock of KYN, and this joint proxy statement/prospectus serves as a prospectus of KYN in connection with the issuance of its common stock in the Merger. Please read it carefully and retain it for future reference. A Statement of Additional Information, dated           , 2023, relating to this joint proxy statement/prospectus (the “Statement of Additional Information”) has been filed with the Securities and Exchange Commission (the “SEC”) and is incorporated herein by reference.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETINGS OF STOCKHOLDERS TO BE HELD ON           , 2023:

You should have received a copy of the Annual Reports for the fiscal year ended November 30, 2022 for KYN and/or KMF. If you would like another copy of either Annual Report or the Statement of Additional Information, please write us at Kayne Anderson’s address or call us at (713) 493-2020. The Annual Report(s) and Statement of Additional Information will be sent to you without charge. This joint proxy statement/prospectus, the Annual Report and the Statement of Additional Information can be accessed on our website at www.kaynefunds.com or on the website of the SEC at www.sec.gov.

The Companies are subject to certain informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith file reports, proxy statements, proxy materials and other information with the SEC. Materials filed with the SEC can be reviewed and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 or downloaded from the SEC’s web site at www.sec.gov. Information on the operation of the SEC’s Public Reference Room may be obtained by calling the SEC at (202) 551-8090. You may also request copies of these materials, upon payment at the prescribed rates of a duplicating fee, by electronic request to the SEC’s e-mail address (publicinfo@sec.gov) or by writing the Public Reference Branch, Office of Consumer Affairs and Information Services, SEC, Washington, DC, 20549-0102.

The currently outstanding shares of common stock of KYN are listed on the New York Stock Exchange (the “NYSE”) under the ticker symbol “KYN” and will continue to be so listed after completion of the Merger. The common stock of KYN to be issued in connection with the Merger will be listed on the NYSE. The currently outstanding shares of common stock of KMF are also listed on the NYSE under the ticker symbol “KMF.” Reports, proxy statements and other information concerning KYN and KMF may be inspected at the offices of the NYSE, 20 Broad Street, New York, NY 10005.

No person has been authorized to give any information or make any representation not contained in this joint proxy statement/prospectus and, if so given or made, such information or representation must not be relied upon as having been authorized. This joint proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction in which, or to any person to whom, it is unlawful to make such offer or solicitation.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISION HAS: APPROVED OR DISAPPROVED OF THE TRANSACTION; PASSED UPON THE MERITS OR FAIRNESS OF THE TRANSACTION; OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this joint proxy statement/prospectus is           , 2023.

TABLE OF CONTENTS

SUMMARY TERM SHEET

In accordance with Item 1001 of Regulation M-A, the following summary of all of the most material terms of the proposed transaction (this “Summary Term Sheet”) has been prepared to provide you with sufficient information to understand the essential features and significance of the proposed transaction. KYN encourages you to read carefully this Summary Term Sheet together with the entire joint proxy statement/prospectus, its appendices and the documents incorporated by reference into this joint proxy statement/prospectus, including the Statement of Additional Information.

Parties to the Merger Agreement

Kayne Anderson Energy Infrastructure Fund, Inc. (“KYN”)

Kayne Anderson NextGen Energy & Infrastructure, Inc. (“KMF”)

811 Main Street, 14^th Floor
Houston, TX 77002

(713) 493-2020

Each of KYN and KMF is a Maryland corporation. Both Companies are registered as non-diversified, closed-end management investment companies under the 1940 Act. Each Company is managed by KA Fund Advisors, LLC (“KAFA”), an affiliate of Kayne Anderson Capital Advisors, L.P. (“KACALP” and, together with its affiliates, “Kayne Anderson”). KAFA is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. The Companies are affiliates due to the fact that each has the same officers and directors and KAFA is the investment advisor for both.

Kayne Anderson is a leading alternative investment adviser focused on real estate, credit, infrastructure/energy, renewables, and growth equity. Kayne Anderson’s investment philosophy is to pursue niches, with an emphasis on cash flow, where our knowledge and sourcing advantages enable us to seek to deliver above average, risk-adjusted investment returns. As responsible stewards of capital, Kayne Anderson’s philosophy extends to promoting responsible investment practices and sustainable business practices to create long-term value for our investors. Kayne Anderson manages over $31 billion in assets (as of June 30, 2023) for institutional investors, family offices, high net worth, and retail clients and employs over 325 professionals in five core offices across the United States.

In addition, the officers and directors of KYN may be considered “covered persons” within the meaning of Rule 13e-3. For more information about such individuals, please see “Proposal One: Merger—Management.” The business address of each such individual is set forth above.

The Merger (see page 86)

Subject to stockholder approval, KYN and KMF would be combined by means of a merger, pursuant to which KMF will be merged with and into a wholly owned subsidiary (the “Merger Sub”) of KYN (the “Merger”). Pursuant to that certain Agreement and Plan of Merger, dated March 24, 2023, as amended and restated on April 24, 2023, by and among KYN and KMF (the “Merger Agreement”), KMF stockholders will be entitled to receive in exchange for each of their outstanding shares of KMF common stock either (i) shares of KYN common stock, which shall be based on the relative per share NAVs of KYN and KMF (i.e., the value received shall be equal to 100% of the NAV per share of the KMF common stock) (“Stock Consideration”), or (ii) an amount of cash equal to 95% of the NAV per share of the KMF common stock (“Cash Consideration”). KMF stockholders right to elect to receive Cash Consideration is subject to the adjustment and proration procedures set forth in the Merger Agreement to ensure that the total number of shares of KMF common stock converted into the right to receive Cash Consideration will not exceed 7,079,620 shares (representing 15% of the outstanding shares of KMF common stock prior to the closing of the Merger).

In accordance with the opinion described in “Proposal One: Merger—Material U.S. Federal Income Tax Consequences of the Merger,” the Merger will qualify as a tax-free merger for federal income tax purposes. This means it is expected that stockholders will recognize no gain or loss for federal income tax purposes as a result of the Merger, except that gain (but not loss) will be recognized by KMF stockholders in an amount not to exceed the amount of cash received as part of the Cash Consideration (other than cash received in lieu of a fractional share) and gain or loss generally will be recognized by KMF stockholders with respect to cash received in lieu of fractional shares of KYN common stock. See “Proposal One: Merger — Material U.S. Federal Income Tax Consequences of the Merger.”

The Merger Agreement is attached as Appendix A to this joint proxy statement/prospectus. Both Companies encourage you to read the Merger Agreement because it is the legal document that governs the terms and conditions of the Merger. For more information regarding the terms of the Merger Agreement, including the Stock Consideration and the Cash Consideration, see “Proposal One: Merger — Information About the Merger” and “—Terms of the Amended and Restated Merger Agreement”.

Effects of the Merger (see page 11)

Upon the closing of the Merger, KMF will be merged with and into a wholly owned subsidiary of KYN. KMF will then cease its separate existence under Maryland law and terminate its registration under the 1940 Act. Immediately following the Merger, it is expected that Merger Sub will be merged with and into KYN.

Reasons for the Merger and Board Considerations (see page 14)

The Board of Directors of KYN (the “KYN Board”) and the Board of Directors of KMF (the “KMF Board”, and together with the KYN Board, the “Boards”) have unanimously approved the Merger because they have determined that the Merger is in the best interests of each Company and that the interests of the existing stockholders of each Company will not be diluted as a result of the Merger. In making this determination, the KYN Board and the KMF Board considered the expected benefits and principal risks of the transaction for each Company. In addition, the Boards considered the material differences between the Companies, specifically that (i) KYN has higher base management fee than KMF and as such KMF stockholders will be subject to an increased management fee immediately following the Merger, (ii) KYN, as a corporation for tax purposes, is subject to federal income tax, while KMF, which qualifies as a regulated investment company (a “RIC”), is generally not subject to federal income tax and (iii) KYN, because it is subject to federal income tax, has the ability to invest more than 25% of its total assets in MLPs, while KMF, as a RIC, does not. KYN currently invests approximately half of its total assets in MLPs, while KMF invests slightly less than 25% of its total assets in MLPs. The Boards also considered the principal risks associated with these differences, as more fully described in “Risk Factors.” The Boards believe that the benefits of a combination outweigh the risks to the stockholders.

The Combined Company will pursue KYN’s investment objective which is to provide a high after-tax total return with an emphasis on making cash distributions to stockholders. The Combined Company intends to achieve this objective by investing at least 80% of total assets in the securities of Energy Infrastructure Companies (as defined in the Glossary). For a more complete discussion of these items, see “Special Factors — Reasons for the Merger and Board Considerations.”

Interests of the Directors and Officers of KYN and KMF in the Merger (see page 20)

Certain of the directors and officers of KYN and KMF hold KMF common stock. Pursuant to an Amended and Restated Support and Non-Election Agreement dated as of April 24, 2023 (the “Support Agreement”), each of the directors and officers of KYN and KMF have agreed not to elect to receive Cash Consideration and to vote to approve the Merger and the issuance of additional shares of KYN common stock in connection with the Merger. No consideration was paid to the officers and directors for entry into the Support Agreement. The officers and directors who entered into the Support Agreement did so because they believe in the merits of the proposed combination and believe the Support Agreement is a tangible sign of their support for the proposed transaction.

Upon the closing of the Merger, those certain directors and officers who hold KMF common stock would be entitled to receive Stock Consideration in exchange of their shares of KMF common stock. The directors and officers of KYN (who are also the directors and officers of KMF) will continue to serve in those roles following the Merger.

Position of KYN as to the Fairness of the Merger (see page 19)

KYN believes that the proposed Merger is substantively and procedurally fair to the unaffiliated stockholders of KMF. However, neither KYN nor any of its affiliates has performed, or engaged a financial advisor to perform, any valuation or other analysis for purposes of assessing the fairness of the Merger to KMF and the unaffiliated stockholders of KMF. KYN’s belief as to the procedural and substantive fairness of the Merger is based on the factors described in “Special Factors — Reasons for the Merger and Board Considerations — Position of KYN as to the Fairness of the Merger.”

Costs of the Merger (see page 21)

The Companies will bear the costs associated with the proposed Merger, which are expected to consist of the costs set forth in the table below. Costs will be allocated 50% to KYN and 50% to KMF. Costs related to the Merger are currently estimated to be approximately $1.8 million or 0.1% of pro forma Combined Company net assets, which equates to $0.9 million or $0.01 per share for KYN and $0.9 million or $0.02 per share for KMF as of May 31, 2023. The costs associated with the Merger will be borne by the common stockholders of the Companies.

Total costs expected to be incurred in connection with the Merger are estimated at this time to be as follows:

Financing of the Cash Consideration (see page 20)

KYN expects to fund the Cash Consideration with cash on hand, securities sales, additional borrowings under its unsecured credit facility (“Credit Facility”), or some combination thereof. Upon closing of the Merger, it is not expected that the Combined Company leverage levels would vary significantly from that of KYN or KMF on a standalone basis, as cash and security sales would be used to maintain leverage levels in accordance with the KYN’s leverage policies. See “Investment Objectives and Policies of KYN”. KYN expects that any incremental borrowings would be immaterial in comparison to total leverage of the Companies on a combined basis. The financing of the Cash Consideration is not subject to any material conditions, and KYN will pay the Cash Consideration (without any conditionality) in connection with the closing of the Merger. To the extent that KYN uses borrowings under its Credit Facility to fund the Cash Consideration, it is not expected that such borrowings would materially impact fees and expenses, and any repayment of such borrowings would be made in the ordinary course from cash from operations (as opposed to refinancing). Because KYN has sufficient borrowing capacity under its Credit Facility to fund the Cash Consideration, in addition to the alternative means of funding the Cash Consideration discussed above, it does not believe any alternative financing arrangements are necessary.

Please see “Special Factors—Financing of the Cash Consideration” for more information regarding KYN’s Credit Facility.

Material U.S. Federal Income Tax Consequences of the Merger (see page 88)

In accordance with the opinion described in “Proposal One: Merger—Material U.S. Federal Income Tax Consequences of the Merger,” the Merger will qualify as a tax-free merger for federal income tax purposes. This means it is expected that stockholders will recognize no gain or loss for federal income tax purposes as a result of the Merger, except that gain (but not loss) will be recognized by KMF stockholders in an amount not to exceed the amount of cash received as part of the Cash Consideration (other than cash received in lieu of a fractional share) and gain or loss generally will be recognized by KMF stockholders with respect to cash received in lieu of fractional shares of KYN common stock. If the Merger fails to qualify as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”) because KYN or KMF fail to meet the asset diversification tests of Section 368(a)(2)(F) of the Code or for any other reason, the transaction will be taxable to the non-diversified investment company and its stockholders. For a more complete discussion of these matters, please see “Proposal One: Merger — Material U.S. Federal Income Tax Consequences of the Merger.”

Dissenters’ or Appraisal Rights (see page 99)

Stockholders do not have dissenters’ or appraisal rights.

Delisting and Deregistration of KMF Common Stock (see page 21)

KMF’s common stock is currently listed on the NYSE under the ticker symbol “KMF.” If the Merger is completed, the KMF common stock will cease to be listed on the NYSE and will be deregistered under the Securities Exchange Act of 1934, as amended.

Regulatory Approvals Required for the Merger

None of KYN or KMF is aware of any federal or state regulatory approval required in connection with the Merger, other than compliance with applicable federal securities law and applicable Maryland law. Notwithstanding the forgoing, KYN and KMF caution investors that the SEC does not approve or disapprove the Merger or the related transactions.

Arrangements with Saba

On August 6, 2023, Saba Capital Management, L.P. (“Saba”) entered into a Standstill Agreement (the “Standstill Agreement”) with KACALP, pursuant to which Saba agreed to various customary standstill provisions, such as prohibitions on Saba’s soliciting proxies, seeking to remove KMF’s or KYN’s directors, seeking to nominate directors to KMF’s or KYN’s board, making shareholder proposals or making certain public statements, among other actions. Saba also has agreed in the Standstill Agreement to vote all the shares of KYN and KMF common stock it owns in favor of the proposals at the Meeting and to elect, on behalf of certain of its affiliates, to receive Cash Consideration with respect to the KMF common stock it owns.

Saba’s obligations under the Standstill Agreement will survive for 18 months after the consummation of the Merger, depending on various facts and circumstances, as described in the Standstill Agreement.

KACALP has agreed in a separate Share Purchase Agreement to purchase up to $20 million of KYN common stock from Saba and certain of its affiliates. This purchase will occur ten business days after the Merger is completed and the number of shares of KYN common stock that KACALP will purchase will not exceed the amount of Stock Consideration Saba receives in the Merger. KACALP has agreed to purchase that common stock from Saba and certain of its affiliates at a price equal to ninety-seven percent (97%) of the NAV per share of KYN’s common stock, measured as of two business days before that purchase is completed.

QUESTIONS AND ANSWERS

Although it is recommended that you read the complete joint proxy statement/prospectus of which this “Questions and Answers” section is a part, a brief overview of the issues to be voted on has been provided below for your convenience.

The anticipated material impacts of the Merger are set forth below. No assurance can be given that the anticipated positive impacts of the Merger will be achieved. For information regarding the risks associated with an investment in KYN, see “Risk Factors.”

Questions Regarding the Merger

Q: What is being proposed?

A: The combination of KYN and KMF by means of a merger, pursuant to which KMF will be merged with and into a wholly owned subsidiary (“Merger Sub”) of KYN (the “Merger”). Pursuant to that certain Agreement and Plan of Merger, dated March 24, 2023, as amended and restated on April 24, 2023, by and among KYN and KMF (the “Merger Agreement”), KMF stockholders will be entitled to receive in exchange for each of their outstanding shares of KMF common stock either (i) shares of KYN common stock, which shall be based on the relative per share NAVs of KYN and KMF (i.e., the value received shall be equal to 100% of the NAV per share of the KMF common stock) (“Stock Consideration”), or (ii) an amount of cash equal to 95% of the NAV per share of the KMF common stock (“Cash Consideration”). KMF stockholders’ right to elect to receive Cash Consideration is subject to the adjustment and proration procedures set forth in the Merger Agreement to ensure that the total number of shares of KMF common stock converted into the right to receive Cash Consideration will not exceed 7,079,620 shares (representing 15% of the outstanding shares of KMF common stock prior to the closing of the Merger). In accordance with the opinion described in “Proposal One: Merger—Material U.S. Federal Income Tax Consequences of the Merger,” the Merger will qualify as a tax-free merger for federal income tax purposes. This means it is expected that stockholders will recognize no gain or loss for federal income tax purposes as a result of the Merger, except that gain (but not loss) will be recognized by KMF stockholders in an amount not to exceed the amount of cash received as part of the Cash Consideration (other than cash received in lieu of a fractional share) and gain or loss generally will be recognized by KMF stockholders with respect to cash received in lieu of fractional shares of KYN common stock. See below for a description of how the Stock Consideration and Cash Consideration are calculated.

Q: Why is the Merger being recommended by the Boards of Directors?

A: The KYN Board and the KMF Board have unanimously approved the Merger because they have determined that it is in the best interests of each Company and that the interests of the existing stockholders of each Company will not be diluted as a result of the Merger. In making this determination, the KYN Board and the KMF Board considered the expected benefits and principal risks of the transaction for each Company. In addition, the Boards considered the material differences between the Companies, specifically that (i) KYN has higher base management fee than KMF and as such KMF stockholders will be subject to an increased management fee immediately following the Merger, (ii) KYN, as a corporation for tax purposes, is subject to federal income tax, while KMF, which qualifies as a regulated investment company (a “RIC”), is generally not subject to federal income tax and (iii) KYN, because it is subject to federal income tax, has the ability to invest more than 25% of its total assets in MLPs, while KMF, as a RIC, does not. The Boards also considered the principal risks associated with these differences, as more fully described in “Risk Factors.” The Boards believe that the benefits of a combination outweigh the risks to the stockholders. Please see “Special Factors—Reasons for the Merger and Board Considerations.”

The Combined Company will pursue KYN’s investment objective which is to provide a high after-tax total return with an emphasis on making cash distributions to stockholders. The Combined Company intends to achieve this objective by investing at least 80% of total assets in the securities of Energy Infrastructure Companies. Please refer to the Glossary for the meaning of capitalized terms not otherwise defined herein.

Q: What are some of the material factors that the KYN Board and the KMF Board considered in determining that the Merger is in the best interests of the Companies?

A: For a description of the material factors that the KYN Board and the KMF Board considered in determining that the Merger is in the best interests of the Companies, please see “Special Factors—Reasons for the Merger and Board Considerations.”

Q: What are the material differences between the Companies?

A: The Boards recognize that while KYN and KMF have very similar fundamental investment limitations, principal investment policies, principal investment strategies and current portfolio holdings, there are some material differences between the Companies. Specifically, (i) KYN, as a corporation for tax purposes, is subject to federal income tax, while KMF, which qualifies as a regulated investment company (a “RIC”), is generally not subject to federal income tax and (ii) KYN, because it is subject to federal income tax, has the ability to invest more than 25% of its total assets in MLPs, while KMF, as a RIC, does not. KYN currently invests approximately half of its total assets in MLPs, while KMF invests slightly less than 25% of its total assets in MLPs. With respect to fundamental investment limitations, KYN’s investment concentration limitation excludes investments in the Energy Infrastructure Industry, while KYM’s excludes investments in Energy Companies. In addition, KYN has a higher base management fee than KMF and as such KMF stockholders will be subject to an increased management fee immediately following the Merger. The Boards also considered the principal risks associated with these differences, as more fully described in “Risk Factors.” The Boards believe that the benefits of a combination outweigh the risks to the stockholders.

Q: How is the leverage level of the Combined Company expected to compare to the leverage levels of KYN and KMF on a standalone basis?

A: The amount of leverage as a percentage of total assets following the Merger is not expected to materially change from that of each Company’s standalone leverage levels. The table below illustrates the leverage of each Company on both a standalone and pro forma basis.

As of May 31, 2023

For further information on the amount and types of leverage used by KYN and KMF, please see “Proposal One: Merger—Investment Objectives and Policies of KYN—Effects of Leverage.”

Q. How has KYN performed relative to KMF?

A: The performance table below illustrates the average annual total returns of an investment in each Company. These average annual returns are based on net asset values, which reflect the total expenses incurred at each Company for the periods presented and, for KYN, this includes the impact of income taxes.

The performance table below illustrates the average total returns of an investment in each Company based on market value.

Past performance does not predict future performance, and the tables above do not reflect the deduction of taxes that a stockholder would pay on distributions or the sale of shares of common stock. The investment return and principal value of an investment will fluctuate with changes market conditions and other factors so that an investor’s shares, when sold, may be worth more or less than their original cost.

Q: Is the Merger expected to be a taxable event for stockholders?

A: In accordance with the opinion described in “Proposal One: Merger—Material U.S. Federal Income Tax Consequences of the Merger,” the Merger will qualify as a tax-free merger for federal income tax purposes. This means it is expected that stockholders will recognize no gain or loss for federal income tax purposes as a result of the Merger, except that gain (but not loss) will be recognized by KMF stockholders in an amount not to exceed the amount of cash received as part of the Cash Consideration (other than cash received in lieu of a fractional share) and gain or loss generally will be recognized by KMF stockholders with respect to cash received in lieu of fractional shares of KYN common stock. If the Merger fails to qualify as a tax-free reorganization because KYN or KMF fail to meet the asset diversification tests of Section 368(a)(2)(F) of the Internal Revenue Code of 1986, as amended (the “Code”), or for any other reason, then the transaction will be taxable to the non-diversified investment company and its stockholders. See “Proposal One: Merger—Material U.S. Federal Income Tax Consequences of the Merger.”

Q: Will the Merger cause a change in value of KYN’s deferred tax liability?

A: The Merger should not result in any incremental net deferred income tax liability for KYN. KMF, as a regulated investment company (“RIC”), is not generally subject to federal income tax and as such does not have a deferred tax liability associated with unrealized gains on investments (nor any deferred tax asset associated with capital loss carryforwards). As of November 30, 2022, KMF had $402 million of capital loss carryforwards and an unrealized gain on investment for tax purposes of $100 million. As a RIC, KMF capital loss carryforwards would be eligible to be carried forward indefinitely and generally would not be limited. Following the Merger, all pre-Merger KMF capital losses would be subject to a five year carryforward period as applicable to taxable corporations. KYN, as a corporation, is obligated to pay federal and state income tax on its taxable income and accrues deferred income tax in accordance with the Income Tax Topic of the FASB Accounting Standards Codification (ASC 740). In the Merger, KYN as the tax acquirer will succeed to any capital loss carryforward that KMF has as of the time of the Merger. Any such capital loss carryforward acquired will be subject to certain limitations under the Code. It is KYN’s expectation that KMF capital losses available post-Merger will equal, if not exceed, the amount of the KMF net unrealized gain (if any) as of the Merger date such that KYN should not be required to increase its net deferred tax liability in connection with the Merger. Any KMF capital losses in excess of the limitations imposed by the Code will expire unused. As of May 31, 2023, the net value of the prospective benefit to KYN post-Merger of the KMF capital losses acquired was estimated to be a range of zero to $13 million. Post-Merger, KYN will continue to periodically assess whether or not a valuation allowance is required for any deferred tax assets that may exist in accordance with the Income Tax Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC 740). If a valuation allowance is required to reduce any deferred tax asset in the future, or if a valuation allowance is determined to no longer be necessary, this could have a material impact on KYN’s net asset value and results of operations in the period it is recorded.

Even though KYN is subject to federal income tax and may enjoy a future economic benefit of the capital losses acquired, the Boards did not deem it appropriate to ascribe any value to KMF’s capital losses as (i) the capital losses have no deferred tax value to KMF on a standalone basis, (ii) any value of the capital losses to KYN is contingent upon the successful completion of the Merger, (iii) the prospective value of the capital losses is dependent upon the realization of capital gains post-Merger (which may or may not occur) prior to the expiration of the KMF capital losses acquired, (iv) the expectation that the majority of the capital losses available post-Merger would likely be utilized to offset unrealized gains that might exist as of the Merger date, and (v) the potential value of the remaining portion of available capital losses is dependent upon future asset appreciation post-Merger (which may or may not occur). See “Material U.S. Federal Income Tax Consequences of the Merger”.

Q: Will the Merger have any impact on management fees?

A: As of May 31, 2023, KYN was subject to a management fee of 1.375% on its $1.8 billion of management fee total assets and KMF was subject to a management fee of 1.25% on its $0.5 billion of management fee total assets. Based on KMF’s current management fee, the Combined Company’s management fee as a percentage of net assets is expected to be higher than KMF’s standalone fee. Pro forma for the combination and assuming the maximum aggregate amount of Cash Consideration is elected, the Combined Company would have pro forma total assets for purposes of calculating the management fee of $2.2 billion, based on the Companies’ assets as of May 31, 2023.

Subject to and beginning at the completion of the Merger, KAFA has agreed to revise its existing contractual management fee waiver agreement (the “Tier Waiver”) with KYN to reduce the asset tiers for fee waivers. The Tier Waiver is reviewed annually by the Board of KYN and does not have a termination date. The initial asset tier for the Tier Waiver will be reset to the pro forma Combined Company total assets for purposes of calculating the management fee of as of the closing of the Merger (for example, if total assets of the Combined Company at closing are $2.5 billion, then the initial asset tier for the Tier Waiver will be set at $2.5 billion). The revised Tier Waiver will lower the effective management fee that KYN pays as its assets appreciate. There can be no guarantee that the Combined Company’s total assets will increase to levels for the asset tier fee waivers to be effective. The table below outlines the current and revised management fee waivers under the current and updated Tier Waiver assuming the Merger was completed on May 31, 2023:

In addition to reducing the Tier Waiver, KAFA has also separately contractually agreed to waive an additional amount of management fees (based on KYN and KMF assets at closing of the Merger) (the “Merger Waiver”) such that the pro forma fees payable to KAFA are equal to the aggregate management fees payable if KYN and KMF had remained standalone companies. The Merger Waiver will last for three years from the closing of the Merger so long as KAFA is the Combined Company’s investment adviser and is estimated to be approximately $0.6 million per year (i.e., the product of KMF’s total assets for purposes of calculating KMF’s management fee multiplied by 0.125%) based on KYN and KMF assets as of May 31, 2023. The updated Tier Waiver and the new Merger Waiver would be effective as of the closing of the Merger and would not be subject to recoupment, either with respect to KYN, KMF or the Combined Company. If the investment management agreement, Tier Waiver and/or Merger Waiver were to be terminated, the management fee payable by the Combined Company could increase.

Q: How are distributions to KYN stockholders treated for tax purposes and how does that compare to the tax treatment of distributions to KMF stockholders?

A: As a corporation, the tax character of KYN distributions paid is generally either taxable dividends (eligible to be treated as “qualified dividend income”) or return of capital. See “Certain Federal Income Tax Matters—U.S. Federal Income Taxation of Holders of Our Common Stock”. As a RIC, the tax character of KMF distributions paid may be ordinary income, qualified dividend income, capital gains or return of capital. The tax character of each Company’s common distributions for fiscal 2022 and since their inception is included below.

We cannot assure you what percentage of the distributions paid on the pro forma Combined Company’s common stock, if any, will be treated as tax-advantaged qualified dividend income or tax-deferred return of capital in the future. Historically, more of KYN’s distributions to its stockholder has been classified as tax-advantaged qualified dividend income and tax-deferred return of capital as compared to distributions paid to KMF stockholders. As a stockholder of KYN, provided that you meet the requisite holding period requirement (and certain other requirements), taxable dividends should be eligible to be treated as tax-advantaged qualified dividend income and not ordinary income. Qualified dividend income is taxed at lower capital gain rates. The final tax characterization of distributions paid in future periods will depend on the earnings and profits of the Combined Company in any given year. Historically, a portion of the cash distributions received from KYN’s and KMF’s portfolio investments was characterized as a return of capital which contributed to the amount of return of capital that KYN and KMF have paid to their respective stockholders. A reduction in the return of capital portion of the distributions received from KYN and KMF portfolio investments (or an increase in each Company’s earnings and profits) may reduce the portion of the distribution paid by KYN and KMF that is treated as a tax-deferred return of capital. A “return of capital” represents a return of a stockholder’s original investment and should not be confused with a dividend from earnings and profits.

See “Risk Factors—Risks Related to Our Business and Structure—Tax Risks” and “Proposal One: Merger—Certain Federal Income Tax Matters—U.S. Federal Income Taxation of Holders of Our Common Stock.”

Q: How will the Merger affect KYN and KMF common stockholders, including with respect to taxable income, tax basis and holding period?

A: KYN stockholders will remain stockholders of KYN. KMF stockholders who receive Stock Consideration will become stockholders of KYN and will recognize no gain or loss (except with respect to cash received in lieu of a

fractional share of KYN common stock). Such KMF stockholders will have the same aggregate tax basis in its KYN

common stock as it did its KMF shares surrendered in exchange therefor (reduced by any amount of tax basis

allocable to a fractional share of common stock for which cash is received). Furthermore, for KMF stockholders that receive KYN shares pursuant to the Merger, the holding period for such KYN shares received will include the holding period of the KMF shares surrendered in exchange therefor. KMF will then cease its separate existence under Maryland law.

Q: What will happen to the shares of KYN that I currently own as a result of the Merger?

A: For KYN stockholders, your currently issued and outstanding shares of common and preferred stock of KYN will remain unchanged.

Q: What will happen to the common shares of KMF that I currently own as a result of the Merger?

A: KMF common stockholders will be entitled to receive in exchange for each of their outstanding shares of KMF common stock either (i) shares of KYN common stock, which shall be based on the relative per share NAVs of KYN and KMF (i.e., the value received shall be equal to 100% of the NAV per share of the KMF common stock), which is referred to as the Stock Consideration, or (ii) an amount of cash equal to 95% of the NAV per share of the KMF common stock, which is referred to as the Cash Consideration (see below for a description of how the Stock Consideration and the Cash Consideration are calculated). If you make no election or an untimely election, or are otherwise deemed not to have submitted an effective form of election, you will receive the Stock Consideration. Your right to elect to receive the Cash Consideration is subject to the adjustment and proration procedures set forth in the Merger Agreement to ensure that the total number of shares of KMF common stock converted into the right to receive cash consideration will not exceed 7,079,620 shares (representing 15% of the outstanding shares of KMF common stock prior to the closing of the Merger). The precise consideration that you will receive if you elect to receive Cash Consideration will not be known at the time that you vote on the approval of the Merger or make an election because it is dependent upon the per share NAV of KMF prior to the closing of the Merger and is subject to proration. No fractional shares of KYN common stock will be issued in the Merger; instead KMF stockholders will receive cash in an amount equal to the value of the fractional shares of KYN common stock that they would otherwise have received.

Q: What will happen to the preferred shares of KMF that I currently own as a result of the Merger?

A: KMF preferred stockholders will receive, on a one-for-one basis, newly issued KYN preferred shares having substantially identical terms as the KMF preferred shares you held immediately prior to the closing of the Merger.

Q: How are the Stock Consideration and the Cash Consideration determined?

A: The Stock Consideration will be determined based on the relative NAVs per share of each Company on the business day prior to the closing of the Merger. As of May 31, 2023, KYN’s NAV per share was $9.47 and KMF’s was $8.24. For illustrative purposes, if these were the NAVs on the business day prior to closing of the Merger, then KMF common stockholders who elect Stock Consideration would be issued approximately 0.870 shares of KYN for each share of KMF.

The Cash Consideration will be determined based on the NAV per share of the KMF common stock on the business day prior to the closing of the Merger (and will equal 95% of the NAV per share). For illustrative purposes, if the NAV per share of KMF as of May 31, 2023 was the NAV on the business day prior to closing of the Merger, then KMF common stockholders who elect Cash Consideration would receive approximately $7.83 for each share of KMF subject to proration.

Q: How will the net asset values utilized in calculating the Stock Consideration and the Cash Consideration be determined?

A: The net asset value of a share of common stock of each Company will be calculated in a manner consistent with past practice and will include the impact of each Company’s share of the costs of the Merger. Each of KYN and KMF use the same methodology for determining net asset value, as described in “Proposal One: Merger—Net Asset Value.” In addition, please see “Proposal One: Merger—Information About the Merger.”

Q: If I elect to receive Cash Consideration, under what circumstances will my Cash Consideration be prorated and how will the proration be calculated?

A: In the event that KMF stockholders elect to receive Cash Consideration for an aggregate number of shares of KMF common stock, which are referred to as cash election shares, in excess of 7,079,620 shares (representing 15% of the outstanding shares of KMF common stock prior to the closing of the Merger), all cash election shares will be converted into the right to receive Stock Consideration or Cash Consideration as follows:

The number of cash election shares of a holder of KMF common stock that are to remain cash election shares pursuant to the calculation described above will be rounded downward where needed. The calculations described above will be performed by American Stock Transfer & Trust Company, KYN’s and KMF’s transfer agent (the “Exchange Agent”).

Q: How do I make an election to receive Cash Consideration or Stock Consideration for my shares of KMF common stock?

A: Prior to the closing of the Merger, the Exchange Agent will provide a form of election and appropriate transmittal materials to holders of record of shares of KMF common stock advising such holders of the procedure for exercising their right to make an election. If you hold shares of KMF common stock in street name, you will need to follow the procedures established by your broker, bank or other nominee in order to make an election. Once you make an election, it is likely that you will be unable to trade your shares unless you properly revoke the election. Further, for the period of time after the deadline to make such an election occurs and prior to the Merger closing, you will not be able to change nor revoke any such election.

Q: What is the deadline for submitting an election?

A: To be effective, a form of election must be properly completed, signed and submitted to the Exchange Agent by 5:00 PM (Eastern Time) on the business day that is five trading days prior to the closing date for the Merger, or such other date and time as KYN may publicly announce with the consent of KMF, which is referred to as the election deadline. You can revoke your election before the election deadline by written notice that is sent to and received by the Exchange Agent prior to the election deadline.

Q: What happens if I don’t make an election?

A: A holder of shares of KMF common stock who makes no election or an untimely election, or is otherwise deemed not to have submitted an effective form of election, or who has validly revoked his or her merger consideration election but has not properly submitted a new duly completed form of election, will be deemed to have made a stock election.

Q: How will KYN fund the cash portion of the per share merger consideration?

A: KYN expects to fund the cash portion of the per share merger consideration with cash on hand, securities sales, additional borrowings under its unsecured credit facility, or some combination thereof. Upon closing of the Merger, we do not expect the Combined Company leverage levels to vary materially from that of KYN or KMF on a standalone basis. See “Special Factors—Financing of the Cash Consideration.”

Q: Will I have to pay any sales load, commission or other similar fees in connection with the Merger?

A: No, you will not pay any sales loads or commissions in connection with the Merger.

Q: How will the costs associated with the proposed Merger be allocated?

A: The Companies will bear the costs associated with the proposed Merger whether or not the Merger is completed. In accordance with the terms of the Merger Agreement, costs will be allocated 50% to KYN and 50% to KMF. Costs related to the Merger are currently estimated to be approximately $1.8 million or 0.1% of pro forma Combined Company net assets, which equates to $0.9 million or $0.01 per share for KYN on a standalone basis and $0.9 million or $0.02 per share for KMF on a standalone basis as of May 31, 2023. The costs associated with the Merger include all estimated costs expected to be borne by the common stockholders of the Companies other than costs associated with portfolio rebalancing (i.e., trading costs which include brokerage commissions and other transactional expenses). Costs associated with portfolio rebalancing would be borne by each Company (and ultimately by each Company’s common stockholders) based on their respective portfolio turnover; however, the Companies believe that any portfolio rebalancing costs would not be material to the Combined Company.

Q: Who do we expect to vote on the Merger and the issuance of additional KYN common stock in connection with the Merger?

A: KMF’s common and preferred stockholders are being asked to vote, together as a single class, on the Merger. KYN’s common and preferred stockholders are being asked to vote, together as a single class, to approve the issuance of KYN shares required to complete the Merger.

Q: What is the deadline for voting on the Merger and the issuance of KYN common stock in connection with the Merger?

A: In order to be counted, your vote must be received by the KMF Special Meeting and KYN Special Meeting, or any adjournment, as applicable, to be held at 8:00 a.m. Central Time on           , 2023.

Q: What happens if KMF stockholders do not approve the Merger or KYN stockholders do not approve the issuance of additional shares of KYN common stock in connection therewith?

A: The Merger must be approved by KMF’s common and preferred stockholders, voting together as a single class. In addition, the issuance of additional shares of KYN common stock in connection with the Merger must be approved by KYN’s common and preferred stockholders, voting together as a single class. If KMF stockholders do not approve the Merger, or if KYN stockholders do not approve the issuance of additional KYN common stock in connection therewith, then the Merger will not take place and KYN and KMF will continue to operate as separate entities. Further, if the Merger is not approved, KYN’s current asset tiers for fee waivers will remain in effect.

Q: What is the timetable for the Merger?

A: The Merger is expected to take effect prior to the end of fiscal 2023, following the receipt of stockholder approvals and once other customary conditions to closing are satisfied.

General Questions

Q: How do the KYN Board and the KMF Board suggest that I vote?

A: After careful consideration, the KYN Board and the KMF Board recommend that you vote “FOR” all proposals on the enclosed proxy card for which you are entitled to vote.

Q: How do I vote my shares?

A: Voting is quick and easy. You may vote your shares via the internet or by telephone by following the instructions on the proxy card, or by simply completing and signing the enclosed proxy card, and mailing it in the postage-paid envelope included in this package. You may also vote in person if you are able to attend the Meeting. However, even if you plan to attend the Meeting, we urge you to cast your vote early. That will ensure your vote is counted should your plans change.

Q: Whom do I contact for further information?

A: You may contact your financial advisor for further information. You may also call AST Fund Solutions, the Companies’ proxy solicitor, at (877) 871-1741. Representatives are available to assist you Monday through Friday 9 a.m. to 10 p.m. Eastern time.

Q: Will anyone contact me?

A: You may receive a call from AST Fund Solutions, the Companies’ proxy solicitor, to verify that you received your proxy materials, to answer any questions you may have about the proposals and to encourage you to authorize your proxy. We recognize the inconvenience of the proxy solicitation process and would not impose it on you if we did not believe that the matters being proposed were important. Once your vote has been registered with the proxy solicitor, your name will be removed from the solicitor’s follow-up contact list.

Your vote is very important. We encourage you as a stockholder to participate in the Companies’ governance by authorizing a proxy to vote your shares as soon as possible. If enough stockholders fail to cast their votes, the Companies may not be able to hold the Meeting or to call for a vote on each issue, and will be required to incur additional solicitation costs in order to obtain sufficient stockholder participation.

SPECIAL FACTORS

Effects of the Merger

The KMF Board, including the Independent Directors, has unanimously approved the Merger Agreement, determined the Merger to be in the best interests of KMF and directed that the Merger proposal be submitted to the KMF stockholders for consideration. Similarly, the KYN Board, including the Independent Directors, has unanimously approved the Merger Agreement, determined the Merger to be in the best interests of KYN and directed that the proposal approving the issuance of additional shares of KYN common stock in connection with the Merger be submitted to the KYN stockholders for consideration. Upon the closing of the Merger, KMF will be merged with and into a wholly owned subsidiary (“Merger Sub”) of KYN (the “Merger”). Pursuant to the Merger Agreement, KMF stockholders will be entitled to receive in exchange for each of their outstanding shares of KMF common stock either (i) shares of KYN common stock, which shall be based on the relative per share NAVs of KYN and KMF (i.e., the value received shall be equal to 100% of the NAV per share of the KMF common stock) (“Stock Consideration”), or (ii) an amount of cash equal to 95% of the NAV per share of the KMF common stock (“Cash Consideration”). No fractional shares of KYN common stock will be issued in the Merger; instead KMF stockholders will receive cash in an amount equal to the value of the fractional shares of KYN common stock that they would otherwise have received. KMF stockholders’ right to elect to receive Cash Consideration is subject to the adjustment and proration procedures set forth in the Merger Agreement to ensure that the total number of shares of KMF common stock converted into the right to receive Cash Consideration will not exceed 7,079,620 shares (representing 15% of the outstanding shares of KMF common stock prior to the closing of the Merger). KMF will then cease its separate existence under Maryland law and terminate its registration under the 1940 Act. Immediately following the Merger, it is expected that Merger Sub will be merged with and into KYN. The aggregate NAV of KYN common stock received by KMF common stockholders receiving Stock Consideration in the Merger will equal the aggregate NAV of the exchanged KMF common stock (excluding cash distributed by KYN for fractional shares). KYN will be the accounting survivor following the closing of the Merger and will continue to operate after the Merger as a registered, non-diversified, closed-end management investment company with the investment objectives and policies described in this joint proxy statement/prospectus.

In connection with the Merger, each holder of KMF Mandatory Redeemable Preferred Shares (“MRP Shares”) will receive in a private placement an equivalent number of newly issued KYN MRP Shares, each having substantially identical terms as the respective KMF MRP Shares. The aggregate liquidation preference of the KYN MRP Shares received by the holders of KMF MRP Shares in the Merger will equal the aggregate liquidation preference of the KMF MRP Shares held immediately prior to the closing of the Merger. The KYN MRP Shares to be issued in the Merger will have equal priority with KYN’s existing outstanding preferred shares as to the payment of dividends and the distribution of assets in the event of a liquidation of KYN. In addition, the preferred shares of KYN, including the KYN MRP Shares to be issued in connection with the Merger, will be senior in priority to KYN common shares as to payment of dividends and the distribution of assets in the event of a liquidation of KYN.

If the Merger is not approved by stockholders of KMF, or if the issuance of additional KYN common stock in connection with the Merger is not approved by the stockholders of KYN, KYN and KMF will each continue to operate as a standalone Maryland corporation advised by KAFA and will each continue its investment activities in the normal course. Further, if the Merger is not approved, KYN’s current asset tiers for fee waivers will remain in effect.

Background of the Merger

During the fourth quarter of 2019, KAFA began evaluating the investment mandates of KYN and KMF and whether any strategic alternatives for either fund should be considered for recommendation to the KYN Board and the KMF Board (together, the “Boards”).

At a regular quarterly joint meeting of the Boards on December 17, 2019, representatives of KAFA presented materials to the Boards reviewing each Company’s investment objective and policies. The KAFA representatives and members of the Boards discussed the merits of a potential change to each Company’s investment mandate as well as certain other strategic alternatives each Company could consider (including a potential merger of KYN and KMF). At the Boards’ direction, KAFA representatives agreed to prepare analysis on these topics to be presented at future meetings.

At a regular quarterly joint meeting of the Boards on April 1, 2020, KAFA representatives presented further thoughts on potential strategic alternatives for the Companies, including (i) maintaining KMF’s then current investment mandate, (ii) changing KMF’s investment mandate to focus on investment opportunities associated with the “energy transition” (which is the term KAFA uses to describe the energy sector’s transition to a more sustainable mix of lower carbon and renewable energy sources that results in reduced emissions of carbon dioxide and other greenhouse gases over the next 20 to 30 years) and (iii) a potential merger of KMF with and into KYN. In light of the market uncertainty related to COVID-19, the KAFA representatives did not make any specific recommendations and the Boards determined further analysis on strategic alternatives was to be performed.

At a regular quarterly joint meeting of the Boards on June 24, 2020, KAFA representatives again presented materials on the various alternatives, including (i) potential changes to the investment objectives and policies of both Companies, (ii) repositioning KMF to focus on the “energy transition” and (iii) merging KMF with and into KYN. The Boards determined that the best course of action was to reposition KMF as focused on “energy transition,” with a follow up meeting scheduled to review the final recommendations.

On July 23, 2020, the Boards convened a joint special meeting, together with representatives of KAFA. At the meeting, the KAFA representatives reviewed KAFA’s recommendation to rename KMF as “Kayne Anderson NextGen Energy & Infrastructure” and reposition KMF as focused on the ”energy transition” (including recommendations to modify its non-fundamental investment policies accordingly) and to rename KYN as “Kayne Anderson Energy Infrastructure Fund, Inc.” and modify its investment objective and non-fundamental investment policies accordingly. After consideration, the Boards approved these changes.

On July 27, 2020, both Companies announced their strategic updates, including their name changes and revisions to their investment policies.

During the remainder of fiscal 2020, and through fiscal year 2021, the Boards, with input and analysis from KAFA representatives, continued to assess the viability of KMF as a differentiated fund and whether the shift in its strategic focus was being recognized and embraced by KMF’s investors.

At a regular quarterly joint meeting of the Boards on June 23, 2021, KAFA representatives presented materials regarding the distribution philosophy for both KYN and KMF. At the meeting, upon KAFA’s recommendation, the Boards declared an increase in the distribution level at each fund (for KYN, increasing the per share distribution from $0.15 to $0.175 – representing a 17% increase in the per share distribution level; and for KMF, increasing the per share distribution from $0.09 to $0.14 – representing a 56% increase in the per share distribution level). The distribution increases were intended to help address the market price to NAV discounts (with the expectation that the increased distribution level would result in a tighter market price to NAV discount) and reward each Company’s long-term stockholders. As it relates to KMF, the KMF Board concluded, based on KAFA’s recommendation, that an enhanced distribution would increase the probability that investors would embrace the fund’s investment strategy.

On March 7, 2022, KYN completed its merger with Fiduciary/Claymore Energy Infrastructure Fund (NYSE:FMO), emphasizing KYN’s role as the largest closed-end fund in the energy infrastructure sector and its position as a natural consolidator of closed-end funds investing in these types of companies.

At a regular quarterly joint meeting of the Boards on March 29, 2022, KAFA representatives presented materials to the Boards reviewing market price to NAV trading discounts, the number and size of the various closed-end funds in the energy infrastructure space, activist activity and KYN’s desire to acquire additional energy infrastructure closed-end funds. As a part of these discussions, the KAFA representatives questioned whether the shift in strategy at KMF resonated with its investors given its persistent trading discount and whether alternatives – including a potential merger with KYN – should be considered. The KAFA representatives recommended, and the KMF Board ultimately declared, an increase in KMF’s quarterly distribution from $0.14 per share to $0.16 per share in an effort to address the market price to NAV discount and to reward KMF’s long-term stockholders. The Boards requested further analysis on the various tax attributes of each Company from the KAFA representatives to be presented at the next quarterly joint meeting of the Boards.

At a regular quarterly joint meeting of the Board on June 22, 2022, KAFA representatives presented materials to the Boards on the tax attributes of KYN (which operates as a taxable corporation) and KMF (which qualifies as a regulated investment company or “RIC”). The KAFA representatives reviewed KMF’s market price to NAV discount and further discussed what actions could be taken to address the discount.

At a regular quarterly joint meeting of the Boards on September 21, 2022, KAFA representatives presented an update on closed-end fund activism in the energy infrastructure space and discussed the various alternatives that KMF could take to address its market price to NAV discount. KYN was discussed as the consolidator of choice for closed-end funds in the energy infrastructure sector and an analysis of the potential overlap of stockholders between KYN and KMF was discussed.

At a regular quarterly joint meeting of the Boards on December 14, 2022, KAFA representatives presented materials reviewing KMF’s performance since its name change and revisions to its investment policies in July of 2020 and discussed various strategic alternatives for the KMF Board to consider, including whether to revise KMF’s strategy further or pursue a combination with KYN. As a part of these discussions, the KAFA representatives provided further analysis to the Boards on the potential combination of the Companies and recommended pursuing this merger. The Boards considered the materials presented and recommendations made by KAFA and requested a special follow up meeting to address the questions raised and review the potential merger in more detail, but the Boards did not make an official determination to pursue any of the strategic alternatives at that time.

On February 17, 2023, the Boards held a special joint meeting at which KAFA representatives were present. At the meeting, the KAFA representatives presented two strategic alternatives: (i) maintaining KMF’s current strategy or (ii) pursuing a combination of KMF with KYN. At the meeting, the KAFA representatives provided feedback from the investment community on KMF’s current strategy concluding (i) that the strategy was not as well understood by the investors and investment analysts sampled as KYN’s strategy was understood and (ii) that an investment strategy principally focused on midstream investments, including master limited partnerships (like KYN’s investment strategy) would resonate best with the largest group of existing and potential investors. The KAFA representatives further noted the persistent market price to NAV discount at KMF and increased shareholder activism across the sector. At this meeting, KAFA representatives reiterated their recommendation for the Companies to pursue the merger and provided an analysis of the proposed combination including a review of the Combined Company’s pro forma portfolio positioning, a summary term sheet including the mechanics of a possible combination which at the time was contemplated to be effected with stock on an NAV-for-NAV exchange, a draft timeline for the approval of a combination, and the expected and potential benefits of the transaction to both KYN and KMF’s stockholders.

In the interim between the February 17, 2023 and February 28, 2023 meetings, the independent directors on the Boards jointly retained Dechert LLP (“Dechert”) to represent and advise them as their independent legal counsel.

On February 20, 2023, Dechert provided the KAFA representatives with follow up questions and additional analyses that the Boards requested with respect to the proposed combination including further details on operating expenses and potential synergies to be realized in a combination, questions regarding the proposed revisions to KYN’s management fee, tax implications of stockholders holding shares of KYN and KMF, historical information regarding trading discounts at KYN as compared to KMF, projected expenses to be incurred in connection with a proposed combination, more details on the potential benefits for KYN’s and KMF’s stockholders, historical information on buyback programs and their potential impact on trading discounts, considerations of other strategic alternatives, and a summary of the capital structure of each KYN, KMF and the pro forma Combined Company.

On February 24, 2023, Dechert provided the KAFA representatives with further questions regarding expenses, the taxability of the proposed combination and the pro forma tax treatment of the Combined Company, the allocation of expenses related to the proposed combination, and information regarding any impacts to KMF’s leverage as a result of the transaction.

On February 28, 2023, the Boards held a joint special meeting together with representatives of KAFA. At the meeting, the KAFA representatives addressed all of the Boards’ requests and questions, including all of the follow-up questions previously provided. The KAFA representatives presented materials explaining the stockholder approvals needed and illustrative stockholder vote outcomes. The KAFA representatives presented a revised term sheet for the proposed merger describing a proposed tender offer to be consummated upon stockholder approval, an increase to KYN’s distribution rate from $0.20 per share to $0.21 per share to be announced in connection with the proposed combination and a further recommendation to propose increasing the KYN distribution to $0.22 upon completion of the proposed combination, the asset tiers for fee waivers at KYN to be effective upon the closing of the proposed combination, and a three-year fee waiver by KYN following the proposed combination.

On March 14, 2023, the Boards held a joint special meeting together with representatives of KAFA. At the meeting, the KAFA representatives reviewed further revised terms for the proposed combination of KYN and KMF, the timeline for a proposed announcement, the establishment of a record date, draft approvals of matters relating to the proposed combination, including the approval of the combination and the issuance of shares of KYN, and approval of a proposed tender offer to be consummated upon stockholder approval of the proposed combination. The Boards considered various factors relating to the proposed combination including but not limited to the following: (a) the potential benefits resulting from the combination of KMF with KYN; (b) the compatibility of investment objectives, policies, restrictions and investment holdings of KMF with KYN; and (c) any direct or indirect costs to be incurred by KMF, KYN and their respective stockholders. The Boards, including a majority of the Independent Directors, acknowledged that KYN and KMF will rely on Rule 17a-8 under the Investment Company Act of 1940, as amended (the “1940 Act”) to effect the proposed combination, and the Boards determined, on the basis of the information presented, that the proposed combination would be in the best interests of each of KYN and KMF, and that the interests of the stockholders of each of KYN and KMF would not be diluted, on the basis of net asset value per share, as a result of the proposed combination. Subject to the receipt by the Boards of certain additional specified information, at this meeting, the Boards authorized the KAFA representatives to proceed with the proposed combination under the terms discussed. The KAFA representatives agreed to provide the Boards with various final versions of the merger related agreements and disclosures to reflect the terms and conditions discussed at that meeting.

On March 24, 2023, the Boards held a joint special meeting together with representatives of KAFA. At the meeting, the KAFA representatives presented the Boards with various final merger related agreements, disclosures, and management further discussed the proposal with the Boards. At this meeting the Boards unanimously approved the proposed combination and various related actions.

On March 27, 2023, the Companies announced the proposed combination of KMF and KYN. On the same date, KYN filed a preliminary Registration Statement on Form N-14 with the Securities and Exchange Commission.

On April 13, 2023, after further review of the proposed structure, and discussion with counsel, KAFA and the Boards undertook revising the structure of the transaction in an effort to provide a similar economic outcome for KMF and KYN stockholders to the previously announced merger agreement and contemplated tender offer for up to 15% of the outstanding common stock of KMF at 95% of NAV per share. The new transaction structure eliminated the tender offer but was revised so that KMF common stockholders could elect to receive either (i) shares of KYN common stock, which shall be based on the relative per share NAVs of KYN and KMF (i.e., the value received shall be equal to 100% of the NAV per share of the KMF common stock) (“Stock Consideration”), or (ii) an amount of cash equal to 95% of the NAV per share of the KMF common stock (“Cash Consideration”). Cash Consideration was proposed to be subject to proration to ensure that the total number of shares of KMF common stock converted into the right to receive Cash Consideration would not exceed 15% of the outstanding shares of KMF common stock prior to the closing of the Merger. KAFA performed further diligence on the revised structure, including analyzing the legal and tax implications and regulatory requirements. Although the Cash Consideration available to the stockholders of KMF will be equal to 95% of the NAV of KMF common stock for which stockholders elect to receive Cash Consideration, KMF’s Board did not consider that feature to prevent reliance on Rule 17a-8. This is primarily because Cash Consideration is an optional choice for KMF’s stockholders; that is, stockholders are not required to accept Cash Consideration. The five percent discount for Cash Consideration relative to NAV was not regarded as a material discount that would constitute dilution. In addition, the elective Cash Consideration feature is, in substance, a mechanism for stockholders to sell their KMF stock at a price that exceeds, based on recent market conditions, what they could obtain for that stock, or the KYN stock they would receive in exchange through an open-market transaction through a broker and, therefore, would increase their proceeds rather than dilute them.

On April 16, 2023, the Boards held a joint special meeting together with representatives of KAFA. At the meeting, the KAFA representatives outlined the framework of this new structure. The Boards concluded that KAFA should complete its diligence on the revised structure and pursue revising the transaction structure.

On April 21, 2023, the Boards convened a joint special meeting that included representatives of KAFA. At the meeting, the KAFA representatives provided the Boards with a summary of its findings. KAFA explained why it considered the revised merger structure to be substantially economically equivalent to the previously announced construct, and that it had been advised by Paul Hastings LLP (counsel to KAFA, KYN and KMF) about the securities law filings and disclosure that would be necessary to proceed with the new structure.

On April 24, 2023, the Boards unanimously approved the parties’ entry into the revised merger. In connection with such approval, the Boards reiterated their conclusions from the March 14, 2023 special meeting, including the proposed combination being in the best interests of each of KYN and KMF, and concluded that the change in structure did not affect its conclusions. On the same date, KYN and KMF announced the revised merger agreement.

Reasons for the Merger and Board Considerations

The KYN Board and the KMF Board have unanimously approved the Merger because they have determined that the Merger is in the best interests of each Company and that the interests of the existing stockholders of each Company will not be diluted as a result of the Merger. In making this determination, the KYN Board and the KMF Board considered the expected benefits and principal risks of the transaction for each Company. In addition, the Boards considered the material differences between the Companies, specifically that (i) KYN has higher base management fee than KMF and as such KMF stockholders will be subject to an increased management fee immediately following the Merger, (ii) KYN , as a corporation for tax purposes, is subject to federal income tax, while KMF, which qualifies as a regulated investment company (a “RIC”), is generally not subject to federal income tax and (iii) KYN, because it is subject to federal income tax, has the ability to invest more than 25% of its total assets in MLPs, while KMF, as a RIC, does not. The Boards also considered the principal risks associated with these differences, as more fully described in “Risk Factors.” The Boards believe that the benefits of a combination outweigh the risks to the stockholders.

The Combined Company will pursue KYN’s investment objective which is to provide a high after-tax total return with an emphasis on making cash distributions to stockholders. The Combined Company intends to achieve this objective by investing at least 80% of total assets in the securities of Energy Infrastructure Companies. Please refer to the Glossary for the meaning of capitalized terms not otherwise defined herein.

In the course of their consideration of the Merger, the Boards considered and discussed matters relating to the Merger at executive sessions and meetings of the Boards (collectively, the “Board meetings”) (as further described under “—Background of the Merger”). In advance of the Board meetings, KAFA provided detailed information to the Boards about the proposed Merger and responded to a number of questions and additional requests for information from the Boards.

In addition, at or prior to the Board meetings, the Boards met with representatives of KAFA, KAFA’s legal counsel and counsel to the Companies (Paul Hastings LLP) and their independent legal counsel (Dechert LLP). The Independent Directors met separately several times with their independent legal counsel to consider and discuss the Merger. KAFA recommended that the Boards approve the Merger and in the course of deliberations, KAFA agreed to support a fee waiver as described under “—Potential for reduced management fee in the future as assets appreciate, due to revised KYN management fee waiver,” and to offer KMF stockholders the right to elect to receive either (i) Stock Consideration or (ii) Cash Consideration (subject to adjustment and proration). The Boards reviewed the Merger with respect to the interests of both Companies in mind. After careful consideration, the Boards, including the Independent Directors of each, unanimously approved the Merger for both Companies.

In unanimously approving the Merger and recommending that stockholders of KMF approve the Merger and stockholders of KYN approve the issuance of additional KYN common stock in connection with the Merger, the Boards, including the Independent Directors of each, determined that participation in the Merger is in the best interests of both Companies and that the interests of the existing stockholders of both Companies will not be diluted as a result of the Merger. The determination to approve the Merger was made on the basis of each director’s business judgment after consideration of all of the factors deemed relevant to the director taken as a whole, though individual directors may have placed different weights on certain factors.

The material factors that the Boards considered in determining that the Merger is in the best interests of both Companies include:

The Boards recognize that while KYN and KMF have very similar fundamental investment limitations, principal investment policies, principal investment strategies and current portfolio holdings, there are some material differences between the Companies. Specifically, (i) KYN, as a corporation for tax purposes, is subject to federal income tax, while KMF, which qualifies as a regulated investment company (a “RIC”), is generally not subject to federal income tax and (ii) KYN, because it is subject to federal income tax, has the ability to invest more than 25% of its total assets in MLPs, while KMF, as a RIC, does not. KYN currently invests approximately half of its total assets in MLPs, while KMF invests slightly less than 25% of its total assets in MLPs. With respect to fundamental investment limitations, KYN’s investment concentration limitation excludes investments in the Energy Infrastructure Industry, while KYM’s excludes investments in Energy Companies. In addition, KYN has a higher base management fee than KMF and as such KMF stockholders will be subject to an increased management fee immediately following the Merger. The Boards also considered the principal risks associated with these differences, as more fully described in “Risk Factors.” The Boards believe that the benefits of a combination outweigh the risks to the stockholders.

Currently, KYN pays a quarterly cash distribution of $0.21 per share ($0.84 on an annualized basis) or an annualized distribution rate as a percentage of net asset value (“NAV”) per share of 8.9%. Currently, KMF pays a quarterly cash distribution of $0.16 per share ($0.64 share on an annualized basis) or an annualized distribution rate as a percentage of NAV per share of 7.8%. Based on these distribution levels, the Merger may result in an increase to the distribution received by KMF’s common stockholders of approximately $0.09 on an annualized basis, or approximately 14% greater than KMF’s current annualized distribution rate. Upon closing of the Merger, KYN’s management plans to recommend a $0.01 per share increase in KYN’s quarterly distribution (to a quarterly rate of $0.22 per share), which if approved by the KYN Board, would increase KYN’s distribution to an annualized rate of $0.88 per share. This would result in an approximate 20% increase in the current annualized distribution received by KMF’s common stockholders. This increase is based on KMF’s per share distribution rate pro forma for the Merger ($0.191 per share) relative to KMF’s current per share distribution rate ($0.16 per share). However, the proposed increase in KMF’s distribution level is not certain as payment of future distributions is subject to the KYN Board’s approval, as well as meeting the covenants of KYN’s debt agreements and terms of its preferred stock. There can be no guarantee that the KYN quarterly distribution will ultimately increase (due to changes in market conditions or otherwise) or that it would not subsequently decrease.

These estimates are based on the relative NAV per share of the Companies as of May 31, 2023, which would have resulted in an exchange ratio of approximately 0.870 shares of KYN for each share of KMF. The exchange ratio will be determined based on the relative NAV per share of each Company on the business day prior to closing of the Merger. Historically, a portion of the distributions paid to common stockholders of KYN and KMF has been classified as a return of capital. The final tax characterization of distributions paid in future periods will depend on the earnings and profits of the Combined Company in any given year. A “return of capital” represents a return of a stockholder’s original investment and should not be confused with a dividend from earnings and profits. In addition, a “return of capital” distribution should not be considered a total or complete return of your investment, and any payment of distributions would only be made after the payment of fees and expenses. See “Questions and Answers—Q: How are distributions to KYN stockholders treated for tax purposes and how does that compare to distributions to KMF stockholders” and “Risk Factors—Risks Related to Our Business and Structure—Tax Risks” and “Proposal One: Merger—Certain Federal Income Tax Matters—U.S. Federal Income Taxation of Holders of Our Common Stock.”

The tax character of each Company’s common distributions for fiscal 2022 and since their inception is included below.

We cannot assure you what percentage of the distributions paid on the pro forma Combined Company’s common stock, if any, will be treated as tax-advantaged qualified dividend income or tax-deferred return of capital in the future. Historically, more of KYN’s distributions to its stockholder has been classified as tax-advantaged qualified dividend income and tax-deferred return of capital as compared to distributions paid to KMF stockholders. As a stockholder of KYN, provided that you meet the requisite holding period requirement (and certain other requirements), taxable dividends should be eligible to be treated as tax-advantaged qualified dividend income and not ordinary income. Qualified dividend income is taxed at lower capital gain rates. The final tax characterization of distributions paid in future periods will depend on the earnings and profits of the Combined Company in any given year. Historically, a portion of the cash distributions received from KYN’s and KMF’s portfolio investments was characterized as a return of capital which contributed to the amount of return of capital that KYN and KMF have paid to their respective stockholders. A reduction in the return of capital portion of the distributions received from KYN and KMF portfolio investments (or an increase in each Company’s earnings and profits) may reduce the portion of the distribution paid by KYN and KMF that is treated as a tax-deferred return of capital. A “return of capital” represents a return of a stockholder’s original investment and should not be confused with a dividend from earnings and profits.

See “Risk Factors—Risks Related to Our Business and Structure—Tax Risks” and “Proposal One: Merger—Certain Federal Income Tax Matters—U.S. Federal Income Taxation of Holders of Our Common Stock.”

The larger market capitalization of the Combined Company relative to KMF may provide an opportunity for enhanced market liquidity over the long-term. Greater market liquidity may lead to a narrowing of bid-ask spreads and reduce price movements on a trade-to-trade basis. The table below illustrates the common equity market capitalization and average daily trading volume for each Company on a standalone basis as well as for the Combined Company. KMF stockholders will be part of a much larger company with significantly higher trading volume. The KMF Board also considered the fact that KYN has historically traded at a smaller discount to NAV compared to KMF’s historical discount to NAV. For example, for the three years ended February 28, 2023, KYN has traded at an average discount to NAV of 14.3%, and KMF has traded at an average discount to NAV of 19.8%. Further, in the period from KMF’s initial public offering (November 2010) through February 28, 2023, KYN’s average discount to NAV was 4.3% and KMF’s average discount to NAV was 12.2%.

As of February 28, 2023.

However, no guarantee can be made that KMF stockholders will benefit from enhanced market liquidity or that the common stock of the Combined Company will trade at a smaller discount to NAV than KMF has on a standalone basis. To the extent that KMF is trading at a narrower discount or wider premium than the acquiring fund at the time of the Merger, KMF shareholders may be negatively impacted if the Merger is consummated. The Combined Company stockholders would only benefit from a discount perspective to the extent the post-Merger discount or premium improved. There can be no assurance that after the Merger, common shares of the Combined Company will trade at, above or below NAV.

KMF currently qualifies as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As long as KMF meets certain portfolio diversification and other requirements that govern its sources of income and timely distribution of earnings to stockholders, KMF will not be subject to federal income tax. For KMF to qualify as a RIC, at the end of each quarter, KMF must have (i) at least 50% of the value of its total assets comprised of investments that are not greater in value than 5% of total assets and (ii) no more than 25% of the value of its total assets invested in the securities of one or more qualified publicly traded partnership (“PTPs”). Currently, these requirements are limiting the types of investments that KMF could make – in particular, the fund’s investments in MLPs (as defined in the Glossary), which are considered PTPs for the purpose of KMF’s RIC diversification requirement, cannot exceed 25% of its total assets. In contrast, KYN, which is a taxable corporation, does not have these same portfolio constraints See “Proposal One: Merger – Investment Objectives and Policies of KYN”. Upon completion of the Merger, the Combined Company will operate as a taxable corporation and pursue KYN’s investment objective. We believe the benefits of additional portfolio flexibility, which enables KYN to invest across a full spectrum of Energy Infrastructure Companies (in particular, the ability to hold more than 25% of its portfolio in MLPs), outweigh the benefits of qualifying as a RIC. However, the fact that KYN is not required to meet the portfolio diversification requirements of a RIC could make it more subject to risks related to concentration of investments. In addition, the flexibility afforded by not qualifying as a RIC means that KYN is subject to federal income taxes, whereas KMF generally is not. See “Risk Factors” and “Proposal One: Merger—Comparison of the Companies”. Further, by holding a larger percentage of its portfolio in MLPs, KYN’s stockholders are exposed to other risks specific to those types of investments. See “Risk Factors—Risks of Investing in MLP Units” and “—Tax Risks of Investing in Equity Securities of MLPs.”

As of May 31, 2023, KYN was subject to a management fee of 1.375% on its $1.8 billion of management fee total assets and KMF was subject to a management fee of 1.25% on its $0.5 billion of management fee total assets. Based on KMF’s current management fee, the Combined Company’s management fee as a percentage of net assets is expected to be higher than KMF’s standalone fee. Though the fee before waivers will increase for KMF stockholders, the Boards took into consideration the waivers described below as part of their determinations that the Merger was in the best interests of the Companies.

Pro forma for the combination and assuming the maximum aggregate amount of Cash Consideration is elected, the Combined Company would have pro forma total assets for purposes of calculating the management fee of $2.2 billion, based on the Companies’ assets as of May 31, 2023. Subject to and beginning at the completion of the Merger, KAFA has agreed to revise its existing contractual management fee waiver agreement (the “Tier Waiver”) with KYN to reduce the asset tiers for fee waivers. The Tier Waiver is reviewed annually by the Board of KYN and does not have a termination date. The initial asset tier for the Tier Waiver will be reset to the pro forma Combined Company total assets for purposes of calculating the management fee of as of the closing of the Merger (for example, if total assets of the Combined Company at closing are $2.5 billion, then the initial asset tier for the Tier Waiver will be set at $2.5 billion). The revised Tier Waiver will lower the effective management fee that KYN pays as its assets appreciate. There can be no guarantee that the Combined Company’s total assets will increase to levels for the asset tier fee waivers to be effective. The table below outlines the current and revised management fee waivers under the current and updated Tier Waiver assuming the Merger was completed on May 31, 2023:

In addition to reducing the Tier Waiver, KAFA has also separately contractually agreed to waive an additional amount of management fees (based on KYN and KMF assets at closing of the Merger) (the “Merger Waiver”) such that the pro forma fees payable to KAFA are equal to the aggregate management fees payable if KYN and KMF had remained standalone companies. The Merger Waiver will last for three years from the closing of the Merger so long as KAFA is the Combined Company’s investment adviser and is estimated to be approximately $0.6 million per year (i.e., the product of KMF’s total assets for purposes of calculating KMF’s management fee multiplied by 0.125%) based on KYN and KMF assets as of May 31, 2023. The updated Tier Waiver and the new Merger Waiver would be effective as of the closing of the Merger and would not be subject to recoupment, either with respect to KYN, KMF or the Combined Company. If the investment management agreement, Tier Waiver and/or Merger Waiver were to be terminated, the management fee payable by the Combined Company could increase. For more information, please see Proposal One: Merger—Management—Investment Management Agreement.”

The larger asset base of the Combined Company relative to KMF may provide greater financial flexibility. In particular, as a larger entity, KMF’s stockholders may benefit from the Combined Company’s access to attractive leverage terms and a wider range of alternatives for raising capital to grow the Combined Company.

The Merger is expected to result in an increase in expenses as a percentage of net assets for KMF stockholders, which the Boards considered in making their determinations with respect to the Merger. The increase in expenses as a percentage of net assets for KMF’s stockholders is also a result of (i) the net deferred tax liability (as a percentage of total assets) at KYN and the Combined Company as compared to standalone KMF, which causes net assets for the Combined Company to be smaller as a percentage of total assets as compared to standalone KMF and (ii) the entity level income taxes that are expected to be borne by KYN and the Combined Company. KYN is a taxable corporation with entity level income taxes whereas KMF is a regulated investment company (or RIC) that does not have entity level income taxes.

It is expected that the Combined Company will have a lower expense level than KYN, driven by estimated cost savings (which would occur only after the payment of the costs of the Merger), a portion of which is expected to be attributable to reduced operating costs. Each Company incurs operating expenses that are fixed (e.g., board fees, printing fees, legal, tax returns and auditing services) and operating expenses that are variable (e.g., administrative and custodial services that are based on assets under management). Many of these fixed expenses are duplicative between the Companies and can be reduced/eliminated as a result of the Merger. There will also be an opportunity to reduce variable expenses by taking advantage of greater economies of scale. Because the Merger is expected to be completed during the second half of fiscal 2023, and because there are expenses associated with the Merger, the full impact of the elimination of duplicative expenses will not be entirely recognized during fiscal 2023. We expect the Combined Company to realize the full benefit of these expense reductions during fiscal 2024. However, we cannot guarantee that the expense reductions will be achieved in full or at all.

In addition to the items discussed above, the Boards also took into consideration the following items:

Position of KYN as to the Fairness of the Merger

Under the SEC rules governing “going private” transactions, KYN is an affiliate of KMF that is engaged in a “going private” transaction (as KMF’s common stock will be delisted from the NYSE as a result of the Merger) and, therefore, is required to express its position as to the fairness of the Merger to KMF’s “unaffiliated security holders” as defined under Rule 13e-3 of the Exchange Act. KYN is making the statements included in this section solely for the purpose of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act.

The KYN Board, based on KAFA’s recommendation and the other information provided, reasonably believes that the Merger (which is the Rule 13e-3 transaction for which a Schedule 13E-3 Transaction Statement has been filed with the SEC) is fair to KMF’s unaffiliated stockholders on the basis of the factors described in “—Reasons for the Merger and Board Considerations”.

KYN does not own any shares of KMF common stock, and the officers and directors of each Company own only a small amount of shares of KMF common stock as described in “More Information About the Meeting — Outstanding Stock.” As a result, the KYN Board does not believe that the Merger presents a material conflict of interest with respect to either Company.

Because the Stock Consideration is on a 100% NAV-for-NAV basis, the Companies and their respective Boards did not need to consider complex valuation issues. Specifically, the Boards did not make any determination with respect to the fairness of the consideration in relation to current market prices and historical market prices based on that structural feature. While the Cash Consideration only represents 95% of KMF’s NAV, the election of Cash Consideration is purely optional for KMF stockholders and only intended to provide an option for KMF stockholders to monetize at least a portion of their investment in KMF in connection with the Merger. For the foregoing reasons, neither the KYN Board nor the KMF Board engaged a financial advisor or any party to deliver a fairness opinion. Similarly, the Independent Directors did not believe it was necessary or appropriate to retain an unaffiliated representative to act solely on behalf of unaffiliated stockholders for purposes of negotiating the terms of the Rule 13e–3 transaction.

The KYN Board believes that the Merger is substantively and procedurally fair to KMF’s unaffiliated stockholders based on information available regarding KMF and the KYN Board’s analysis of such information, discussions with representatives of all parties and the factors considered by, and the analysis and resulting conclusions of, the KYN Board and the KMF Board (including the Independent Directors, who unanimously approved the Merger).

The KYN Board did not find it practicable to assign, nor did it assign, specific relative weights to the individual factors that it considered in reaching its conclusion as to fairness.

The Merger is not structured to technically require the approval of at least a majority of unaffiliated stockholders of KMF. However, the affiliated stockholders (consisting of KAFA and the officers and directors of KYN and KMF) own only a nominal amount of KMF common stock. As a result, affiliated stockholders are not able to exert significant influence over the approval of the Merger, which is required to be approved by majority of the outstanding KMF common and preferred stock (voting as a class). See “More Information About the Meeting—Outstanding Stock.”

Primary Benefits and Detriments of the Merger

For a discussion of the primary benefits and detriments of the Merger, please see “—Reasons for the Merger and Board Considerations.”

Interests of the Directors and Officers of KYN and KMF in the Merger

Certain of the directors and officers of KYN and KMF hold KMF common stock. Pursuant to the Support Agreement, each of the directors and officers of KYN and KMF have agreed not to elect to receive Cash Consideration and to vote to approve the Merger and the issuance of additional shares of KYN common stock in connection with the Merger. No consideration was paid to the officers and directors for entry into the Support Agreement. The officers and directors who entered into the Support Agreement did so because they believe in the merits of the proposed combination and believe the Support Agreement is a tangible sign of their support for the proposed transaction.

Upon the closing of the Merger, those certain directors and officers who hold KMF common stock would be entitled to receive Stock Consideration in exchange of their shares of KMF common stock. The directors and officers of KYN (who are also the directors and officers of KMF) will continue to serve in those roles following the Merger.

For more information regarding the ownership of securities of KYN and KMF by their officers and directors, please see “More Information About the Meeting—Outstanding Stock.”

Financing of the Cash Consideration

KYN expects to fund the Cash Consideration with cash on hand, securities sales, additional borrowings under its unsecured credit facility (“Credit Facility”), or some combination thereof. Upon closing of the Merger, it is not expected that the Combined Company leverage levels would vary significantly from that of KYN or KMF on a standalone basis, as any incremental borrowings would be immaterial in comparison to total leverage of the Companies on a combined basis. The financing of the Cash Consideration is not subject to any material conditions, and KYN will pay the Cash Consideration (without any conditionality) in connection with the closing of the Merger. To the extent that KYN uses borrowings under its Credit Facility to fund the Cash Consideration, it is not expected that such borrowings would materially impact fees and expenses, and any repayment of such borrowings would be made in the ordinary course from cash from operations (as opposed to refinancing). Because KYN has sufficient borrowing capacity under its Credit Facility to fund the Cash Consideration, in addition to the alternative means of funding the Cash Consideration discussed above, it does not believe any alternative financing arrangements are necessary.

As of May 31, 2023, KYN did not have any borrowings outstanding under its Credit Facility. The interest rate payable by KYN on borrowings under its Credit Facility with JPMorgan Chase Bank, N.A., Bank of America, N.A., Sumitomo Mitsui Banking Corporation, Regions Bank, and U.S. Bank National Association may vary between one-month SOFR plus 1.40% and one-month SOFR plus 2.25%, depending on asset coverage ratios. Outstanding loan balances accrue interest daily at a rate equal to one-month SOFR plus 1.40% per annum based on asset coverage ratios as of May 31, 2023. KYN pays a commitment fee equal to a rate of 0.20% per annum on any unused amounts of the $175 million commitment for the Credit Facility. The Credit Facility has a one-year term maturing on February 23, 2024. 

Costs of the Merger

The Companies will bear the costs associated with the proposed Merger, which are expected to consist of the costs set forth in the table below. Costs will be allocated 50% to KYN and 50% to KMF. Costs related to the Merger are currently estimated to be approximately $1.8 million or 0.1% of pro forma Combined Company net assets, which equates to $0.9 million or $0.01 per share for KYN and $0.9 million or $0.02 per share for KMF as of May 31, 2023. The costs associated with the Merger will be expensed by each of the Companies and, as a result, will be borne by the common stockholders of the Companies.

Total costs expected to be incurred in connection with the Merger are estimated at this time to be as follows:

Delisting and Deregistration

If the Merger is completed, KMF’s common stock will be delisted from the NYSE and deregistered under the Exchange Act (via termination of registration pursuant to Section 12(g) of the Exchange Act). After the closing of the Merger, KMF will also file a Form 15 to suspend its reporting obligations under Section 15(d) of the Exchange Act. As a result, KMF will no longer be obligated to file any periodic reports or other reports with the SEC on account of its common stock.

Material U.S. Federal Income Tax Consequences of the Merger

In accordance with the opinion described in “Proposal One: Merger—Material U.S. Federal Income Tax Consequences of the Merger,” the Merger will qualify as a tax-free merger for federal income tax purposes. This means it is expected that stockholders will recognize no gain or loss for federal income tax purposes as a result of the Merger, except that gain (but not loss) will be recognized by KMF stockholders in an amount not to exceed the amount of cash received as part of the Cash Consideration (other than cash received in lieu of a fractional share) and gain or loss generally will be recognized by KMF stockholders with respect to cash received in lieu of fractional shares of KYN common stock. If the Merger fails to qualify as a tax-free reorganization because KYN or KMF fail to meet the asset diversification tests of Section 368(a)(2)(F) of the Code or for any other reason, then the transaction will be taxable to the non-diversified investment company and its stockholders.

Dissenters’ or Appraisal Rights

Stockholders do not have dissenters’ or appraisal rights.

Accounting Treatment of the Merger

Both Companies are considered investment companies and follow the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 946 – “Financial Services – Investment Companies.” In accordance with ASC Topic 805 – “Business Combinations”, the Merger will be accounted for as an asset acquisition. KYN will be the accounting survivor following the closing of the Merger. Pursuant to the Merger Agreement, KMF stockholders will be entitled to receive in exchange for each of their outstanding shares of KMF common stock either (i) Stock Consideration (shares of KYN common stock, valued at KYN’s NAV per share, equal to 100% of the NAV per share of the KMF common stock exchanged), or (ii) Cash Consideration (an amount of cash equal to 95% of the NAV per share of the KMF common stock). Cash Consideration will be subject to adjustment and proration procedures such that the total number of shares of KMF common stock converted into the right to receive Cash Consideration will not exceed 15% of the outstanding shares of KMF common stock prior to the closing of the Merger. The fair value of the consideration paid by KYN (in the form of Stock Consideration and Cash Consideration) will be approximately equal to the fair value of the assets acquired and liabilities assumed except for the small difference between the NAV of KMF’s common stock exchanged for Cash Consideration and the Cash Consideration paid by KYN. In accordance with ASC 805-50-30, the fair value of the consideration paid by KYN (in the form of Stock Consideration and Cash Consideration) will be allocated to the fair value of the assets acquired and liabilities assumed. KYN expects that the difference between the fair value of consideration paid and the fair value of the assets acquired and liabilities assumed (as a result of the difference between the NAV of KMF’s common stock exchanged for Cash Consideration and the Cash Consideration paid by KYN) will be accounted for as a reduction to the cost basis of the assets acquired in the Merger (the substantial majority of which consist of KMF’s portfolio of securities). The reduction in cost basis of the assets acquired will be allocated to the assets based on their relative fair values and will result in an unrealized gain to the Combined Company. The Companies use the same valuation methodologies, and there is significant overlap between the Companies’ portfolios; as a result, there should not be any material difference in the values of assets in the hands of KMF or KYN. As such, there should be a small amount of unrealized gain associated with the Cash Consideration and no day one realized or unrealized gain or loss associated with the Stock Consideration.

Provisions for Unaffiliated Stockholders

No provision has been made to grant unaffiliated stockholders of KMF (that is, all stockholders of KMF other than KYN, KAFA and their affiliates) access to the files of KYN or KMF or to obtain counsel or appraisal services at the expense of the foregoing parties.

GLOSSARY

This glossary contains definitions of certain key terms, as they are used in KYN investment policies and as described in this joint proxy statement/prospectus. These definitions may not correspond to standard sector definitions.

“Energy Assets” means Energy Infrastructure Assets and other assets that are used in the energy sector, including assets used in exploring, developing, producing, generating, transporting, transmitting, storing, gathering, processing, fractionating, refining, distributing, mining or marketing of natural gas, natural gas liquids, crude oil, refined products, coal, electricity or water.

“Energy Companies” means companies that own and/or operate Energy Assets or provide energy- related services. For purposes of this definition, this includes companies that (i) derive at least 50% of their revenues or operating income from operating Energy Assets or providing services for the operation of such assets or (ii) have Energy Assets that represent the majority of their assets.

“Energy Infrastructure Assets” means (a) Midstream Assets, (b) Renewable Infrastructure Assets and (c) Utility Assets.

“Energy Infrastructure Companies” consists of (a) Midstream Energy Companies, (b) Renewable Infrastructure Companies and (c) Utility Companies.

“energy transition” is used to describe the energy sector’s transition to a more sustainable mix of lower carbon and renewable energy sources that results in reduced emissions of carbon dioxide and other greenhouse gases over the next 20 to 30 years.

“Master Limited Partnerships” or “MLPs” means limited partnerships and limited liability companies that are publicly traded and are treated as partnerships for federal income tax purposes.

“Midstream Assets” means assets used in energy logistics, including, but not limited to, assets used in (a) transporting, storing, gathering, processing, fractionating, distributing, or marketing of natural gas, natural gas liquids, crude oil, refined products or water produced in conjunction with such activities or (b) the capture, transportation or sequestration of carbon dioxide.

“Midstream Energy Companies” means companies that primarily own and operate Midstream Assets. Such companies may be structured as Master Limited Partnerships or taxed as corporations. For purposes of this definition, this includes companies that (i) derive at least 50% of their revenue or operating income from operating Midstream Assets or providing services for the operation of such assets or (ii) have Midstream Assets that represent the majority of their assets.

“Renewable Infrastructure Assets” means assets used in the generation, production, distribution, transportation, transmission, storage and marketing of energy including, but not limited to, electricity, steam, natural gas or transportation fuels, from renewable sources such as solar, wind, flowing water (hydroelectric power), geothermal, biomass and organic waste.

“Renewable Infrastructure Companies” means companies that own and/or operate Renewable Infrastructure Assets. For purposes of this definition, this includes companies that (i) derive at least 50% of their revenues or operating income from operating Renewable Infrastructure Assets or providing services for the operation of such assets or (ii) have Renewable Infrastructure Assets that represent the majority of their assets.

“Utility Assets” means assets, other than Renewable Infrastructure Assets, that are used in the generation, production, distribution, transportation, transmission, storage and marketing of energy, including, but not limited to, electricity, natural gas and steam.

“Utility Companies” means companies that own and/or operate Utility Assets. For purposes of this definition, this includes companies that (i) derive at least 50% of their revenues or operating income from operating Utility Assets or providing services for the operation of such assets or (ii) have Utility Assets that represent the majority of their assets.

RISK FACTORS

If the Merger is approved and consummated, holders of KMF’s common stock that receive Stock Consideration will receive shares of KYN’s common stock in exchange. That would represent an investment in KYN’s common stock. KMF’s stockholders should understand that, like an investment in KMF’s common stock, investing in KYN’s common stock involves risk, including the risk that you may receive little or no return on your investment or that you may lose part or all of your investment. The following discussion summarizes some of the risks that a holder of KMF’s common stock should carefully consider before deciding whether to approve the Merger. You should carefully consider the following risks before voting on the Merger.

Except where otherwise noted, this section relates to KYN and the risk factors for KYN’s common stockholders (other parts of this document relate to both KYN and KMF). Accordingly, references to “we” “us” “our” or “the Company” in this section are references to KYN.

Comparison of the Risks of the Companies

Other than (a) the fact that KYN may invest more than 25% of its total assets in MLPs and (b) the fact that KYN is taxed as a corporation while KMF is a RIC, the Companies’ similar investment policies and the current substantial overlap in portfolios cause them to be subject to most of the same risks. With respect to fundamental investment limitations, KYN’s investment concentration limitation excludes investments in the Energy Infrastructure Industry, while KYM’s excludes investments in Energy Companies. However, those material differences make certain risks more pronounced for KYN. Accordingly, investors should pay particular attention to the risks described under “—Tax Risks of Investing in Equity Securities of MLPs,” “—Tax Risks of Investing in Equity Securities of MLPs—Non-Diversification Risk,” “—Tax Risks—Other Tax Risks” and “—Tax Risks—Deferred Tax Risks of Investing in our Securities.”

Risks Related to Our Investments and Investment Techniques

Investment and Market Risk

An investment in our common stock is subject to investment risk, including the possible loss of the entire amount that you invest. Your investment in our common stock represents an indirect investment in Energy Infrastructure Companies and other securities owned by us, which will generally be traded on a national securities exchange or in the over-the-counter markets. An investment in our common stock is not intended to constitute a complete investment program and should not be viewed as such. The value of these publicly traded securities, like other market investments, may move up or down, sometimes rapidly and unpredictably. The value of the securities in which we invest may affect the value of our common stock. Your common stock at any point in time may be worth less than your original investment, even after taking into account the reinvestment of our distributions. We are primarily a long-term investment vehicle and should not be used for short-term trading.

Energy Infrastructure Company Risk

Our concentration in the energy infrastructure sector may present more risk than if we were broadly diversified over multiple sectors of the economy. Energy Infrastructure Companies, including Midstream Energy Companies, Renewable Infrastructure Companies and Utility Companies, are subject to risks specific to the energy and energy-related industries. See “Glossary” for descriptions of these capitalized terms.

Energy Sector Risk

The revenues of Energy Infrastructure Companies, including many Midstream Energy Companies and Utilities, are often dependent upon the volumes of oil, natural gas, refined products, natural gas liquids or water produced by Energy Companies and/or consumed by customers of these commodities, and could be adversely affected by reductions in the supply of, or demand for, such energy commodities. The adverse impact of these events could lead to a material reduction in the earnings of Energy Infrastructure Companies and a substantial reduction (or elimination) of distributions paid to equity holders, and could result in a decline in (i) the equity values of the affected Energy Infrastructure Companies and/or (ii) our net distributable income. The volume of energy commodities produced and the volume of energy commodities available for transportation, storage, processing or distribution could be negatively affected by a variety of factors, including, among others, depletion of resources, depressed commodity prices, access to capital for companies engaged in the energy industry, catastrophic or extreme weather events, labor relations, increased environmental or other governmental regulation (including policies designed to reduce carbon emissions and/or address climate change), limitations on leasing of additional federal lands or the issuance of permits for oil and gas drilling, equipment malfunctions and maintenance difficulties, volumes of imports or exports, international politics, policies of the Organization of the Petroleum Exporting Countries (“OPEC”), and increased competition from alternative energy sources. A decline in demand for energy commodities could result from factors such as adverse economic conditions, increased taxation, increased environmental or other governmental regulation (including policies designed to reduce carbon emissions and/or address climate change), catastrophic events, extreme weather events, pandemics, increased fuel economy, increased energy conservation or use of alternative energy sources, legislation intended to promote the use of alternative energy sources, or increased commodity prices.

Power Sector Risk

The revenues of Energy Infrastructure Companies, including many Utility Companies and Renewable Infrastructure Companies, are often dependent upon the availability of electric power and/or the consumption of electric power and could be adversely affected by reductions in the supply of, or demand for, such power. The adverse impact of these events could lead to a material reduction in the earnings of Energy Infrastructure Companies and a substantial reduction (or elimination) of dividends paid to equity holders, and could result in a decline in (i) the equity values of the affected Energy Infrastructure Companies and/or (ii) our net distributable income. The production or availability of electric power could be negatively affected by a variety of factors, including depressed power prices, high prices for commodities used in the generation of power, lower than expected wind, solar or hydro power resources, catastrophic or extreme weather events, labor relations, increased environmental or other governmental regulation (including policies designed to reduce carbon emissions and/or address climate change), equipment malfunctions, transmission grid disruptions and maintenance difficulties. A decline in demand for power could result from factors such as increased power prices, adverse economic conditions, increased taxation, increased governmental regulation, catastrophic events, extreme weather events, equipment malfunctions, transmission grid disruptions and maintenance difficulties.

Commodity Pricing Risk

The operations and financial performance of Energy Infrastructure Companies may be directly affected by energy commodity or power prices, especially those companies that (i) produce energy commodities or power, (ii) consume energy commodities or power in their operations, or (iii) receive payments for services that are based on energy commodity or power prices. Such impact may be a result of changes in the price for such commodity or a result of changes in the price of one commodity relative to the price of another commodity (for example, the price of natural gas relative to the price of natural gas liquids). Commodity prices can fluctuate for many different reasons, including changes in market and economic conditions, the impact of weather on demand, levels of domestic and international production, policies implemented by producer groups such as OPEC, energy conservation, domestic and foreign governmental regulation and taxation, acts of terrorism or war and the availability of local, intrastate and interstate transportation systems. Volatility of commodity prices may also make it more difficult for Energy Infrastructure Companies to raise capital to the extent the market perceives that their performance may be directly or indirectly tied to commodity prices, and such difficulty raising capital could adversely impact the financial condition of these companies and their ability to maintain or grow cash distributions or dividends to their equity holders. In addition to the volatility of commodity prices, extremely high commodity prices may drive further energy conservation efforts or incentivize substitution in favor of other energy sources, which may adversely affect the performance of Energy Infrastructure Companies.

Regulatory Risk

Energy Infrastructure Companies are subject to significant national, state and local government regulation in virtually every aspect of their operations, including (i) how facilities are constructed, maintained and operated, (ii) how services are provided, (iii) environmental and safety controls, and, in some cases, the prices they may charge for the products and services they provide. Such regulation can change rapidly or over time in both scope and intensity and may vary significantly across countries, states, and local jurisdictions. Various governmental authorities have the power to enforce compliance with these regulations and the permits issued under them. Working with national, state, and local governments to plan, site, and install energy infrastructure in compliance with such regulations can be complex, time-consuming, and costly. Violations of such regulations may subject companies to administrative, civil and criminal penalties, including civil fines, injunctions or both. Stricter laws, regulations or enforcement policies could be enacted in the future which would likely increase compliance costs and may adversely affect the financial performance of Energy Infrastructure Companies. Additionally, government authorities, such as the Federal Energy Regulatory Commission (“FERC”) and state authorities regulate the rates charged for services of many Energy Infrastructure Companies. Those authorities can change the regulations and, as a result, materially reduce the rates charged for these services, which may adversely affect the financial performance of Energy Infrastructure Companies.

Emissions of greenhouse gases, including gases associated with the production and use of hydrocarbons such as carbon dioxide, methane and nitrous oxide among others contribute to a warming of the earth’s atmosphere and other adverse environmental effects, commonly referred to as “climate change.” To protect against climate change, most of the worlds’ governments, including the federal government of the United States and many states, are committed to taking action to substantially reduce emissions of greenhouse gases. The adoption and implementation of federal, state or local limits on greenhouse gas emissions from Energy Infrastructure Companies could result in significant costs to reduce emissions of greenhouse gases associated with their operations or could adversely affect the supply of, or demand for, power, crude oil, natural gas, natural gas liquids or other hydrocarbon products, which in turn could reduce production of those commodities. As a result, greenhouse gas emissions legislation or regulation could have a material adverse impact on the financial performance of Energy Infrastructure Companies.

There is an inherent risk that Energy Infrastructure Companies may incur material environmental costs and liabilities due to the nature of their businesses and the substances they handle. For example, an accidental release from a pipeline could subject the owner of such pipeline to substantial liabilities for environmental cleanup and restoration costs, claims made by neighboring landowners and other third parties for personal injury and property damage, and fines or penalties for related violations of environmental laws or regulations. Energy Infrastructure Companies can be liable for hazardous substance releases under certain environmental statutes, including the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation, and Liability Act, the federal Oil Pollution Act and analogous state laws and regulations. These laws impose strict, joint and several liability for costs required to clean up and restore sites where Energy Infrastructure Companies have released hazardous substances. Moreover, the possibility exists that stricter laws, regulations or enforcement policies could significantly increase the compliance costs of Energy Infrastructure Companies. Similarly, the implementation of more stringent environmental requirements could significantly increase the cost for any remediation that may become necessary. Energy Infrastructure Companies may not be able to recover these costs from insurance or recover these costs in the rates they charge customers.

Catastrophic Event Risk

Energy Infrastructure Companies are subject to many dangers inherent in the production, exploration, management, transportation, processing and distribution of natural gas, natural gas liquids, crude oil, refined products, water or power. These dangers include leaks, fires, explosions, train wrecks, damage to facilities and equipment resulting from natural disasters — including floods, freezes and hurricanes — inadvertent damage to facilities and equipment and terrorist acts, including cyber- attacks. The U.S. government has issued warnings that energy assets, specifically domestic energy infrastructure such as pipelines or power transmission grids may be targeted in future terrorist attacks.

These dangers give rise to risks of substantial losses as a result of loss or destruction of reserves; damage to or destruction of property, facilities and equipment; pollution and environmental damage; and personal injury or loss of life. Any occurrence of such catastrophic events could bring about a limitation, suspension or discontinuation of the operations of certain assets owned by such Energy Infrastructure Company.

Midstream Energy Companies Risk

Midstream Energy Companies are a subset of Energy Infrastructure Companies and, as such, are subject to the risks described above under Energy Infrastructure Company Risks.

Regulatory Risk

In the last several years, several pipeline projects have experienced significant delays related to difficulties in obtaining the necessary permits to proceed with construction (or some phase of construction). These delays have raised concerns about the ability of Midstream Energy Companies to place such projects in service and their ability to get the necessary financing to complete such projects. Furthermore, it has become much more common for opponents of energy infrastructure development to utilize the courts, media campaigns and political activism to attempt to stop, or delay as much as possible, these projects. Significant delays could result in a material increase in the cost of developing these projects and could result in Midstream Energy Companies developing such projects failing to generate the expected return on investment or, if the project does not go forward, realizing a financial loss, either of which would adversely affect the results of operations and financial performance of the affected Energy Infrastructure Companies.

Natural gas transmission pipeline systems, crude oil transportation pipeline systems, refined products transportation pipeline systems, and certain classes of storage facilities and related assets owned by Energy Infrastructure Companies are subject to regulation by the FERC. The regulators have authority to regulate natural gas pipeline transmission, crude oil pipeline transportation services, and refined products pipeline transportation services including the rates charged for the services, terms and conditions of service, certification and construction of new facilities, the extension or abandonment of services and facilities, the maintenance of accounts and records, the acquisition and disposition of facilities, the initiation and discontinuation of services, and various other matters. Action by the FERC could adversely affect the ability of Energy Infrastructure Companies to establish or charge rates that would cover future increases in their costs, such as additional costs related to environmental matters including any climate change regulation, or even to continue to collect rates that cover current costs, including a reasonable rate of return. It could also become more common for regulatory agencies (such as FERC) to include the impact of carbon emissions from energy infrastructure assets as a consideration in granting permits for the construction or operation of such assets. This could result in costly delays in obtaining permits, requirements to spend additional capital to limit carbon emissions or denial of required permits to operate existing or proposed energy infrastructure assets. Any such change could have an adverse impact on the financial condition, results of operations, or cash flows of Energy Infrastructure Companies.

Over the past several years, governmental agencies have imposed more stringent protections governing hydraulic fracturing and the disposal of wastewater associated with hydraulic fracturing processes that are critical to the recovery of economic amounts of oil, natural gas and natural gas liquids by Energy Companies. Wastewater is a byproduct of hydraulic fracturing and production and, to the extent it is not recycled, must be disposed. Scientific research links the disposal of wastewater to increased earthquake activity in certain oil and natural gas producing regions, and legislation and regulations have been proposed in states like Oklahoma and Colorado to limit or prohibit further underground wastewater disposal in seismically sensitive regions. While we are not able to predict the likelihood that similar regulations will be adopted in other regions, additional restrictions on hydraulic fracturing, wastewater disposal or any other activity necessary for the production of oil, natural gas or natural gas liquids could result in a reduction in production of those commodities. Midstream Energy Companies have spent (and continue to spend) significant amounts of capital building pipelines, processing, treating and storage assets to facilitate the development of oil and gas reserves and such reductions in production could have an adverse impact on the financial performance of Midstream Energy Companies.

Upstream Exploration and Production Risk

Energy reserves naturally deplete as they are produced over time, and to maintain or grow their revenues, companies engaged in the production of natural gas, natural gas liquids, crude oil and other energy commodities need to maintain or expand their reserves through exploration of new sources of supply, through the development of existing sources or through acquisitions. Energy Companies may be unsuccessful adding reserves and/or maintaining production levels for several reasons, including the lack of sufficient cash flow to fund re-investment due to a material decline in commodity prices, an inability to raise capital on favorable terms or an unwillingness to reinvest cash flow in the development (or acquisition) of new reserves. The failure to cost-effectively acquire additional reserves sufficient to replace the natural decline in production may cause the production of natural gas, natural gas liquids, crude oil and other energy commodities to decline. During recent industry downturns, including the 2020 downturn resulting from COVID-19’s severe negative impact on global demand, many Energy Companies significantly reduced capital expenditures, leading to declines in U.S. production of natural gas and crude oil. Many Energy Companies were forced to monetize reserves or acreage to manage their balance sheets and maintain adequate liquidity levels. Some Energy Companies were forced to file for bankruptcy in an effort to restructure their balance sheets. These actions have had a negative impact on the operating results and financial performance for some Midstream Energy Companies engaged in the transportation, storage, distribution and processing of production from such Energy Companies.

Energy Companies engaged in the production of natural gas, natural gas liquids and crude oil estimate the quantities of their reserves. If reserve estimates prove to be inaccurate, these companies’ reserves may be overstated, and no commercially productive amounts of such energy commodities may be discovered. Furthermore, drilling or other exploration activities, may be curtailed, delayed, or cancelled as a result of low commodity prices, unexpected conditions or miscalculations, title problems, pressure or irregularities in formations, equipment failures or accidents, adverse weather conditions, compliance with environmental and other governmental requirements and cost of, or shortages or delays in the availability of, drilling rigs and other exploration equipment. In addition, there are many operational risks and hazards associated with the development of the underlying properties, including natural disasters, blowouts, explosions, fires, leakage of such energy commodities, mechanical failures, cratering, and pollution. Midstream Energy Companies invest significant capital in assets to provide transportation, processing, treating, storage, and other services to facilitate production of these energy commodities and would be adversely impacted in the event reserves were significantly underestimated or were unable to be economically produced.

Affiliated Party Risk

Certain Midstream Energy Companies are dependent on their affiliates for a majority of their revenues. In some cases, those same affiliates are the majority owners and/or have effective control of the Midstream Energy Companies. Any failure by a Midstream Energy Company’s affiliates to satisfy their payments or obligations would impact the Midstream Energy Company’s revenues and cash flows and ability to make interest payments and distributions or dividends to their equity holders. Controlling affiliates of Midstream Energy Companies may also enter into M&A transactions or attempt to effect changes in commercial contracts that could be adverse to the Midstream Energy Company.

Contract Renegotiation/Rejection Risk

Midstream Energy Companies that operate midstream assets are also subject to the credit risk of their customers. For example, many Energy Companies that explore for and produce oil, natural gas and natural gas liquids filed for bankruptcy during the last downturn. During the bankruptcy process, the debtor Energy Company may be able to reject a contract that it has with a Midstream Energy Company that provides services for the debtor, which could include gathering, processing, treating, transportation or storage services. If a contract is successfully rejected during bankruptcy, the affected Midstream Energy Company will have an unsecured claim for damages but will likely only recover a portion of its claim for damages and may not recover anything at all. A debtor Energy Company may also threaten to reject a contract in an effort to force a renegotiation of the agreement on terms less favorable to its counterparty, the Midstream Energy Company. For these reasons, a Midstream Energy Company that provides services to an Energy Company that is in financial distress could experience a material adverse impact to its financial performance and results of operations.

Risks of Investing in MLP Units

In addition to the risks summarized herein, an investment in MLP units involves certain risks, which differ from an investment in the securities of a corporation. Limited partners of MLPs, unlike investors in the securities of a corporation, have limited voting rights on matters affecting the partnership and generally have no rights to elect the directors of the general partner. In addition, conflicts of interest exist between limited partners and the general partner and the general partner does not generally have any duty to the limited partners beyond a “good faith” standard.

Tax Risks of Investing in Equity Securities of MLPs

Our ability to meet our investment objective will depend, in part, on the level of taxable income and distributions and dividends we receive from the MLP securities in which we invest, a factor over which we have no control. The benefit we derive from our investment in MLPs is largely dependent on the MLPs being treated as partnerships and not as corporations for federal income tax purposes. As a partnership, an MLP has no tax liability at the entity level. If, as a result of a change in the tax code or a change in an MLP’s business, an MLP were treated as a corporation for federal income tax purposes, such MLP would be obligated to pay federal income tax on its income at the corporate tax rate. Upon the sale of an equity security in an MLP, we generally will be liable for any previously deferred taxes. In addition, the sale of an equity security in an MLP involves certain tax depreciation recapture relating to the MLP’s underlying assets. Such depreciation recapture is treated as ordinary income for tax purposes, and such ordinary income may result even if the sale of the MLP equity security is at a loss or exceeds the gain if sold at a gain. MLPs generally provide the relevant tax information for these calculations on a delayed basis, usually during the calendar year following the sale, so final determination of any resulting recapture income may be similarly delayed. If the recapture exceeds operating losses, we could recognize taxable income and have an income tax liability. No assurance can be given that such taxes will not exceed the Company’s deferred tax assumptions for purposes of computing the Company’s net asset value per share, which would result in an immediate reduction of the Company’s net asset value per share. If an MLP were classified as a corporation for federal income tax purposes, the amount of cash available for distribution by the MLP would likely be reduced and distributions received by us that are treated as dividend income or capital gain would be taxed under federal income tax laws applicable to corporate distributions, which would reduce our net distributable income. In addition, as U.S presidential and legislative priorities change and develop, energy-related tax provisions may be enacted, some of which may not be favorable to MLPs or corporations investing in them and may increase the amount of taxes we ultimately bear. There can be no assurance how any such provisions could affect our net distributable income or our business generally.

Utility Companies Risk

Utility Companies are a subset of Energy Infrastructure Companies and, as such, are subject to the risks described above under Energy Infrastructure Company Risk.

Other risks inherent in the utilities sector include a variety of factors that may adversely affect the business or operations of Utility Companies, including: high interest costs associated with capital construction and improvement programs; difficulty in raising adequate capital on reasonable terms in periods of high inflation and unsettled capital markets; governmental regulation of rates that the company can charge to customers; costs associated with compliance with, and adjusting to changes to, environmental and other regulations; the difficulty in obtaining an adequate return on invested capital or in financing large construction projects; effects of economic slowdowns and surplus capacity; increased competition from other providers of utilities services; costs associated with the reduced availability of certain types of fuel, occasionally reduced availability and high costs of natural gas for resale, and the effects of energy conservation policies.

Some Utility Companies also face risks associated with the effects of a national energy policy and lengthy delays, and greatly increased costs and other problems, associated with the design, construction, licensing, regulation and operation of nuclear facilities for power generation, including, among other considerations: the problems associated with the use of radioactive materials and the disposal of radioactive wastes; technological innovations that may render existing plants, equipment or products obsolete; difficulty in obtaining regulatory approval of new technologies; lack of compatibility of telecommunications equipment; potential impacts of terrorist activities on the utilities industry and its customers; and the impact of natural or man-made disasters. Utility Companies may also be subject to regulation by various governmental authorities and may be affected by the imposition of special tariffs and changes in tax laws, regulatory policies and accounting standards.

Deregulation is subjecting Utility Companies to greater competition and may adversely affect profitability. As deregulation allows utilities to diversify outside of their original geographic regions and their traditional lines of business, Utility Companies may engage in riskier ventures. There is no assurance that regulatory authorities will, in the future, grant rate increases, or that such increases will be adequate to permit the payment of dividends on stocks issued by a Utility Company.

In many regions, including the United States, the Utility Industry is experiencing increasing competitive pressures, primarily in wholesale markets, as a result of consumer demand, technological advances, greater availability of natural gas with respect to electric utility companies and other factors. For example, FERC has implemented regulatory changes to increase access to the nationwide transmission grid by utility and non-utility purchasers and sellers of electricity. A number of countries, including the United States, are considering or have implemented methods to introduce and promote retail competition. Changes in regulation may result in consolidation among domestic utilities and the disaggregation of many vertically integrated utilities into separate generation, transmission and distribution businesses. As a result, additional significant competitors could become active in certain parts of the utility industry.

Renewable Infrastructure Companies Risk

Renewable Infrastructure Companies are a subset of Energy Infrastructure Companies and, as such, are subject to the risks described above under Energy Infrastructure Company Risk. In addition, the future growth of Renewable Infrastructure Companies may be dependent upon on government policies that support renewable power generation and enhance the economic viability of owning renewable electric generation assets. Such policies can include renewable portfolio standard programs, which mandate that a specified percentage of electricity sales come from eligible sources of renewable energy, accelerated cost-recovery systems of depreciation, tax credits and production credits.

The electric power produced, and revenues generated by a renewable energy generation facility, including solar electric or wind energy, is highly dependent on suitable weather conditions. These assets may not be able to operate in extreme weather conditions, such as during a severe freeze. Furthermore, components used in the generation of renewable energy could be damaged by severe weather, such as hailstorms, tornadoes or hurricanes. In addition, replacement and spare parts for key components may be difficult or costly to acquire or may be unavailable. Unfavorable weather and atmospheric conditions could impair the effectiveness of assets or reduce their output beneath their rated capacity or require shutdown of key equipment, impeding operation of renewable assets. Actual climatic conditions at a facility site, particularly wind conditions, may not conform to the historical findings and, therefore, renewable energy facilities may not meet anticipated production levels or the rated capacity of the generation assets, which could adversely affect the business, financial condition and results of operations and cash flows of the Renewable Infrastructure Companies involved in the renewable energy industry.

A portion of revenues from investments in Renewable Infrastructure Assets will be tied, either directly or indirectly, to the wholesale market price for electricity in the markets served. Wholesale market electricity prices are impacted by a number of factors including: the price of fuel (for example, natural gas) that is used to generate electric power; the cost of and management of generation and the amount of excess generating capacity relative to load in a particular market; and conditions (such as extremely hot or cold weather) that impact electrical system demand. Owners of Renewable Infrastructure Assets may attempt to secure fixed prices for their power production through the use of financial hedges; but may not be able to deliver power to collect such fixed price, rendering those hedges ineffective or creating economic losses for Renewable Infrastructure Assets. In addition, there is uncertainty surrounding the trend in electricity demand growth. This volatility and uncertainty in power markets could have a material adverse effect on the assets, liabilities, financial condition, results of operations and cash flow of the companies in which we invest.

Decreases in Subsidies and Changes in Regulations Risk

Poor economic conditions could have an effect on government budgets and threaten the continuation of government subsidies such as regulated revenues, cash grants, U.S. federal income and state tax benefits or state renewables portfolio standards that benefit Renewable Infrastructure Companies. Such conditions may also lead to adverse changes in laws or regulations. The reduction or elimination of renewable generation targets, tariffs, subsidies or tax incentives or adverse changes in law could have a material adverse effect on the profitability of some existing projects. The availability and continuation of public policy support mechanisms will drive a significant part of the economics and viability of clean energy investments, and the curtailment or termination of such subsidies and incentives could adversely affect the feasibility and profitability of Renewable Infrastructure Assets and the growth plan of Renewable Infrastructure Companies. In addition, if the various domestic and international regulations that provide incentives for renewable energy change or expire in a manner that adversely impacts the market for Renewable Infrastructure Companies, the competitiveness of renewable energy generally and the economic value of new projects undertaken by Renewable Infrastructure Companies could be impacted.

Renewable Infrastructure Companies also rely in part on environmental and other regulations of industrial and local government activities, including regulations granting subsidies or mandating reductions in carbon or other greenhouse gas emissions and minimum biofuel content in fuel or use of energy from renewable sources. If the businesses to which such regulations relate were deregulated or if such subsidies or regulations were changed or weakened, the profitability of Renewable Infrastructure Companies could suffer.

Hydrology, Solar and Wind Changes Risk

The revenues and cash flows generated by Renewable Infrastructure Assets are often correlated to the amount of electric power generated, which for some assets is dependent upon available water flows, solar conditions, wind conditions and weather conditions generally. Hydrology, solar, wind and weather conditions have natural variations from season to season and from year to year and may also change permanently because of climate change or other factors, and these changes could impact the profitability of Renewable Infrastructure Assets. A natural disaster could also impact water flows within the watersheds the Renewable Infrastructure Companies in which we invest operate. Wind energy is highly dependent on weather conditions and, in particular, on wind conditions.

Operational Disruption Risk

Renewable Infrastructure Companies are exposed to risks in connection with disruptions of their operations, or to the operations of third parties on which they depend, which may be caused by technical breakdowns at power generation assets, resulting from aged or defective facility components, insufficient maintenance, failed repairs, power outages, adverse weather conditions, natural disasters, labor disputes, ill-intentioned acts or other accidents or incidents. These disruptions could result in shutdowns, delays or long-term decommissioning in production or distribution of energy. This may materially and adversely affect operations or financial condition and cause harm to the reputation of companies in which we invest.

Construction Risk

Renewable Infrastructure Companies may invest in projects that are subject to construction risk and construction delays. The ability of these projects to generate revenues will often depend upon their successful completion of the construction and operation of generating assets. Any shortage, delay or component price change from the suppliers of equipment associated with renewable energy projects could result in construction or installation delays. There have been periods of industry-wide shortage of key components, including solar panels and wind turbines. Delays in construction may also occur as a result of inclement weather, labor disruptions, technical complications or other reasons, and any resulting cost over-runs could negatively impact the income and market values of Renewable Infrastructure Companies.

In addition, tariffs on imports to the United States could affect operating or construction costs for a number of companies in which we invest. The cost of new solar power generation projects could be more challenging as a result of increases in the cost of solar panels or tariffs on imported solar panels imposed by the U.S. government on imported solar cells and modules manufactured in China. If project developers purchase solar panels containing cells manufactured in China, the purchase price for renewable energy equipment and facilities may reflect the tariff penalties mentioned above.

Renewable Infrastructure Technology Risk

Technology related to the production of renewable power and conventional power generation is continually advancing, resulting in a gradual decline in the cost of producing electricity. Renewable Infrastructure Companies may invest in and use newly developed, less proven, technologies in their development projects or in maintaining or enhancing their existing assets. There is no guarantee that such new technologies will perform as anticipated. The failure of a new technology to perform as anticipated may materially and adversely affect the profitability of a particular development project.

Increasing Competition/Market Change Risks

A significant portion of the electric power generation and transmission capacity sold by Renewable Infrastructure Assets is sold under long-term agreements with public utilities, industrial or commercial end-users or governmental entities. If, for any reason, any of the purchasers of power or transmission capacity under these agreements are unable or unwilling to fulfill their related contractual obligations or if they otherwise terminate such agreements prior to the expiration thereof, the business and financial condition of Renewable Infrastructure Companies could be materially and adversely affected. The power generation industry is characterized by intense competition, which may impact the ability of Renewable Infrastructure Companies to replace an expiring or terminated agreement with an agreement on equivalent terms and conditions, including at prices that permit operation of the related facility on a profitable basis, and as a result the affected facility may temporarily or permanently cease operations.

Changes in Tariffs Risk

The revenue that Renewable Infrastructure Assets generate from contracted concessions is often dependent on regulated tariffs or other long-term fixed rate arrangements. Under such concession agreements, a tariff structure is established, and Renewable Infrastructure Companies have limited or no possibility to independently raise tariffs beyond the established rates and indexation or adjustment mechanisms. Similarly, under a long-term power purchase agreement, Renewable Infrastructure Companies may be required to deliver power at a fixed rate for the contract period, with limited escalation rights. In addition, Renewable Infrastructure Companies may be unable to adjust tariffs or rates as a result of fluctuations in prices of raw materials, exchange rates, labor and subcontractor costs during the operating phase of these projects. Moreover, in some cases, if Renewable Infrastructure Assets fail to comply with certain pre-established conditions, the government or customer, as applicable, may reduce the tariffs or rates payable. In addition, during the life of a concession, the relevant government authority may unilaterally impose additional restrictions on tariff rates, subject to the regulatory frameworks applicable in each jurisdiction.

Non-Diversification Risk

We are a non-diversified, closed-end investment company under the 1940 Act and will not be treated as a regulated investment company under the Internal Revenue Code of 1986, as amended, or the Code. Accordingly, there are no regulatory requirements under the 1940 Act or the Code on the minimum number or size of securities we hold. As we may invest up to 15% of our total assets in any single issuer, a decline in value of the securities of such an issuer could significantly impact the value of our portfolio.

Dependence on Limited Number of Customers and Suppliers

Certain Energy Infrastructure Companies in which we may invest depend upon a limited number of customers for a majority of their revenue. Similarly, certain Energy Infrastructure Companies in which we may invest depend upon a limited number of suppliers of goods or services to continue their operations. The recent COVID-19 related downturn in the energy industry put significant pressure on a number of these customers and suppliers and caused many companies operating in the energy industry to file for bankruptcy. Other public health emergencies or widespread market disruptions in the future could have similar effects. Any loss of any such customers or suppliers, including through bankruptcy, could materially adversely affect such Energy Infrastructure Companies’ results of operation and cash flow, and their ability to make distributions or dividends to equity holders could therefore be materially adversely affected.

Capital Markets Risk

Financial markets are volatile, and Energy Infrastructure Companies may not be able to obtain new debt or equity financing on attractive terms or at all. For example, the downturn in commodity prices and economic activity associated with the COVID-19 pandemic negatively impacted the ability of Energy Companies to raise capital, and equity capital in particular, at attractive levels. Downgrades of the debt of Energy Infrastructure Companies by rating agencies during times of distress could exacerbate this challenge. In addition, downgrades of the credit ratings of Energy Infrastructure Companies by ratings agencies may increase the cost of borrowing under the terms of an Energy Infrastructure Company’s credit facility, and a downgrade from investment grade to below investment grade (i.e., an issuer of junk bonds) may cause an Energy Infrastructure Company to be required to post collateral (or additional collateral) by its contractual counterparties, which could reduce the amount of liquidity available to such Energy Infrastructure Company and increase its need for additional funding sources. If funding is not available when needed, or is available only on unfavorable terms, Energy Infrastructure Companies may have to reduce their distributions or dividends to manage their funding needs and may not be able to meet their obligations as they come due. Moreover, without adequate funding, many Energy Infrastructure Companies may be unable to execute their growth strategies, complete future acquisitions, take advantage of other business opportunities or respond to competitive pressures, any of which could have a material adverse effect on their revenues and results of operations.

Financial Institution Instability Risk

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership. In addition, counterparties to SVB credit agreements and arrangements, and third parties such as beneficiaries of letters of credit (among others), may experience direct impacts from the closure of SVB and uncertainty remains over liquidity concerns in the broader financial services industry. Similar impacts have occurred in the past, such as during the 2008-2010 financial crisis.

Investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us and the companies in which we invest to acquire financing on acceptable terms or at all.

Political Instability Risk

The Energy Infrastructure Companies in which we may invest are subject to disruption as a result of terrorist activities (including cyber-attacks), war, and other geopolitical events. The U.S. government has issued warnings that energy assets, specifically those related to pipeline and other energy infrastructure, production facilities and transmission and distribution facilities, may be targeted in future terrorist attacks. Internal unrest, acts of violence or strained relations between a government and energy companies or other governments may affect the operations and profitability of Energy Infrastructure Companies in which we invest. Political instability in other parts of the world may also cause volatility and disruptions in the market for the securities of Energy Infrastructure Companies, even those that operate solely in North America.

Weather Risks

Weather conditions and the seasonality of weather patterns play a role in the cash flows of certain Energy Infrastructure Companies. Although most Energy Infrastructure Companies can reasonably predict seasonal weather demand based on normal weather patterns, extreme weather conditions (for instance hurricanes, wildfires and extreme winter storms) demonstrate that no amount of preparation can protect an Energy Infrastructure Company from the unpredictability of the weather. The damage done by extreme weather also may serve to increase insurance premiums for energy assets owned by Energy Infrastructure Companies, could significantly increase the volatility in the supply of energy- related commodities and could adversely affect such companies’ financial condition and ability to pay distributions or dividends to equity holders.

Concentration Risk

Our investments are concentrated in the energy infrastructure sector. The focus of our portfolio on the energy infrastructure sector may present more risks than if our portfolio were broadly diversified over numerous sectors of the economy. A downturn in the energy infrastructure sector, or more generally in the energy industry, would have a larger impact on us than on an investment company that does not concentrate in the energy infrastructure sector. The performance of securities in the energy infrastructure sector may lag the performance of other industries or the broader market as a whole. To the extent that we invest a relatively high percentage of our assets in the obligations of a limited number of issuers, we may be more susceptible than a more widely diversified investment company to any single economic, political or regulatory occurrence.

Interest Rate Risk

Valuations of securities in which we invest are based on numerous factors, including sector and business fundamentals, management expertise, and expectations of future operating results. Most of the securities in which we invest pay quarterly distributions or dividends to investors and are viewed by investors as yield-based investments. As a result, yields for these securities are also susceptible, in the short-term, to fluctuations in interest rates and the equity prices of such securities may decline when interest rates rise. Because we invest in equity securities of Energy Infrastructure Companies, our net asset value and the asset coverage ratios on our senior securities may decline if interest rates rise.

Inflation/Deflation Risk

Inflation risk is the risk that the value of assets or income from investment will be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of our common stock and distributions that we pay declines. In addition, during any periods of rising inflation, the dividend rates or borrowing costs associated with our use of leverage would likely increase. Deflation risk is the risk that prices throughout the economy decline over time — the opposite of inflation. Deflation may have an adverse effect on the creditworthiness of issuers and may make issuer defaults more likely, which may result in a decline in the value of our portfolio.

In an effort to control inflation, the Federal Open Market Committee (“FOMC”), the committee within the Federal Reserve (“Fed”) that sets domestic monetary policy, raised the target range for the federal funds rate seven times in calendar year 2022 to a range of 4.25% to 4.50%. The Fed has signaled that further increases could happen in 2023. Rising rates generally have a negative impact on income-oriented investments such as those in which we invest and could be adversely impacted by these actions. There is no assurance that the action being taken by the Fed will improve the outlook for long-term inflation or whether they might result in a recession. A recession could lead to declined employment, global demand destruction and/or business failures, which may result in a decline in the value of our portfolio. In addition, increased interest rates could increase our cost of borrowing and reduce the return on leverage to common stockholders.

Risk of Conflicting Transactions by the Investment Adviser

Kayne Anderson manages portfolios of other investment companies and client accounts that invest in similar or the same securities as the Company. It is possible that Kayne Anderson would effect a purchase of a security for us when another investment company or client account is selling that same security, or vice versa. Kayne Anderson will use reasonable efforts to avoid adverse impacts on the Company’s transactions as a result of those other transactions, but there can be no assurances that adverse impacts will be avoided.

Equity Securities Risk

The vast majority of our assets are invested in equity securities of Energy Infrastructure Companies. Such securities are subject to general movements in the stock market and a significant drop in the stock market may depress the price of securities to which we have exposure. Equity securities prices fluctuate for several reasons, including changes in the financial condition of a particular issuer, investors’ perceptions of Energy Infrastructure Companies, investors’ perceptions of the energy industry, the general condition of the relevant stock market, or when political or economic events affecting the issuers occur. In addition, Energy Infrastructure Company equity securities held by the Company may decline in price if the issuer fails to make anticipated distributions or dividend payments (or reduces the amount of such payments) because, among other reasons, the issuer experiences a decline in its financial condition. In general, the equity securities of MLPs that are publicly traded partnerships tend to be less liquid than the equity securities of corporations, which means that we could have difficulty selling such securities at the time and price we would like.

Small Capitalization Risk

Certain of the Energy Infrastructure Companies in which we invest may have comparatively smaller capitalizations than other companies whose securities are included in major benchmarked indices. Investing in the securities of smaller Energy Infrastructure Companies presents some unique investment risks. These Energy Infrastructure Companies may have limited product lines and markets, as well as shorter operating histories, less experienced management and more limited financial resources than larger Energy Infrastructure Companies and may be more vulnerable to adverse general market or economic developments. Stocks of smaller Energy Infrastructure Companies may be less liquid than those of larger Energy Infrastructure Companies and may experience greater price fluctuations than larger Energy Infrastructure Companies. In addition, small-cap securities may not be widely followed by the investment community, which may result in reduced demand. This means that we could have greater difficulty selling such securities at the time and price that we would like.

Debt Securities Risks

Debt securities in which we invest are subject to many of the risks described elsewhere in this section. In addition, they are subject to credit risk and other risks, depending on the quality and other terms of the debt security.

Credit Risk

An issuer of a debt security may be unable to make interest payments and repay principal. We could lose money if the issuer of a debt obligation is, or is perceived to be, unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The downgrade in the credit rating of a security by rating agencies may further decrease its value. Additionally, we may purchase a debt security that has payment-in-kind interest, which represents contractual interest added to the principal balance and due at the maturity date of the debt security in which we invest. It is possible that by effectively increasing the principal balance payable or deferring cash payment of such interest until maturity, the use of payment-in-kind features will increase the risk that such amounts will become uncollectible when due and payable.

Below Investment Grade and Unrated Debt Securities Risk

Below investment grade debt securities (commonly referred to as “junk bonds” or “high yield bonds”) are rated Ba1 or less by Moody’s, BB+ or less by Fitch or Standard & Poor’s, or comparably rated by another rating agency. Below investment grade and unrated debt securities (or junk bonds) generally pay a premium above the yields of U.S. government securities or debt securities of investment grade issuers because they are subject to greater risks than these securities. These risks, which reflect their speculative character, include the following: greater yield and price volatility; greater credit risk and risk of default; potentially greater sensitivity to general economic or industry conditions; potential lack of attractive resale opportunities (illiquidity); and additional expenses to seek recovery from issuers who default. In addition, the prices of these below investment grade (or junk bonds) and other unrated debt securities in which we may invest are more sensitive to negative developments, such as a decline in the issuer’s revenues or profitability or a general economic downturn, than are the prices of higher grade securities. Below investment grade (or junk bonds) and unrated debt securities tend to be less liquid than investment grade securities, and the market for below investment grade (or junk bonds) and unrated debt securities could contract further under adverse market or economic conditions. In such a scenario, it may be more difficult for us to sell these securities in a timely manner or for as high a price as could be realized if such securities were more widely traded.

Prepayment Risk

Certain debt instruments, particularly below investment grade securities (or junk bonds), may contain call or redemption provisions which would allow the issuer thereof to prepay principal prior to the debt instrument’s stated maturity. This is known as prepayment risk. Prepayment risk is greater during a falling interest rate environment as issuers can reduce their cost of capital by refinancing higher yielding debt instruments with lower yielding debt instruments. An issuer may also elect to refinance its debt instruments with lower yielding debt instruments if the credit standing of the issuer improves. To the extent debt securities in our portfolio are called or redeemed, we may be forced to reinvest in lower yielding securities.

Interest Rate Risk for Debt and Equity Securities

Debt securities, and equity securities that pay dividends and distributions, have the potential to decline in value, sometimes dramatically, when interest rates rise or are expected to rise. In general, the values or prices of debt securities vary inversely with interest rates. The change in a debt security’s price depends on several factors, including its maturity. Generally, debt securities with longer maturities are subject to greater price volatility from changes in interest rates. Adjustable rate instruments also react to interest rate changes in a similar manner although generally to a lesser degree (depending, however, on the characteristics of the reset terms).

LIBOR Risk

The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has ceased making LIBOR available as a reference rate over a phase-out period that began on December 31, 2021. Alternative reference rates have been established or are in development in most major currencies, including with regards to the Secured Overnight Financing Rate (“SOFR”), which is intended to replace U.S. dollar LIBOR. Although the transition process away from LIBOR has become increasingly well-defined, there remains uncertainty regarding the impact of the transition to a new reference rate. At this time, it is not possible to predict the full impact of the elimination of LIBOR and the establishment of an alternative reference rate on the Company or its investments.

Risks Associated with Investing in Initial Public Offerings (“IPOs”)

Securities purchased in IPOs are often subject to the general risks associated with investments in companies with small market capitalizations and, at times, are magnified. Securities issued in IPOs have no trading history, and information about the companies may be available for very limited periods. In addition, the prices of securities sold in an IPO may be highly volatile. At any particular time, or from time to time, we may not be able to invest in IPOs, or to invest to the extent desired, because, for example, only a small portion (if any) of the securities being offered in an IPO may be available to us. In addition, under certain market conditions, a relatively small number of companies may issue securities in IPOs. Our investment performance during periods when we are unable to invest significantly or at all in IPOs may be lower than during periods when we are able to do so. IPO securities may be volatile, and we cannot predict whether investments in IPOs will be successful. As we grow in size, the positive effect of IPO investments on the Company may decrease.

Risks Associated with a Private Investment in a Public Entity (“PIPE”) Transaction

PIPE investors purchase securities directly from a publicly traded company in a private placement transaction, typically at a discount to the market price of the company’s common stock. Because the sale of the securities is not registered under the Securities Act of 1933, as amended (the “Securities Act”), the securities are “restricted” and cannot be immediately resold by the investors into the public markets. Until we can sell such securities into the public markets, our holdings will be less liquid, and any sales will need to be made pursuant to an exemption under the Securities Act. We may purchase equity securities in a PIPE transaction that are structured as convertible preferred equity (that may also pay distributions in kind). At the time a convertible preferred equity investment becomes convertible into common equity, the common equity may be worth less than the conversion price, which would make it uneconomic to convert into common equity and, as a result, significantly reduce the liquidity of the investment.

Privately Held Company Risk

Investing in privately held companies involves risk. For example, privately held companies are not subject to SEC reporting requirements, are not required to maintain their accounting records in accordance with generally accepted accounting principles and are not required to maintain effective internal controls over financial reporting. As a result, we may not have timely or accurate information about the business, financial condition and results of operations of the privately held companies in which we invest. In addition, the securities of privately held companies are generally illiquid, and entail the risks described under “Liquidity Risk.”

Liquidity Risk

Securities with limited trading volumes may display volatile or erratic price movements. Kayne Anderson is one of the largest investors in Energy Infrastructure Companies. Thus, it may be more difficult for us to buy and sell significant amounts of such securities without an unfavorable impact on prevailing market prices. Larger purchases or sales of these securities by us in a short period of time may cause abnormal movements in the market price of these securities. As a result, these securities may be difficult to dispose of at a fair price at the times when we believe it is desirable to do so. Investment of our capital in securities that are less actively traded or over time experience decreased trading volume may restrict our ability to take advantage of other market opportunities.

We also invest in unregistered or otherwise restricted securities. The term “restricted securities” refers to securities that are unregistered or are held by control persons of the issuer and securities that are subject to contractual restrictions on their resale. Unregistered securities are securities that cannot be sold publicly in the United States without registration under the Securities Act, unless an exemption from such registration is available. Restricted securities may be more difficult to value, and we may have difficulty disposing of such assets either in a timely manner or for a reasonable price. In order to dispose of an unregistered security, we, where we have contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that we could sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and acquirer of the securities. We would, in either case, bear the risks of any downward price fluctuation during that period. The difficulties and delays associated with selling restricted securities could result in our inability to realize a favorable price upon disposition of such securities, and at times might make disposition of such securities impossible.

Our investments in restricted securities may include investments in private companies. Such securities are not registered under the Securities Act until the company becomes a public company. Accordingly, in addition to the risks described above, our ability to dispose of such securities on favorable terms would be limited until the portfolio company becomes a public company.

Portfolio Turnover Risk

Portfolio turnover may vary greatly from year to year. Portfolio turnover rate is not considered a limiting factor in KAFA’s execution of investment decisions. A higher portfolio turnover rate results in correspondingly greater brokerage commissions and other transactional expenses, including taxes related to realized gains, that are borne by us. It could also result in an acceleration of realized gains on portfolio securities held by us (and payment of cash taxes on such realized gains).

Derivatives Risk

We may purchase and sell derivative investments such as exchange-listed and over-the-counter put and call options on securities, equity, fixed income, interest rate and currency indices, and other financial instruments, enter into total return swaps and various interest rate transactions such as swaps. We also may purchase derivative investments that combine features of these instruments. The use of derivatives has risks, including the imperfect correlation between the value of such instruments and the underlying assets, the possible default of the other party to the transaction or illiquidity of the derivative investments. Furthermore, the ability to successfully use these techniques depends on our ability to predict pertinent market movements, which cannot be assured. Thus, the use of derivatives may result in losses greater than if they had not been used, may require us to sell or purchase portfolio securities at inopportune times or for prices other than current market values, may limit the amount of appreciation we can realize on an investment or may cause us to hold a security that we might otherwise sell. Additionally, amounts paid by us as premiums and cash or other assets held in margin accounts with respect to derivative transactions are not otherwise available to us for investment purposes.

We have written covered calls in the past and may do so in the future. As the writer of a covered call option, during the option’s life we give up the opportunity to profit from increases in the market value of the security covering the call option above the sum of the premium and the strike price of the call, but we retain the risk of loss should the price of the underlying security decline. The writer of an option has no control over the time when it may be required to fulfill its obligation as a writer of the option. Once an option writer has received an exercise notice, it cannot effect a closing purchase transaction in order to terminate its obligation under the option and must deliver the underlying security at the exercise price. There can be no assurance that a liquid market will exist when we seek to close out an option position. If trading were suspended in an option purchased by us, we would not be able to close out the option. If we were unable to close out a covered call option that we had written on a security, we would not be able to sell the underlying security unless the option expired without exercise.

Depending on whether we would be entitled to receive net payments from the counterparty on an interest rate swap, which in turn would depend on the general state of short-term interest rates at that point in time, a default by a counterparty could negatively impact the performance of our common stock. In addition, at the time an interest rate transaction reaches its scheduled termination date, there is a risk that we would not be able to obtain a replacement transaction or that the terms of the replacement would not be as favorable as on the expiring transaction. If this occurs, it could have a negative impact on the performance of our common stock. If we fail to maintain any required asset coverage ratios in connection with any use by us of our debt securities, revolving credit facility and other borrowings (collectively, our “Borrowings”) and our preferred stock (together with our Borrowings, “Leverage Instruments”), we may be required to redeem or prepay some or all of the Leverage Instruments. Such redemption or prepayment would likely result in our seeking to terminate early all or a portion of any swap or cap transactions. Early termination of a swap could result in a termination payment by or to us.

Short Sales Risk

Short selling involves selling securities which may or may not be owned and borrowing the same securities for delivery to the purchaser, with an obligation to replace the borrowed securities at a later date. Short selling allows the short seller to profit from declines in market prices to the extent such declines exceed the transaction costs and the costs of borrowing the securities. A short sale creates the risk of an unlimited loss, in that the price of the underlying security could theoretically increase without limit, thus increasing the cost of buying those securities to cover the short position. There can be no assurance that the securities necessary to cover a short position will be available for purchase. Purchasing securities to close out the short position can itself cause the price of the securities to rise further, thereby exacerbating the loss.

Our obligation to replace a borrowed security is secured by collateral deposited with the broker-dealer, usually cash, U.S. government securities or other liquid securities similar to those borrowed. We also are required to segregate similar collateral to the extent, if any, necessary so that the value of both collateral amounts in the aggregate is at all times equal to at least 100% of the current market value of the security sold short. Depending on arrangements made with the broker-dealer from which we borrowed the security regarding payment over of any payments received by us on such security, we may not receive any payments (including interest) on the collateral deposited with such broker-dealer.

Public Health Emergency Risk

Pandemics and other local, national, and international public health emergencies, including outbreaks of infectious diseases such as SARS, H1N1/09 Flu, the Avian Flu, Ebola and the novel coronavirus (“COVID-19”) pandemic, can result in market volatility and disruption, and any similar future emergencies may materially and adversely impact economic production and activity in ways that cannot be predicted, all of which could result in substantial investment losses. Most recently, COVID-19 has caused a worldwide public health emergency, significantly diminished and disrupted global economic production and activity of all kinds, and contributed to both volatility and a severe decline in financial markets.

The full extent of the impact of COVID-19 (and of the resulting precipitous decline and disruption in economic and commercial activity across many of the world’s economies) on global economic conditions, and on the operations, financial condition, and performance of any particular market, industry or business, is impossible to predict, and additional economic disruptions and market volatility may occur as new variants appear and spread. Ongoing and potential additional materially adverse effects, including further global, regional and local economic downturns (including recessions) of indeterminate duration and severity, are possible.

The ongoing COVID-19 crisis and any other public health emergency could have a significant adverse impact on our investments and result in significant investment losses. Of particular relevance to an investment in KYN, volatility in the energy markets, including decreases in demand for (and prices of) energy-related commodities as a result of the impact of COVID-19 on global economic activity, has significantly affected the performance of the energy sector, as well as the performance of Energy Infrastructure Companies in which we invest. Other public health emergencies in the future could have similar impacts.

General Market Conditions Risk

Global economic, political and market conditions, including uncertainty about the financial stability of the United States, could have a significant adverse effect on our business, financial condition and results of operations. The current worldwide financial markets situation, as well as various social and political tensions in the United States and around the world (including wars and other forms of conflict, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes and global health epidemics), may contribute to increased market volatility, may have long term effects on the United States and worldwide financial markets, and may cause economic uncertainties or deterioration in the United States and worldwide.

In addition, the continuing conflict between Russia and Ukraine, and resulting market volatility, could adversely affect our business, financial condition or results of operations. In response to the conflict between Russia and Ukraine, the U.S. and other countries have imposed sanctions or other restrictive actions against Russia. The ongoing conflict and the rapidly evolving measures in response could be expected to have a negative impact on the economy and business activity globally and could have a material adverse effect on our portfolio companies and our business, financial condition, cash flows and results of operations. The severity and duration of the conflict and its impact on global economic and market conditions are impossible to predict. In addition, sanctions could also result in Russia taking counter measures or retaliatory actions which could adversely impact our business or the business of our portfolio companies, including, but not limited to, cyberattacks targeting companies, individuals or other infrastructure upon which our business and the business of our portfolio companies rely.

Risks Related to Our Business and Structure

Use of Leverage

We currently utilize Leverage Instruments and intend to continue to do so. Under normal market conditions, our policy is to utilize Leverage Instruments in an amount that represents approximately 20% – 25% of our total assets, including proceeds from such Leverage Instruments. See “Notice of Changes to Non-Fundamental Investment Policies.” Notwithstanding this policy, based on market conditions at such time, we may use Leverage Instruments in amounts greater than our policy (to the extent permitted by the 1940 Act) or less than our policy. Leverage Instruments have seniority in liquidation and distribution rights over our common stock.

If we are unable to renew or refinance our credit facility prior to maturity or if we are unable to refinance our Notes or MRP Shares as they mature, we may be forced to sell securities in our portfolio to repay debt or MRP Shares as they mature. If we are required to sell portfolio securities to repay outstanding debt or MRP Shares as they mature or to maintain asset coverage ratios, such sales may be at prices lower than what we would otherwise realize if we were not required to sell such securities at such time.

Additionally, we may be unable to refinance our debt or MRP Shares or sell a sufficient amount of portfolio securities to repay debt or MRP Shares as they mature or to maintain asset coverage ratios, which could cause an event of default on our debt securities or MRP Shares.

Leverage Instruments constitute a substantial lien and burden by reason of their prior claim against our income and against our net assets in liquidation. The rights of lenders to receive payments of interest on and repayments of principal of any Borrowings are senior to the rights of holders of common stock and preferred stock, with respect to the payment of distributions or upon liquidation. We may not be permitted to declare dividends and distributions with respect to common stock or preferred stock or purchase common stock or preferred stock unless at such time, we meet certain asset coverage requirements and no event of default exists under any Borrowing. In addition, we may not be permitted to pay distributions on common stock unless all dividends on the preferred stock and/or accrued interest on Borrowings have been paid, or set aside for payment.

In an event of default under any Borrowing, the lenders have the right to cause a liquidation of collateral (i.e., sell portfolio securities and other of our assets) and, if any such default is not cured, the lenders may be able to control the liquidation as well. If an event of default occurs or in an effort to avoid an event of default, we may be forced to sell securities at inopportune times and, as a result, receive lower prices for such security sales. We may also incur prepayment penalties on Notes and MRP Shares that are redeemed prior to their stated maturity dates or mandatory redemption dates.

Certain types of leverage, including the Notes and MRP Shares, subject us to certain affirmative covenants relating to asset coverage and our portfolio composition. In a declining market, we may need to sell securities in our portfolio to maintain asset coverage ratios, which would impact the distributions to us, and as a result, our cash available for distribution to common stockholders. By utilizing Notes and MRP Shares, we may be forced to sell securities at an inopportune time in the future to maintain asset coverage ratios and may be forced to pay additional prepayment penalties on our Notes and MRP Shares. Our Notes and MRP Shares also may impose special restrictions on our use of various investment techniques or strategies or in our ability to pay distributions on common stock and preferred stock in certain instances. In addition, we are subject to certain negative covenants relating to transactions with affiliates, mergers and consolidation, among others. We are also subject to certain restrictions on investments imposed by guidelines of one or more rating agencies, which issue ratings for Leverage Instruments issued by us. These guidelines may impose asset coverage or portfolio composition requirements that are more stringent than those imposed by the 1940 Act. Kayne Anderson does not believe that these covenants or guidelines will impede it from managing our portfolio in accordance with our investment objective and policies.

Interest Rate Hedging Risk

We may hedge against interest rate risk resulting from our leveraged capital structure. We do not intend to hedge interest rate risk of our portfolio holdings. Interest rate transactions that we may use for hedging purposes will expose us to certain risks that differ from the risks associated with our portfolio holdings. There are economic costs of hedging reflected in the price of interest rate swaps and similar techniques, the cost of which can be significant. In addition, our success in using hedging instruments is subject to KAFA’s ability to correctly predict changes in the relationships of such hedging instruments to our leverage risk, and there can be no assurance that KAFA’s judgment in this respect will be accurate. To the extent there is a decline in interest rates, the value of interest rate swaps could decline, and result in a decline in the net asset value of our common stock (and asset coverage ratios for our senior securities). In addition, if the counterparty to an interest rate swap or cap defaults, we would not be able to use the anticipated net receipts under the interest rate swap to offset our cost of financial leverage.

Foreign Investing Risk

We invest in securities of foreign issuers, predominantly those located in Canada and, to a lesser extent, Europe. Canada is a significant exporter of natural resources, such as oil, natural gas and agricultural products. As a result, the Canadian economy is susceptible to adverse changes in certain commodities markets. It is also heavily dependent on trading with key partners, including the United States, Mexico, and China. Any reduction in trading with these key partners may adversely affect the Canadian economy. Canada’s dependency on the economy of the United States, in particular, makes Canada’s economy vulnerable to political and regulatory changes affecting the United States economy.

The European financial markets have continued to experience volatility because of concerns about economic downturns and about high and rising government debt levels of several countries in the European Union (“EU”) and Europe generally. These events have adversely affected the exchange rate of the Euro and the European securities markets, and may spread to other countries in Europe, including countries that do not use the Euro. These events may affect the value and liquidity of certain of our investments. Responses to the financial problems by EU governments, central banks and others, including austerity measures and reforms, may not work, may result in social unrest and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets and asset valuations around the world.

The United Kingdom (“U.K.”) left the EU on January 31, 2020, in a process now commonly referred to as “Brexit.” Investments in European issuers face risks associated with the potential uncertainty and consequences following Brexit, including with respect to volatility in exchange rates and interest rates. Brexit could adversely affect European or worldwide political, regulatory, economic or market conditions and could contribute to instability in global political institutions, regulatory agencies and financial markets. Brexit has also led to legal uncertainty and could lead to politically divergent national laws and regulations as a new relationship between the U.K. and EU is defined and the U.K. determines which EU laws to replace or replicate. Any of these effects of Brexit could adversely affect any of the companies to which we have exposure and any other assets in which we invest. The political, economic and legal consequences of Brexit are not yet fully known.

Secessionist movements, such as the Catalan movement in Spain and the independence movement in Scotland, as well as governmental or other responses to such movements, may also create instability and uncertainty in the region. In addition, the national politics of countries in the EU have been unpredictable and subject to influence by disruptive political groups and ideologies. The governments of EU countries may be subject to change and such countries may experience social and political unrest. Unanticipated or sudden political or social developments may result in sudden and significant investment losses. The occurrence of terrorist incidents throughout Europe could also impact financial markets. The impact of these events is not clear but could be significant and far-reaching and could adversely affect the value and liquidity of our investments.

Investments in some foreign securities may involve greater risks than investing in U.S. securities. As compared to U.S. companies, foreign issuers generally disclose less financial and other information publicly and are subject to less stringent and less uniform accounting, auditing and financial reporting standards. Foreign countries typically impose less thorough regulations on brokers, dealers, stock exchanges, corporate insiders and listed companies than does the U.S., and foreign securities markets may be less liquid and more volatile than U.S. markets. Investments in foreign securities generally involve higher costs than investments in U.S. securities, including higher transaction and custody costs as well as additional taxes imposed by foreign governments. In addition, securities trading practices abroad may offer less protection to investors. Political or social instability, civil unrest, acts of terrorism, regional economic volatility, and the imposition of sanctions, confiscations, trade restrictions (including tariffs) and other government restrictions by the United States and/or other governments are other potential risks that could impact an investment in a foreign security. Settlement of transactions in some foreign markets may be delayed or may be less frequent than in the U.S., which could affect the liquidity of our portfolio.

Foreign Currency Risk

Because we invest in foreign (non-U.S.) currencies or in foreign securities that are denominated, trade and/or receive revenues in foreign (non-U.S.) currencies, we are subject to the risk that those foreign currencies may decline in value relative to the U.S. dollar. In the case of currency hedging positions, we are subject to the risk that the U.S. dollar may decline in value relative to the currency being hedged. Currency exchange rates may fluctuate significantly and unpredictably. As a result, our investments in foreign currencies, in foreign securities that are denominated, trade, and/or receive revenues in foreign currencies, or in derivatives that provide exposure to foreign currencies may reduce our returns.

Tax Risks

In addition to other risk considerations, an investment in our common stock will involve certain tax risks, including, but not limited to, the risks summarized below. The federal, state, local and foreign tax consequences of an investment in and holding of our common stock will depend on the facts of each investor’s situation. Investors are encouraged to consult their own tax advisers regarding the specific tax consequences that may affect them.

Taxability of Distributions Received

We cannot assure you what percentage of the distributions paid on our common stock, if any, will be treated as tax-advantaged qualified dividend income or return of capital or what the tax rates on various types of income or gain will be in future years. New legislation could negatively impact the amount and tax characterization of distributions received by our common stockholders. Under current law, qualified dividend income received by individual stockholders is taxed at a maximum federal tax rate of 20% for individuals, provided a holding period requirement and certain other requirements are met. In addition, currently a 3.8% federal tax on net investment income (the “Tax Surcharge”) generally applies to dividend income and net capital gains for taxpayers whose adjusted gross income exceeds $200,000 for single filers or $250,000 for married joint filers.

Tax Risks of Investing in our Securities

A reduction in the return of capital portion of the distributions that we receive from our portfolio investments or an increase in our earnings and profits and portfolio turnover may reduce that portion of our distribution treated as a tax-deferred return of capital and increase that portion treated as a dividend, resulting in lower after-tax distributions to our common and preferred stockholders.

Other Tax Risks

As a limited partner in the MLPs in which we invest, we will be allocated our distributive share of income, gains, losses, deductions and credits from those MLPs. Historically, a significant portion of income from such MLPs has been offset by tax deductions. We will incur a current tax liability on our distributive share of an MLP’s income and gains that is not offset by tax deductions, losses and credits, or our capital or net operating loss carryforwards or other applicable deductions, if any. The percentage of an MLP’s income and gains which is offset by tax deductions, losses and credits will fluctuate over time for various reasons. A significant slowdown in acquisition activity or capital spending by MLPs held in our portfolio could result in a reduction in the depreciation deduction passed through to us, which may, in turn, result in increased current tax liability to us. In addition, changes to the tax code that impact the amount of income, gain, deduction or loss that is passed through to us from the MLP securities in which we invest (for example through changes to the deductibility of interest expense or changes to how capital expenditures are depreciated) may also result in an increased current tax liability to us. For example, the 2017 Tax Cuts and Jobs Act imposed certain limitations on the deductibility of interest expense that could result in less deduction being passed through to us as the owner of an MLP that is impacted by such limitations. We will accrue deferred income taxes for any future tax liability associated with that portion of MLP distributions considered to be a tax-deferred return of capital as well as capital appreciation of our investments. Upon the sale of an MLP security, we may be required to pay previously deferred taxes. A portion of the gain upon disposition of MLP units attributable to Internal Revenue Code Section 751 assets, including depreciation recapture, would be recognized as ordinary income. Ordinary income attributable to Section 751 assets may exceed the net taxable gain realized upon sale and may be recognized even if there is a net taxable loss upon disposition. We could therefore recognize both ordinary income and a capital loss upon disposition of MLP units.

We rely to some extent on information provided by the MLPs, which may not necessarily be timely, to estimate taxable income allocable to the MLP units held in the portfolio and to estimate the associated current or deferred taxes. Such estimates are made in good faith. From time to time, as new information becomes available, we modify our estimates or assumptions regarding our deferred taxes.

The 2017 Tax Cuts and Jobs Act also imposed limitations on the deductibility of net interest expense and limitations on the usage of net operating loss carryforwards (and elimination of carrybacks). These limitations may impact certain deductions to taxable income and may result in an increased current tax liability to us. To the extent certain deductions are limited in any given year, we may not be able to utilize such deductions in future periods if we do not have sufficient taxable income.

Deferred Tax Risks of Investing in our Securities

The Tax Cuts and Jobs Act reduced the federal corporate tax rate from 35% to 21%. Because our deferred tax liability is based primarily on the federal corporate tax rate, the enactment of the bill significantly reduced our deferred tax liability and increased our net asset value. If the federal income tax rate were to increase in the future, as has been proposed by the Biden administration, our deferred tax liability would increase resulting in a corresponding decrease to our net asset value.

The Company periodically reviews the recoverability of its deferred tax assets based on the weight of available evidence. When assessing the recoverability of its deferred tax assets, significant weight is given to the effects of potential future realized and unrealized gains on investments and the period over which these deferred tax assets can be realized. The Company will continue to review and assess the need for a valuation allowance in the future. Significant variability in the fair value of its portfolio of investments may change the Company’s assessment regarding the recoverability of its deferred tax assets. If a valuation allowance is required to reduce any deferred tax asset in the future, or if a change in a valuation allowance is necessary, it could have a material impact on the Company’s net asset value and results of operations in the period of adjustment.

Management Risk; Dependence on Key Personnel of Kayne Anderson

Our portfolio is subject to management risk because it is actively managed. KAFA applies investment techniques and risk analyses in making investment decisions for us, but there can be no guarantee that they will produce the desired results.

We depend upon Kayne Anderson’s key personnel for our future success and upon their access to certain individuals and investments in the energy sector. In particular, we depend on the diligence, skill and network of business contacts of our portfolio managers, who evaluate, negotiate, structure, close and monitor our investments. These individuals manage a number of investment vehicles on behalf of Kayne Anderson and, as a result, do not devote all of their time to managing us, which could negatively impact our performance. Furthermore, these individuals do not have long-term employment contracts with Kayne Anderson, although they do have equity interests and other financial incentives to remain with Kayne Anderson. We also depend on the senior management of Kayne Anderson. The departure of any of our portfolio managers or the senior management of Kayne Anderson could have a material adverse effect on our ability to achieve our investment objective. In addition, we can offer no assurance that KAFA will remain our investment adviser or that we will continue to have access to Kayne Anderson’s industry contacts and deal flow.

Cybersecurity Risk

The information and technology systems relied upon by KYN, KAFA and our service providers (including, but not limited to, fund accountants, custodians, transfer agents, administrators, distributors and other financial intermediaries) and/or the issuers of securities in which we invest may be vulnerable to damage or interruption from computer viruses, network failures, computer and telecommunication failures, infiltration by unauthorized persons, security breaches, usage errors, power outages and catastrophic events such as fires, tornadoes, floods, hurricanes and earthquakes. Although KAFA has implemented measures to manage risks relating to these types of events, if these systems are compromised, become inoperable for extended periods of time or cease to function properly, significant investment may be required to fix or replace them. The failure of these systems and/or of disaster recovery plans could cause significant interruptions in the operations of KYN, KAFA, our service providers and/or issuers of securities in which we invest and may result in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information relating to investors (and the beneficial owners of investors). Such a failure could also harm the reputation of KYN, KAFA, our service providers and/or issuers of securities in which we invest, subject these entities and their respective affiliates to legal claims or otherwise affect their business and financial performance. There is also a risk that cybersecurity breaches may not be detected, and KYN and its stockholders could be negatively impacted as a result.

Conflicts of Interest of Kayne Anderson

Conflicts of interest may arise because Kayne Anderson and its affiliates generally carry on substantial investment activities for other clients in which the Company will have no interest. Kayne Anderson or its affiliates may have financial incentives to favor certain of such accounts over us. Any of their proprietary accounts and other customer accounts may compete with us for specific trades. Kayne Anderson or its affiliates may buy or sell securities for us which differ from securities bought or sold for other accounts and customers, even though their investment objectives and policies may be similar to ours. Situations may occur when we could be disadvantaged because of the investment activities conducted by Kayne Anderson or its affiliates for their other accounts. Such situations may be based on, among other things, legal or internal restrictions on the combined size of positions that may be taken for us and the other accounts, thereby limiting the size of our position, or the difficulty of liquidating an investment for us and the other accounts where the market cannot absorb the sale of the combined position.

Our investment opportunities may be limited by affiliations of Kayne Anderson or its affiliates with Energy Infrastructure Companies. In addition, to the extent that Kayne Anderson sources and structures private investments in Energy Infrastructure Companies, certain employees of Kayne Anderson may become aware of actions planned by Energy Infrastructure Companies, such as acquisitions, that may not be announced to the public. It is possible that we could be precluded from investing in an Energy Infrastructure Company about which Kayne Anderson has material non-public information; however, it is Kayne Anderson’s intention to ensure that any material non-public information available to certain Kayne Anderson employees not be shared with those employees responsible for the purchase and sale of publicly traded Energy Infrastructure Company securities.

KAFA also manages KMF and Kayne Anderson Renewable Infrastructure Fund, an open-end investment company.

In addition to closed-end and open-end investment companies, KAFA and KACALP manage several private investment funds and separately managed accounts (collectively, “Affiliated Funds”). Some of the Affiliated Funds have investment objectives that are similar to or overlap with ours. Further, Kayne Anderson may at some time in the future, manage other investment funds with the same investment objective as ours or that otherwise create potential conflicts of interest with us.

Investment decisions for us are made independently from those of Kayne Anderson’s other clients; however, from time to time, the same investment decision may be made for more than one fund or account. When two or more clients advised by Kayne Anderson or its affiliates seek to purchase or sell the same publicly traded securities, the securities actually purchased or sold are allocated among the clients on a good faith equitable basis by Kayne Anderson in its discretion in accordance with the clients’ various investment objectives and procedures adopted by Kayne Anderson and approved by our Board of Directors. In some cases, this system may adversely affect the price or size of the position we may obtain. In other cases, however, our ability to participate in volume transactions may produce better execution for us.

We and our affiliates, including Affiliated Funds, may be precluded from co-investing in private placements of securities, including in any portfolio companies that we control. Except as permitted by law, Kayne Anderson will not co-invest its other clients’ assets in the private transactions in which we invest. Kayne Anderson will allocate private investment opportunities among its clients, including us, based on allocation policies that take into account several suitability factors, including the size of the investment opportunity, the amount each client has available for investment and the client’s investment objectives. These allocation policies may result in the allocation of investment opportunities to an Affiliated Fund rather than to us. The policies contemplate that Kayne Anderson will exercise discretion, based on several factors relevant to the determination, in allocating the entirety, or a portion, of such investment opportunities to an Affiliated Fund, in priority to other prospectively interested advisory clients, including us. In this regard, when applied to specified investment opportunities that would normally be suitable for us, the allocation policies may result in certain Affiliated Funds having greater priority than us to participate in such opportunities depending on the totality of the considerations, including, among other things, our available capital for investment, our existing holdings, applicable tax and diversification standards to which we may then be subject and the ability to efficiently liquidate a portion of our existing portfolio in a timely and prudent fashion in the time period required to fund the transaction.

The investment management fee paid to KAFA is based on the value of our assets, as periodically determined. A significant percentage of our assets may be illiquid securities acquired in private transactions for which market quotations will not be readily available. Although we have adopted valuation procedures designed to determine valuations of illiquid securities in a manner that reflects their fair value, there typically is a range of prices that may be established for each individual security. Pursuant to Rule 2a-5, our Board of Directors has designated KAFA as our “Valuation Designee”. As the Valuation Designee, KAFA performs fair value determinations of our portfolio holdings, subject to oversight by and periodic reporting to the Board. KAFA determines the fair value of our portfolio holdings in accordance with our valuation program, as adopted by the Board. As a part of this process, KAFA receives a valuation report from a third-party firm for fair valued (Level 3) securities.

Risk of Owning Securities of Affiliates

From time to time, we may “control” or may be an “affiliate” of one or more of our portfolio companies, as each of these terms is defined in the 1940 Act. In general, under the 1940 Act, we would be presumed to “control” a portfolio company if we and our affiliates owned 25% or more of its outstanding voting securities and would be an “affiliate” of a portfolio company if we and our affiliates owned 5% or more of its outstanding voting securities. The 1940 Act contains prohibitions and restrictions relating to transactions between investment companies and their affiliates (including our investment adviser), principal underwriters and affiliates of those affiliates or underwriters.

Valuation Risk

Market prices may not be readily available for certain of our investments in restricted or unregistered investments in public companies or investments in private companies. The value of such investments will ordinarily be determined based on fair valuations determined by KAFA as our Valuation Designee. Restrictions on resale or the absence of a liquid secondary market may adversely affect our ability to determine our net asset value. The sale price of securities that are not readily marketable may be lower or higher than our most recent determination of their fair value. Additionally, the value of these securities typically requires more reliance on the judgment of KAFA than that required for securities for which there is an active trading market. Due to the difficulty in valuing these securities and the absence of an active trading market for these investments, we may not be able to realize these securities’ true value or may have to delay their sale in order to do so.

Anti-Takeover Provisions

Our Charter, Bylaws and the Maryland General Corporation Law include provisions that could limit the ability of other entities or persons to acquire control of us, to convert us to open-end status, or to change the composition of our Board of Directors. We also have adopted other measures that may make it difficult for a third party to obtain control of us, including provisions of our Charter classifying our Board of Directors in three classes serving staggered three-year terms; and provisions authorizing our Board of Directors to classify or reclassify shares of our stock in one or more classes or series, to cause the issuance of additional shares of our stock, and allowing a majority of our entire Board of Directors to amend our Charter, without stockholder approval, to increase or decrease the number of shares of stock that we have the authority to issue. These provisions, as well as other provisions of our Charter and Bylaws, could have the effect of discouraging, delaying, deferring or preventing a transaction or a change in control that might otherwise be in the best interests of our stockholders. As a result, these provisions may deprive our common stockholders of opportunities to sell their common stock at a premium over the then current market price of our common stock.

Additional Risks Related to Our Common Stock

Market Discount from Net Asset Value Risk

Our common stock has traded both at a premium and at a discount to our net asset value. Shares of closed-end investment companies frequently trade at a discount to their net asset value. This characteristic is a risk separate and distinct from the risk that our net asset value could decrease as a result of our investment activities. Although the value of our net assets is generally considered by market participants in determining whether to purchase or sell shares, whether investors will realize gains or losses upon the sale of our common stock depends upon whether the market price of our common stock at the time of sale is above or below the investor’s purchase price for our common stock. Because the market price of our common stock is affected by factors such as net asset value, distribution levels (which are dependent, in part, on expenses), supply of and demand for our common stock, stability of distributions, trading volume, general market and economic conditions, and other factors beyond our control, we cannot predict whether our common stock will trade at, below or above net asset value.

Leverage Risk to Common Stockholders

The issuance of Leverage Instruments represents the leveraging of our common stock. Leverage is a technique that could adversely affect our common stockholders. Unless the income and capital appreciation, if any, on securities acquired with the proceeds from Leverage Instruments exceed the costs of the leverage, the use of leverage could cause us to lose money. When leverage is used, the net asset value and market value of our common stock will be more volatile. There is no assurance that our use of leverage will be successful.

Our common stockholders bear the costs of leverage through higher operating expenses. Our common stockholders also bear management fees, whereas holders of notes or preferred stock do not bear management fees. Because management fees are based on our total assets, our use of leverage increases the effective management fee borne by our common stockholders. In addition, the issuance of additional senior securities by us would result in offering expenses and other costs, which would ultimately be borne by our common stockholders. Fluctuations in interest rates could increase our interest or dividend payments on Leverage Instruments and could reduce cash available for distributions on common stock. Certain Leverage Instruments are subject to covenants regarding asset coverage, portfolio composition and other matters, which may affect our ability to pay distributions to our common stockholders in certain instances. We may also be required to pledge our assets to the lenders in connection with certain other types of borrowing.

Leverage involves other risks and special considerations for common stockholders including: the likelihood of greater volatility of net asset value and market price of our common stock than a comparable portfolio without leverage; the risk of fluctuations in dividend rates or interest rates on Leverage Instruments; that the dividends or interest paid on Leverage Instruments may reduce the returns to our common stockholders or result in fluctuations in the distributions paid on our common stock; the effect of leverage in a declining market, which is likely to cause a greater decline in the net asset value of our common stock than if we were not leveraged, which may result in a greater decline in the market price of our common stock; and when we use financial leverage, the investment management fee payable to Kayne Anderson may be higher than if we did not use leverage.

While we may from time to time consider reducing leverage in response to actual or anticipated changes in interest rates or actual or anticipated changes in investment values in an effort to mitigate the increased volatility of current income and net asset value associated with leverage, there can be no assurance that we will actually reduce leverage in the future or that any reduction, if undertaken, will benefit our common stockholders. Changes in the future direction of interest rates or changes in investment values are difficult to predict accurately. If we were to reduce leverage based on a prediction about future changes to interest rates (or future changes in investment values), and that prediction turned out to be incorrect, the reduction in leverage would likely result in a reduction in income and/or total returns to common stockholders relative to the circumstance if we had not reduced leverage. We may decide that this risk outweighs the likelihood of achieving the desired reduction to volatility in income and the price of our common stock if the prediction were to turn out to be correct, and determine not to reduce leverage as described above.

Finally, the 1940 Act provides certain rights and protections for preferred stockholders which may adversely affect the interests of our common stockholders. See “Proposal One: Merger — Description of Securities.”

PROPOSAL ONE: MERGER

The Board of Directors of KMF, including the Independent Directors, has unanimously approved the Merger Agreement, determined the Merger to be in the best interests of KMF and directed that the Merger proposal be submitted to the KMF stockholders for consideration. Upon the closing of the Merger, KMF will be merged with and into a wholly owned subsidiary (“Merger Sub”) of KYN (the “Merger”). Pursuant to the Merger Agreement, KMF stockholders will be entitled to receive in exchange for each of their outstanding shares of KMF common stock either (i) shares of KYN common stock, which shall be based on the relative per share NAVs of KYN and KMF (i.e., the value received shall be equal to 100% of the NAV per share of the KMF common stock) (“Stock Consideration”), or (ii) an amount of cash equal to 95% of the NAV per share of the KMF common stock (“Cash Consideration”). No fractional shares of KYN common stock will be issued in the Merger; instead KMF stockholders will receive cash in an amount equal to the value of the fractional shares of KYN common stock that they would otherwise have received. KMF stockholders’ right to elect to receive Cash Consideration is subject to the adjustment and proration procedures set forth in the Merger Agreement to ensure that the total number of shares of KMF common stock converted into the right to receive Cash Consideration will not exceed 7,079,620 shares (representing 15% of the outstanding shares of KMF common stock prior to the closing of the Merger). KMF will then cease its separate existence under Maryland law and terminate its registration under the 1940 Act. Immediately following the Merger, it is expected that Merger Sub will be merged with and into KYN. The aggregate NAV of KYN common stock received by KMF common stockholders receiving Stock Consideration in the Merger will equal the aggregate NAV of the exchanged KMF common stock (excluding cash distributed by KYN for fractional shares). KYN will be the accounting survivor following the closing of the Merger and will continue to operate after the Merger as a registered, non-diversified, closed-end management investment company with the investment objectives and policies described in this joint proxy statement/prospectus.

In connection with the Merger, each holder of KMF MRP Shares will receive in a private placement an equivalent number of newly issued KYN MRP Shares, each having substantially identical terms as the respective KMF MRP Shares. The aggregate liquidation preference of the KYN MRP Shares received by the holders of KMF MRP Shares in the Merger will equal the aggregate liquidation preference of the KMF MRP Shares held immediately prior to the closing of the Merger. The KYN MRP Shares to be issued in the Merger will have equal priority with KYN’s existing outstanding preferred shares as to the payment of dividends and the distribution of assets in the event of a liquidation of KYN. In addition, the preferred shares of KYN, including the KYN MRP Shares to be issued in connection with the Merger, will be senior in priority to KYN common shares as to payment of dividends and the distribution of assets in the event of a liquidation of KYN.

If the Merger is not approved by stockholders of KMF, or if the issuance of additional KYN common stock in connection with the Merger is not approved by the stockholders of KYN, KYN and KMF will each continue to operate as a standalone Maryland corporation advised by KAFA and will each continue its investment activities in the normal course. Further, if the Merger is not approved, KYN’s current asset tiers for fee waivers will remain in effect.

Investment Objectives and Policies of KYN

This section relates to KYN and its Investment Objective and Policies (other parts of this document relate to both KYN and KMF). Accordingly, references to “we” “us,” “our” or “the Company” in this section are references to KYN.

Our investment objective is to provide a high after-tax total return with an emphasis on making cash distributions to stockholders. Our investment objective is considered a fundamental policy and therefore may not be changed without the approval of the holders of a “majority of the outstanding” voting securities, as such term is defined under the 1940 Act. When used with respect to our voting securities, a “majority of the outstanding” voting securities means (i) 67% or more of the shares present at a meeting, if the holders of more than 50% of the shares are present or represented by proxy, or (ii) more than 50% of the shares, whichever is less. There can be no assurance that we will achieve our investment objective.

Our non-fundamental investment policies may be changed by the Board of Directors without the approval of the holders of a “majority of the outstanding” voting securities, provided that the holders of such voting securities receive at least 60 days’ prior written notice of any change. The following are our non-fundamental investment policies, under normal market conditions:

Unless otherwise stated, all investment restrictions apply at the time of purchase and we will not be required to reduce a position due solely to market value fluctuations.

Our Portfolio

At any given time, we expect that our portfolio will have some or all of the types of the following types of investments: (i) equity securities of Energy Infrastructure Companies, including Midstream Energy Companies, Renewable Infrastructure Companies and Utility Companies, (ii) debt securities of Energy Infrastructure Companies, and (iii) equity and debt securities of other public and private issuers.

Description of Energy Infrastructure Companies

Energy Infrastructure Companies consist of (i) Midstream Energy Companies, (ii) Renewable Infrastructure Companies and (iii) Utility Companies, each of which is described in further detail below.

Description of Midstream Energy Companies

Midstream Energy Companies are companies that primarily own and operate Midstream Assets, which are the assets used in energy logistics, including, but not limited to, assets used in (a) transporting, storing, gathering, processing, fractionating, distributing, or marketing of natural gas, natural gas liquids, crude oil, refined products or water produced in conjunction with such activities or (b) the capture, transportation or sequestration of carbon dioxide. Midstream Energy Companies may be structured as Master Limited Partnerships or taxed as corporations. For purposes of our investment policies, Midstream Energy Companies include companies that (i) derive at least 50% of their revenue or operating income from operating Midstream Assets or providing services for the operation of such assets or (ii) have Midstream Assets that represent the majority of their assets.

Master Limited Partnerships are entities that are publicly traded and are treated as partnerships for federal income tax purposes. Master Limited Partnerships are typically structured as limited partnerships or as limited liability companies treated as partnerships. The units for these entities are listed and traded on a U.S. securities exchange. To qualify as a Master Limited Partnership, the entity must receive at least 90% of its income from qualifying sources as set forth in Section 7704(d) of the Code. These qualifying sources include natural resource-based activities such as the exploration, development, mining, production, gathering, processing, refining, transportation, storage, distribution and marketing of mineral or natural resources. Limited partnerships have two classes of interests: general partner interests and limited partner interests. The general partner typically controls the operations and management of the partnership through an equity interest in the partnership (typically up to 2% of total equity). Limited partners own the remainder of the partnership and have a limited role in the partnership’s operations and management.

Renewable Infrastructure Companies

Renewable Infrastructure Companies are companies that own and/or operate Renewable Infrastructure Assets, which are assets used in the generation, production, distribution, transportation, transmission, storage and marketing of energy including, but not limited to, electricity, steam, natural gas or transportation fuels from renewable sources such as solar, wind, flowing water (hydroelectric power), geothermal, biomass and organic waste. For purposes of our investment policies, Renewable Infrastructure Companies include companies that (i) derive at least 50% of their revenues or operating income from operating Renewable Infrastructure Assets or providing services for the operation of such assets or (ii) have Renewable Infrastructure Assets that represent the majority of their assets.

Utility Companies

Utility companies are companies that own and/or operate Utility Assets, which are assets, other than Renewable Infrastructure Assets, that are used in the generation, production, distribution, transportation, transmission, storage and marketing of energy, including, but not limited to, electricity, natural gas and steam. For purposes of our investment policies, Utility Companies include companies that (i) derive at least 50% of their revenues or operating income from operating Utility Assets or providing services for the operation of such assets or (ii) have Utility Assets that represent the majority of their assets.

Investment Practices

Covered Calls

We may write call options with the purpose of generating cash from call premiums, generating realized gains and/or reducing our ownership of certain securities. We will only write call options on securities that we hold in our portfolio (i.e., covered calls). A call option on a security is a contract that gives the holder of such call option the right to buy the security underlying the call option from the writer of such call option at a specified price at any time during the term of the option. At the time the call option is sold, the writer of a call option receives a premium (or call premium) from the buyer of such call option. If we write a call option on a security, we have the obligation upon exercise of such call option to deliver the underlying security upon payment of the exercise price. When we write a call option, an amount equal to the premium received by us will be recorded as a liability and will be subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated by us as realized gains from investments on the expiration date. If we repurchase a written call option prior to its exercise, the difference between the premium received and the amount paid to repurchase the option is treated as a realized gain or realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether we have realized a gain or loss. We, as the writer of the option, bear the market risk of an unfavorable change in the price of the security underlying the written option.

Interest Rate Swaps or Other Hedging Techniques

We may utilize hedging techniques such as interest rate swaps or other hedging techniques to mitigate potential interest rate risk on a portion of our Leverage Instruments. Such interest rate swaps or other hedging activity would principally be used to protect us against higher costs on our Leverage Instruments resulting from increases in interest rates.

Use of Arbitrage and Other Derivative-Based Strategies

We may use short sales, arbitrage and other strategies to try to generate additional return. As part of such strategies, we may (i) engage in paired long-short trades to arbitrage pricing disparities in securities held in our portfolio; (ii) purchase call options or put options; (iii) enter into total return swap contracts; or (iv) sell securities short. Paired trading consists of taking a long position in one security and concurrently taking a short position in another security within the same issuer or in issuers that operate in the same industry. With a long position, we purchase a stock outright; whereas with a short position, we would sell a security that we do not own and must borrow to meet our settlement obligations. We will realize a profit or incur a loss from a short position depending on whether the value of the underlying stock decreases or increases, respectively, between the time the stock is sold and when we replace the borrowed security. See “Risk Factors — Risks Related to Our Investments and Investment Techniques — Short Sales Risk.” A total return swap is a contract between two parties designed to replicate the economics of directly owning a security.

Value of Derivative Instruments

For purposes of determining compliance with the requirement that we invest 80% of our total assets in Energy Infrastructure Companies, we value derivative instruments based on their respective current fair market values.

Other Risk Management Strategies

To a lesser extent, we may use various hedging and other risk management strategies to seek to manage market risks. Such hedging strategies would be utilized to seek to protect against possible adverse changes in the market value of securities held in our portfolio, or to otherwise protect the value of our portfolio. We may execute our hedging and risk management strategy by engaging in a variety of transactions, including buying or selling options or futures contracts on indexes. See “Risk Factors — Risks Related to Our Investments and Investment Techniques — Derivatives Risk.”

Portfolio Turnover

We anticipate that our annual portfolio turnover rate will range between 15% and 25%, but the rate may vary greatly from year to year. In particular, as KYN seeks to utilize the remainder of its capital loss carryforward over the next three fiscal years, we expect that its portfolio turnover will be at the higher end of this stated range and may be above the range indicated in the preceding sentence. Portfolio turnover rate is not considered a limiting factor in KAFA’s execution of investment decisions. For purposes of our investments in MLPs, the types of MLPs in which we intend to invest historically have made cash distributions to limited partners, a substantial portion of which would be treated as a non-taxable return of capital to the extent of our basis. As a result, the tax related to the portion of such distributions treated as return of capital would be deferred until subsequent sale of our MLP units, at which time we would pay any required tax on capital gain. A portion of the gain upon disposition of MLP units attributable to Internal Revenue Code Section 751 assets, including depreciation recapture, would be recognized as ordinary income. Ordinary income attributable to Section 751 assets may exceed the net taxable gain realized upon sale and may be recognized even if there is a net taxable loss upon disposition. We could therefore recognize both ordinary income and a capital loss upon disposition of MLP units. The sooner we sell such MLP units, the sooner we would be required to pay tax on resulting capital gains and/or ordinary income, and the cash available to us to pay distributions to our common stockholders in the year of such tax payment would be less than if such taxes were deferred until a later year. In addition, the greater the number of such MLP units that we sell in any year, i.e., the higher our turnover rate, the greater our potential tax liability for that year. These taxable gains and/or ordinary income may increase our current and accumulated earnings and profits, resulting in a greater portion of our common stock distributions being treated as dividend income to our common stockholders. In addition, a higher portfolio turnover rate results in correspondingly greater brokerage commissions and other transactional expenses that are borne by us. See “— Certain Federal Income Tax Matters.”

Use of Leverage

We generally will seek to enhance our total returns through the use of financial leverage, which may include the issuance of Leverage Instruments. Under normal market conditions, our policy is to utilize Leverage Instruments in an amount that represents approximately 20% - 25% of our total assets, including proceeds from such Leverage Instruments (which equates to 28% - 35% of our net asset value as of May 31, 2023). Notwithstanding this policy, based on market conditions at such time, we may use Leverage Instruments in amounts greater than our policy (to the extent permitted by the 1940 Act) or less than our policy. As of May 31, 2023, our Leverage Instruments represented approximately 23% of our total assets. At May 31, 2023, our asset coverage ratios under the 1940 Act were 576% and 418% for debt and total leverage (debt plus preferred stock), respectively. We target asset coverage ratios that give us ability to withstand declines in the market value of the securities we hold before breaching the financial covenants in our Leverage Instruments. These targets are dependent on market conditions and may vary from time to time. At this time, we target asset coverage ratios that provide 40% to 50% of cushion relative to our financial covenants (i.e., market values could decline by approximately this amount before our asset coverage ratios would be equal to our financial covenants). Leverage creates a greater risk of loss, as well as potential for more gain, for our common stock than if leverage is not used. Our common stock is junior in liquidation and distribution rights to our Leverage Instruments. We expect to invest the net proceeds derived from any use of Leverage Instruments according to the investment objective and policies described in this joint proxy statement/prospectus.

Leverage creates risk for our common stockholders, including the likelihood of greater volatility of net asset value and market price of our common stock, and the risk of fluctuations in dividend rates or interest rates on Leverage Instruments which may affect the return to the holders of our common stock or will result in fluctuations in the distributions paid by us on our common stock. To the extent the return on securities purchased with funds received from Leverage Instruments exceeds their cost (including increased expenses to us), our total return will be greater than if Leverage Instruments had not been used. Conversely, if the return derived from such securities is less than the cost of Leverage Instruments (including increased expenses to us), our total return will be less than if Leverage Instruments had not been used, and therefore, the amount available for distribution to our common stockholders will be reduced. In the latter case, KAFA in its best judgment nevertheless may determine to maintain our leveraged position if it expects that the long-term benefits of so doing will outweigh the near-term impact of the reduced return to our common stockholders.

The management fees paid to KAFA will be calculated on the basis of our total assets including proceeds from Leverage Instruments. During periods in which we use financial leverage, the management fee payable to KAFA may be higher than if we did not use a leveraged capital structure. Consequently, we and KAFA may have differing interests in determining whether to leverage our assets. Our Board of Directors monitors our use of Leverage Instruments and this potential conflict. The use of leverage creates risks and involves special considerations. See “Risk Factors — Additional Risks Related to Our Common Stock — Leverage Risk to Common Stockholders.”

The Maryland General Corporation Law authorizes us, without prior approval of our common stockholders, to borrow money. In this regard, we may obtain proceeds through Borrowings and may secure any such Borrowings by mortgaging, pledging or otherwise subjecting as security our assets. In connection with such Borrowings, we may be required to maintain minimum average balances with the lender or to pay a commitment or other fee to maintain a line of credit. Any such requirements will increase the cost of such Borrowing over its stated interest rate.

Under the requirements of the 1940 Act, we, immediately after issuing any senior securities representing indebtedness, must have an asset coverage of at least 300% after such issuance. With respect to such issuance, asset coverage means the ratio which the value of our total assets, less all liabilities and indebtedness not represented by senior securities (as defined in the 1940 Act), bears to the aggregate amount of senior securities representing indebtedness issued by us.

The rights of our lenders to receive interest on and repayment of principal of any Borrowings will be senior to those of our common stockholders, and the terms of any such Borrowings may contain provisions which limit certain of our activities, including the payment of distributions to our common stockholders in certain circumstances. Under the 1940 Act, we may not declare any dividend or other distribution on any class of our capital stock, or purchase any such capital stock, unless our aggregate indebtedness has, at the time of the declaration of any such dividend or distribution, or at the time of any such purchase, an asset coverage of at least 300% after declaring the amount of such dividend, distribution or purchase price, as the case may be. Further, the 1940 Act does (in certain circumstances) grant our lenders certain voting rights in the event of default in the payment of interest on or repayment of principal.

Certain types of Leverage Instruments subject us to certain affirmative covenants relating to asset coverage and portfolio composition and may impose special restrictions on our use of various investment techniques or strategies or on our ability to pay distributions on common stock in certain circumstances. In addition, we are subject to certain negative covenants relating to transactions with affiliates, mergers and consolidations among others. It is not anticipated that these covenants or guidelines will impede KAFA from managing our portfolio in accordance with our investment objective and policies.

If an event of default is not cured, under any Borrowing, the lenders have the right to cause our outstanding Borrowings to be immediately due and payable and proceed to protect and enforce their rights by an action at law, suit in equity or other appropriate proceeding. If an event of default occurs or in an effort to avoid an event of default, we may be forced to sell securities at inopportune times and, as a result, receive lower prices for such security sales. We may also incur prepayment penalties on unsecured notes (“Notes”) and MRP Shares that are redeemed prior to their stated maturity dates or mandatory redemption dates.

Under the 1940 Act, we are not permitted to issue preferred stock unless immediately after such issuance the value of our total assets less all liabilities and indebtedness not represented by senior securities is at least 200% of the sum of the liquidation value of the outstanding preferred stock plus the aggregate amount of senior securities representing indebtedness. In addition, we are not permitted to declare any cash dividend or other distribution on our common or preferred stock unless, at the time of such declaration, our preferred stock has an asset coverage of at least 200%. Further, while the MRP Shares are outstanding, we are not permitted to issue preferred stock unless immediately after such issuance the value of our total assets less all liabilities and indebtedness not represented by senior securities is at least 225% of the sum of the liquidation value of the outstanding preferred stock plus the aggregate amount of senior securities representing indebtedness. In addition, we are not permitted to declare any cash dividend or other distribution on our common or preferred stock unless, at the time of such declaration, our preferred stock has an asset coverage of at least 225%. If necessary, we will purchase or redeem our preferred stock to maintain the applicable asset coverage ratio. In order to meet redemption requirements, we may have to liquidate portfolio securities. Such liquidations and redemptions would cause us to incur related transaction costs and could result in capital losses to us. If we have preferred stock outstanding, two of our directors will be elected by the holders of our preferred stock (voting as a class). Our remaining directors will be elected by holders of our common stock and preferred stock voting together as a single class. In the event we fail to pay dividends on our preferred stock for two years, holders of preferred stock would be entitled to elect a majority of our directors.

To the extent that we use additional Leverage Instruments, the Borrowings that we anticipate issuing will have maturity dates ranging from 1 to 12 years from the date of issuance. The preferred stock we anticipate issuing is a mandatory redeemable preferred that must be redeemed within 5 to 12 years from the date of issuance. If we are unable to refinance such Leverage Instruments when they mature, we may be forced to sell securities in our portfolio to repay such Leverage Instruments. Further, if we do not repay the Leverage Instruments when they mature, we will trigger an event of default on our Borrowings (which will increase the interest rate on such Borrowings and give the holders of such Borrowings certain rights) and will trigger a higher dividend rate on our preferred stock.

We may also borrow money as a temporary measure for extraordinary or emergency purposes, including the payment of dividends and the settlement of securities transactions which otherwise might require untimely dispositions of our common stock.

Effects of Leverage

KYN/Acquirer

As of May 31, 2023, we had $244.2 million, aggregate principal amount, of Notes outstanding.

As of May 31, 2023, we did not have any borrowings outstanding under our revolving credit facility. The interest rate payable by us on borrowings under our revolving credit facility with JPMorgan Chase Bank, N.A., Bank of America, N.A., Sumitomo Mitsui Banking Corporation, Regions Bank, and U.S. Bank National Association may vary between one-month SOFR plus 1.40% and one-month SOFR plus 2.25%, depending on asset coverage ratios. Outstanding loan balances accrue interest daily at a rate equal to one-month SOFR plus 1.40% per annum based on asset coverage ratios as of May 31, 2023. We pay a commitment fee equal to a rate of 0.20% per annum on any unused amounts of the $175 million commitment for the revolving credit facility. Our revolving credit facility has a one-year term maturing on February 23, 2024.

As of May 31, 2023, we had $50 million of outstanding borrowings under our term loan. The interest rate payable by us on our borrowings under our term loan is 1.735% on the first $25 million and SOFR plus 1.40% per annum on the remaining $25 million. Amounts repaid under our term loan cannot be reborrowed. Our term loan matures on August 6, 2024.

As of May 31, 2023, we had $111.6 million aggregate liquidation value of MRP Shares outstanding.

Assuming that our leverage costs remain as described above, our average annual cost of leverage would be 4.29%. Income generated by our portfolio as of May 31, 2023 must exceed 5.7% in order to cover such leverage costs. These numbers are merely estimates used for illustration; actual dividend or interest rates on the Leverage Instruments will vary frequently and may be significantly higher or lower than the rate estimated above.

The following table is furnished in response to requirements of the SEC. It is designed to illustrate the effect of leverage on common stock total return, assuming investment portfolio returns (comprised of income and changes in the value of securities held in our portfolio) of minus 10% to plus 10%. These assumed investment portfolio returns are hypothetical figures and are not necessarily indicative of the investment portfolio returns experienced or expected to be experienced by us. See “Risk Factors.” Further, the assumed investment portfolio total returns are after all of our expenses other than expenses associated with leverage, but such leverage expenses are included when determining the common stock total return. The table further reflects the issuance of Leverage Instruments representing 23% of our total assets (actual leverage at May 31, 2023), and our estimated leverage costs of 4.29%. The cost of leverage is expressed as a blended interest/dividend rate and represents the weighted average cost on our Leverage Instruments.

Common stock total return is composed of two elements: common stock distributions paid by us and gains or losses on the value of the securities we own. As required by SEC rules, the table above assumes that we are more likely to suffer capital losses than to enjoy capital appreciation. For example, to assume a total return of 0% we must assume that the distributions we receive on our investments is entirely offset by losses in the value of those securities.

KMF/Target

As of May 31, 2023, KMF had $80.1 million, aggregate principal amount, of Notes outstanding.

As of May 31, 2023, KMF did not have any borrowings outstanding under its revolving credit facility. The interest rate payable by KMF on borrowings under its credit facility with JPMorgan Chase Bank, N.A., Bank of America, N.A., Sumitomo Mitsui Banking Corporation, Regions Bank, and U.S. Bank National Association may vary between one-month SOFR plus 1.40% and one-month SOFR plus 2.25% depending on KMF’s asset coverage ratios. Outstanding loan balances accrue interest daily at a rate equal to one-month SOFR plus 1.40% per annum based on KMF’s asset coverage ratios as of May 31, 2023. KMF pays a commitment fee equal to a rate of 0.20% per annum on any unused amounts of the $45 million commitment for the revolving credit facility. KMF’s credit facility has a one-year term maturing on February 23, 2024.

As of May 31, 2023, KMF did not have any borrowings outstanding under its revolving bank facility with Sumitomo Mitsui Banking Corporation. The interest rate payable on borrowings under its bank facility may vary between one-month SOFR plus 1.45% and one-month SOFR plus 2.30% depending on KMF’s asset coverage ratios. Outstanding loan balances accrue interest daily at a rate equal to one-month SOFR plus 1.45% per annum based on KMF’s asset coverage ratios as of May 31, 2023. KMF pays a commitment fee equal to a rate of 0.20% per annum on any unused amounts of the $20 million commitment for the revolving bank facility. The bank facility matures on August 6, 2024.

As of May 31, 2023, KMF had $41.5 million aggregate liquidation value of MRP Shares outstanding.

Assuming that KMF’s leverage costs remain as described above, KMF’s annual cost of leverage would be 4.75%. Income generated by KMF’s portfolio as of May 31, 2023 must exceed 6.0% in order to cover such leverage costs. These numbers are merely estimates used for illustration; actual dividend or interest rates on KMF’s Leverage Instruments will vary frequently and may be significantly higher or lower than the rate estimate above.

The following table is designed to illustrate the effect of leverage on KMF’s common stock total return, assuming investment portfolio returns (comprised of income and changes in the value of securities in KMF’s portfolio) of minus 10% to plus 10%. These assumed investment portfolio returns are hypothetical figures and not necessarily indicative of the investment portfolio returns experienced or expected to be experienced by KMF. Further, the assumed investment portfolio total returns are after all of KMF’s expenses other than expenses associated with leverage, but such expenses are included when determining KMF’s common stock return. The table further reflets the issuance of Leverage Instruments representing 24% of KMF’s total assets (actual leverage at May 31, 2023), and KMF’s estimated leverage costs of 4.75%. The cost of leverage is expressed as a blended interest/dividend rate and represents the weighted average cost of KMF’s Leverage Instruments.

KMF common stock total return is composed of two elements: common stock distributions paid by KMF and gains or losses on the value of the securities that KMF’s owns. As required by SEC rules, the table above assumes that KMF is more likely to suffer capital losses than to enjoy capital appreciation. For example, to assume a total return of 0% KMF must assume that the distributions it receives on its investments is entirely offset by losses in the value of its securities.

Comparison of the Companies

Each Company has an investment portfolio consisting in substantial part of energy infrastructure companies and has similar principal investment strategies. The table below provides a more detailed comparison of the Companies.

For further information on the amount and types of leverage used by KYN and KMF, please see “Proposal One: Merger—Investment Objectives and Policies of KYN—Effects of Leverage.”

Management

Directors and Officers

Each Company’s business and affairs are managed under the direction of its Board of Directors, including supervision of the duties performed by KAFA. Each Company’s Board of Directors currently consists of eight directors, seven of whom are considered to be “Independent Directors” as defined in the 1940 Act. Each Board of Directors elects each Company’s officers, who serve at the Board’s discretion, and are responsible for day-to-day operations.

Investment Adviser

KAFA is each Company’s investment adviser and is registered with the SEC under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). KAFA also is responsible for managing each Company’s business affairs and providing certain clerical, bookkeeping and other administrative services. KAFA is a Delaware limited liability company. The managing member of KAFA is KACALP, an investment adviser registered with the SEC under the Advisers Act. Kayne Anderson has one general partner, Kayne Anderson Investment Management, Inc., and a number of individual limited partners. Kayne Anderson Investment Management, Inc. is a Nevada corporation controlled by Richard A. Kayne. Kayne Anderson’s predecessor was established as an independent investment advisory firm in 1984.

KAFA’s management of each Company’s portfolio is led by James C. Baker, Jr. and J.C. Frey. Mr. Baker has served as portfolio manager for each Company since November 2017. Mr. Frey has served as a portfolio manager for KYN since its inception in 2004 and for KMF since its inception in 2010. Each portfolio manager is jointly and primarily responsible for the day-to-day management of each Company’s portfolio. The portfolio managers draw on the support of the investment team in Kayne Anderson’s Energy Infrastructure group, as well as the experience and expertise of the Company’s officers and other senior professionals at Kayne Anderson.

Portfolio Management

James C. Baker, Jr. is a Managing Partner of Kayne Anderson and Co-Managing Partner of KAFA. Mr. Baker has served as each Company’s Chief Executive Officer since June 2019 and as Director, President and co-portfolio manager of each Company since November 2017. Mr. Baker has served as Senior Managing Director of KACALP and the KAFA since February 2008; as President of each Company since June 2016; and as Executive Vice President of KYN from June 2008 to June 2016 and of KMF from August 2010 to June 2016. Mr. Baker also served as President of Kayne Anderson BDC, Inc. (“KABDC”) from February 2021 until August 2023; served as Chief Executive Officer of KABDC from June 2021 until August 2023; and has served as President and Chief Executive Officer of Kayne DL 2021, Inc. (“KDL”) since December 2021. Prior to joining Kayne Anderson in 2004, Mr. Baker was Director in Planning and Analysis at El Paso Corporation from April 2004 to December 2004. Prior to that, he was a Director in the energy investment banking group at UBS Securities LLC. At UBS, where he focused on securities underwriting and mergers and acquisitions in the energy industry. Prior to joining UBS in 2000, Mr. Baker was an Associate in the energy investment banking group at PaineWebber Incorporated. He earned a BBA degree in Finance from the University of Texas at Austin in 1995 and an MBA degree in Finance from Southern Methodist University in 1997.

J.C. Frey is a Partner and Senior Managing Director for Kayne Anderson and Co-Managing Partner of KAFA. He has served as each Company’s co-portfolio manager since their inception and was each Company’s Assistant Secretary and Assistant Treasurer from June 2004 (KYN) and November 2010 (KMF) to January 2019. He has served as Executive Vice President of KYN since June 2008 and of KMF since inception. Mr. Frey has served as Managing Partner of KACALP since 2004 and Co-Managing Partner of KAFA since 2006. Mr. Frey began investing in MLPs on behalf of Kayne Anderson in 1998 and has served as portfolio manager of Kayne Anderson’s MLP funds since their inception in 2000. Prior to joining Kayne Anderson in 1997, Mr. Frey was a CPA and audit manager in KPMG Peat Marwick’s financial services group, specializing in banking and finance clients and loan securitizations. Mr. Frey graduated from Loyola Marymount University with a BS degree in Accounting in 1990. In 1991, he received a Master’s degree in Taxation from the University of Southern California.

The Statement of Additional Information incorporated by reference into this proxy statement/prospectus includes additional disclosure about the portfolio managers’ compensation, other accounts managed by the portfolio manager, and the portfolio managers’ ownership of securities in KYN.

Company Management

Terry A. Hart is a Partner and Senior Managing Director of Kayne Anderson. Mr. Hart serves as KYN and KMF’s Chief Operating Officer and Assistant Secretary (since April 2022) and previously was each Company’s Chief Financial Officer, Treasurer and Assistant Secretary. Prior to joining Kayne Anderson in 2005, Mr. Hart was most recently a senior vice president and controller at Dynegy, Inc. Prior to that, Mr. Hart served as assistant treasurer and director of structured finance. He began his finance and accounting career in 1992 with Illinova Corporation, which was acquired by Dynegy, Inc. in 2000. Mr. Hart earned a B.S. in Accounting from Southern Illinois University in 1991 and an M.B.A. from the University of Illinois in 1999.

A. Colby Parker is an Assistant Treasurer and Controller of Kayne Anderson. Mr. Parker serves as Chief Financial Officer and Treasurer of KYN and KMF (since April 2022) and previously served as Vice President and Assistant Treasurer of KYN and KMF (from June 2020). Prior to joining Kayne Anderson, Mr. Parker was a senior associate in Ernst & Young’s Houston assurance practice where he performed audits of various public and private companies. Mr. Parker earned a B.B.A. in Accounting and a M.S. in Finance from Texas A&M University in 2010 and is a Certified Public Accountant in the State of Texas.

Michael J. O’Neil is the Chief Compliance Officer of Kayne Anderson. Mr. O’Neil serves as KYN and KMF’s Chief Compliance Officer and Secretary. Prior to joining Kayne Anderson, Mr. O’Neil was a compliance officer at BlackRock Inc., where he was responsible for regulatory compliance matters related to trading and portfolio management activities across equity, fixed income and alternative assets. Mr. O’Neil earned a B.A. in International Business and Management from Dickinson College and an M.B.A. from Boston University.

Ron M. Logan, Jr. is a Partner and Senior Managing Director of Kayne Anderson. Mr. Logan serves as Senior Vice President of KYN and KMF. Prior to joining Kayne Anderson in 2006, Mr. Logan was an independent consultant to several leading energy firms. From 2003 to 2005, he served as Senior Vice President of Ferrellgas Inc. with responsibility for the firm’s supply, wholesale, transportation, storage, and risk management activities. Before joining Ferrellgas, Mr. Logan was employed for six years by Dynegy Midstream Services where he was Vice President of the Louisiana Gulf Coast Region and also headed the company’s business development activities. Mr. Logan began his career with Chevron Corporation in 1984, where he held positions of increasing responsibility in marketing, trading and commercial development through 1997. Mr. Logan earned a B.S. degree in Chemical Engineering from Texas A&M University in 1983 and an M.B.A. degree from the University of Chicago in 1994.

Adriana I. Jimenez is a Vice President and Controller of Kayne Anderson. Ms. Jimenez serves as Vice President of KYN and KMF since December 2021. Prior to joining Kayne Anderson in 2009, Ms. Jimenez was a supervisor of corporate reporting for Dynegy Inc. Prior to that, Ms. Jimenez was staff accountant in the international division and corporate division for Universal Compression Inc. Ms. Jimenez earned a B.S. in Business Administration with Management concentration and a minor in Public Relations from John Brown University in 1998 and is a Certified Public Accountant in the state of Texas.

The principal office of KAFA is located at 811 Main Street, 14th Floor, Houston, Texas 77002. KACALP’s principal office is located at 2121 Avenue of the Stars, 9^th Floor, Los Angeles, California 90067. For additional information concerning KAFA, including a description of the services to be provided by KAFA, see “—Investment Management Agreement.”

Investment Management Agreement

KYN

Pursuant to an investment management agreement between KYN and KAFA, effective for periods commencing on or after December 12, 2006 (the “KYN Investment Management Agreement”), KYN pays a management fee, computed and paid quarterly at an annual rate of 1.375% of its average quarterly total assets less a fee waiver.

As of May 31, 2023, KYN was subject to a management fee of 1.375% on its $1.8 billion of management fee total assets and KMF was subject to a management fee of 1.25% on its $0.5 billion of management fee total assets. Based on KMF’s current management fee, the Combined Company’s management fee as a percentage of net assets is expected to be higher than KMF’s standalone fee. Pro forma for the combination and assuming the maximum aggregate amount of Cash Consideration is elected, the Combined Company would have pro forma total assets for purposes of calculating the management fee of $2.2 billion, based on the Companies’ assets as of May 31, 2023.

Subject to and beginning at the completion of the Merger, KAFA has agreed to revise its existing contractual management fee waiver agreement (the “Tier Waiver”) with KYN to reduce the asset tiers for fee waivers. The Tier Waiver does not have a termination date. The initial asset tier for the Tier Waiver will be reset to the pro forma Combined Company total assets for purposes of calculating the management fee of as of the closing of the Merger (for example, if total assets of the Combined Company at closing are $2.5 billion, then the initial asset tier for the Tier Waiver will be set at $2.5 billion). The revised Tier Waiver will lower the effective management fee that KYN pays as its assets appreciate. There can be no guarantee that the Combined Company’s total assets will increase to levels for the asset tier fee waivers to be effective. The table below outlines the current and revised management fee waivers under the current and updated Tier Waiver assuming the Merger was completed on May 31, 2023:

In addition to reducing the Tier Waiver, KAFA has also separately contractually agreed to waive an additional amount of management fees (based on KYN and KMF assets at closing of the Merger) (the “Merger Waiver”) such that the pro forma fees payable to KAFA are equal to the aggregate management fees payable if KYN and KMF had remained standalone companies. The Merger Waiver will last for three years from the closing of the Merger so long as KAFA is the Combined Company’s investment adviser and is estimated to be approximately $0.6 million per year (i.e., the product of KMF’s total assets for purposes of calculating KMF’s management fee multiplied by 0.125%) based on KYN and KMF assets as of May 31, 2023. The updated Tier Waiver and the new Merger Waiver would be effective as of the closing of the Merger and would not be subject to recoupment, either with respect to KYN, KMF or the Combined Company. If the investment management agreement, Tier Waiver and/or Merger Waiver were to be terminated, the management fee payable by the Combined Company could increase.

For purposes of calculating the management fee, the “average total assets” for each quarterly period are determined by averaging the total assets at the last day of that quarter with the total assets at the last day of the prior quarter. KYN’s total assets shall be equal to its average quarterly gross asset value (which includes assets attributable to or proceeds from its use of Leverage Instruments and excludes any deferred tax assets), minus the sum of its accrued and unpaid distribution on any outstanding common stock and accrued and unpaid dividends on any outstanding preferred stock and accrued liabilities (other than liabilities associated with Leverage Instruments issued by us and any accrued taxes). For purposes of determining KYN’s total assets, KYN values derivative instruments based on their current fair market values. Liabilities associated with Leverage Instruments include the principal amount of any Borrowings that KYN issues, the liquidation preference of any outstanding preferred stock, and other liabilities from other forms of borrowing or leverage such as short positions and put or call options held or written by KYN.

In addition to KAFA’s management fee, KYN pays all other costs and expenses of our operations, such as compensation of its directors (other than those employed by Kayne Anderson), custodian, transfer agency, administrative, accounting and distribution expenses, legal fees, borrowing or leverage expenses, marketing, advertising and public/investor relations expenses, expenses of independent auditors, expenses of personnel including those who are affiliates of Kayne Anderson reasonably incurred in connection with arranging or structuring portfolio transactions for KYN, expenses of repurchasing KYN’s securities, expenses of preparing, printing and distributing stockholder reports, notices, proxy statements and reports to governmental agencies, and taxes, if any.

The KYN Investment Management Agreement and related contractual fee waiver agreement has a current term through April 30, 2024 and will continue in effect from year to year so long as its continuation is approved at least annually by KYN’s Board of Directors including a majority of Independent Directors or by the vote of a “majority of our outstanding voting securities” (as such term is defined under the 1940 Act). The Investment Management Agreement may be terminated at any time without the payment of any penalty upon 60 days’ written notice by either party, or by action of the Board of Directors or by a vote of a majority of KYN’s outstanding voting securities, accompanied by appropriate notice. It also provides that it will automatically terminate in the event of its assignment, within the meaning of the 1940 Act. This means that an assignment of the KYN Investment Management Agreement to an affiliate of Kayne Anderson would normally not cause a termination of the KYN Investment Management Agreement.

Because KAFA’s fee is based upon a percentage of KYN’s total assets, KAFA’s fee will be higher to the extent KYN employs financial leverage. As noted, KYN has issued Leverage Instruments in a combined amount equal to approximately 23% of its total assets as of May 31, 2023. A discussion regarding the basis of the KYN Board of Directors’ decision to approve the continuation of the KYN Investment Management Agreement will be available in KYN’s May 31, 2023 Semi-Annual Report to Stockholders.

KMF

Pursuant to an investment management agreement (the “KMF Investment Management Agreement”) between KMF and KAFA, KMF pays a management fee, computed and paid monthly at an annual rate of 1.25% of its average total assets.

For the fiscal year ended November 30, 2022, KMF paid management fees at an annual rate of 1.25% of its monthly average total assets.

For purposes of calculating the management fee, the “average total assets” for each monthly period are determined by averaging the total assets at the last day of that month with the total assets at the last day of the prior month. KMF’s total assets shall be equal to its average monthly gross asset value (which includes assets attributable to or proceeds from its use of Leverage Instruments), minus the sum of its accrued and unpaid distribution on any outstanding common stock and accrued and unpaid dividends on any outstanding preferred stock and accrued liabilities (other than liabilities associated with Leverage Instruments issued). For purposes of determining KMF’s total assets, KMF values derivative instruments based on their current fair market values. Liabilities associated with Leverage Instruments include the principal amount of any Borrowings that KMF issues, the liquidation preference of any outstanding preferred stock, and other liabilities from other forms of borrowing or leverage such as short positions and put or call options held or written by KMF.

In addition to KAFA’s management fee, KMF pays all other costs and expenses of its operations, such as compensation of its directors (other than those employed by Kayne Anderson), custodian, transfer agency, administrative, accounting and distribution expenses, legal fees, borrowing or leverage expenses, marketing, advertising and public/investor relations expenses, expenses of independent auditors, expenses of personnel including those who are affiliates of Kayne Anderson reasonably incurred in connection with arranging or structuring portfolio transactions for KMF, expenses of repurchasing KMF’s securities, expenses of preparing, printing and distributing stockholder reports, notices, proxy statements and reports to governmental agencies, and taxes, if any.

The KMF Investment Management Agreement has a current term through April 30, 2024 and will continue in effect from year to year so long as its continuation is approved at least annually by KMF’s Board of Directors including a majority of Independent Directors or by the vote of a majority of our outstanding voting securities. The Investment Management Agreement may be terminated at any time without the payment of any penalty upon 60 days’ written notice by either party, or by action of the Board of Directors or by a vote of a majority of KMF’s outstanding voting securities, accompanied by appropriate notice. It also provides that it will automatically terminate in the event of its assignment, within the meaning of the 1940 Act. This means that an assignment of the KMF Investment Management Agreement to an affiliate of Kayne Anderson would normally not cause a termination of the KMF Investment Management Agreement.

Because KAFA’s fee is based upon a percentage of KMF’s total assets, KAFA’s fee will be higher to the extent KMF employs financial leverage. KMF has issued Leverage Instruments in a combined amount equal to approximately 24 % of its total assets as of May 31, 2023. If the Merger is not consummated and KMF continues as a standalone Company, it is expected that KAFA would continue in its role. A discussion regarding the basis of the KMF Board of Directors’ decision to approve the continuation of the KMF Investment Management Agreement will be available in KMF’s May 31, 2023 Semi-Annual Report to Stockholders.

Control Persons

As of May 31, 2023, there were no persons who owned more than 25% of KYN’s or KMF’s outstanding voting securities, and we believe no person should be deemed to control KYN or KMF, as such term is defined in the 1940 Act.

Based on statements publicly filed with the SEC, as of May 31, 2023, one person beneficially owned more than 5% of KYN’s outstanding common stock and two persons beneficially owned more than 5% of KMF’s outstanding common stock. As of May 31, 2023, KYN and KMF are aware of five and four persons, respectively, each of whom beneficially owns more than 5% of each Company’s outstanding preferred stock.

Capitalization

The table below sets forth the capitalization of KYN and KMF as of May 31, 2023, and the pro forma capitalization of the Combined Company as if the Merger had occurred on that date. The information presented in the table is for informational purposes only. If the Merger is consummated, the actual capitalization is likely to be different on the closing date of the transaction as a result of trading activity and changes in net asset value.

Automatic Dividend Reinvestment Plan

This section relates to KYN and KMF, as the Automatic Dividend Reinvestment Plans of each Company are not materially different (and in fact have the same terms and conditions).

We have adopted a Dividend Reinvestment Plan (the “Plan”) that provides that, unless you elect to receive your dividends or distributions in cash, they will be automatically reinvested by the Plan Administrator, American Stock Transfer & Trust Company, in additional shares of our common stock. If you elect to receive your dividends or distributions in cash, you will receive them in cash paid by check mailed directly to you by the Plan Administrator.

No action is required on the part of a registered stockholder to have their cash distribution reinvested in shares of our common stock. Unless you or your brokerage firm decides to opt out of the Plan, the number of shares of common stock you will receive will be determined as follows:

You may withdraw from the Plan at any time by giving written notice to the Plan Administrator, or by telephone in accordance with such reasonable requirements as we and the Plan Administrator may agree upon. If you withdraw or the Plan is terminated, you will receive a certificate for each whole share in your account under the Plan and you will receive a cash payment for any fractional shares in your account. If you wish, the Plan Administrator will sell your shares and send the proceeds to you, less brokerage commissions. The Plan Administrator is authorized to deduct a $15 transaction fee plus a $0.10 per share brokerage commission from the proceeds.

The Plan Administrator maintains all common stockholders’ accounts in the Plan and gives written confirmation of all transactions in the accounts, including information you may need for tax records. Common stock in your account will be held by the Plan Administrator in non-certificated form. The Plan Administrator will forward to each participant any proxy solicitation material and will vote any shares so held only in accordance with proxies returned to us. Any proxy you receive will include all common stock you have received under the Plan.

There is no brokerage charge for reinvestment of your dividends or distributions in common stock. However, all participants will pay a pro rata share of brokerage commissions incurred by the Plan Administrator when it makes open market purchases.

Automatically reinvesting dividends and distributions does not avoid a taxable event or the requirement to pay income taxes due upon the receipt of dividends and distributions, even though you have not received any cash with which to pay the resulting tax. Specifically, reinvestment does not provide relief from recognition of taxable income in the year when dividends are reinvested, you will not receive cash to pay taxes, reinvested dividends increase total managed assets and the management fee payable to the adviser, and taxes will be payable and no withholding will be made for that purpose.

If you hold your common stock with a brokerage firm that does not participate in the Plan, you will not be able to participate in the Plan and any distribution reinvestment may be effected on different terms than those described above. Consult your financial advisor for more information.

The Plan Administrator’s fees under the Plan will be borne by us (and ultimately by the common stockholders of each Company). There is no direct service charge to participants in the Plan; however, we reserve the right to amend or terminate the Plan, including amending the Plan to include a service charge payable by the participants, if in the judgment of the Board of Directors the change is warranted. Any amendment to the Plan, except amendments necessary or appropriate to comply with applicable law or the rules and policies of the SEC or any other regulatory authority, require us to provide at least 30 days written notice to each participant. Additional information about the Plan may be obtained from American Stock Transfer & Trust Company at 6201 15th Avenue, Brooklyn, New York 11219.

Governing Law

Each Company is organized as a corporation under the laws of the State of Maryland. KYN was formed in June 2004 and began investment activities in September 2004 after its initial public offering. KMF was formed in August 2010 and began investment activities in November 2010 after its initial public offering.

Each Company is also subject to federal securities laws, including the 1940 Act and the rules and regulations promulgated by the SEC thereunder, and applicable state securities laws. Each Company is registered as a non-diversified, closed-end management investment company under the 1940 Act.

Description of Securities

This section contains a Description of Securities issued (or to be issued) by KYN (other parts of this document relate to both KYN and KMF). Accordingly, references to “we” “us,” “our” or “the Company” in this section are references to KYN.

The following description is based on relevant portions of the Maryland General Corporation Law and on our Charter and Bylaws. This summary is not necessarily complete, and we refer you to the Maryland General Corporation Law and our Charter and Bylaws for a more detailed description of the provisions summarized below. In addition, the description of our common stock and preferred stock also generally describe the outstanding common stock and preferred stock of KMF (including the KMF MRP Shares that will be replaced with new KYN MRP Shares of KYN in the Merger).

Common Stock

General

As of May 31, 2023, KYN had 136,131,530 shares of common stock issued and outstanding (out of an authorized total of 195,535,883). Shares of KYN’s common stock are listed on the New York Stock Exchange under the symbol “KYN.”

As of May 31, 2023, KMF had 47,197,462 shares of common stock issued and outstanding (out of an authorized total of 198,340,343). Shares of KMF’s common stock are listed on the New York Stock Exchange under the symbol “KMF.”

As of May 31, 2023, neither KYN nor KMF held any of its common stock or preferred stock for its own account.

All common stock offered pursuant to this joint proxy statement/prospectus will be, upon issuance, duly authorized, fully paid and nonassessable. All common stock offered pursuant to this joint proxy statement/prospectus will be of the same class and will have identical rights, as described below. Holders of shares of common stock are entitled to receive distributions when, as and if authorized by the Board of Directors and declared by us out of assets legally available for the payment of distributions. Holders of common stock have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and have no preemptive rights to subscribe for any of our securities. Shares of common stock are freely transferable, except where their transfer is restricted by federal and state securities laws or by contract. All shares of common stock have equal earnings, assets, distribution, liquidation and other rights.

Distributions

Distributions may be paid to the holders of our common stock if, as and when authorized by our Board of Directors and declared by us out of funds legally available therefor.

The distribution rate on our common stock will likely vary from period to period depending on factors including the following:

Consequently, we cannot guarantee any particular distribution rate on our common stock, and the distribution rate for any given period is not an indication or representation of future distribution rate on the common stock.

Limitations on Distributions

So long as our MRP Shares are outstanding, holders of common stock or other shares of stock, if any, ranking junior to our MRP Shares as to dividends or upon liquidation will not be entitled to receive any distributions from us unless (1) we have declared and paid all accumulated dividends due on the MRP Shares on or prior to the date of such distribution; (2) we have redeemed the full number of MRP Shares required to be redeemed by any provision for mandatory redemption contained in the articles supplementary of such MRP Shares; (3) our asset coverage (as defined in the 1940 Act) with respect to outstanding debt securities and preferred stock would be at least 225%; and (4) the assets in our portfolio have a value, discounted in accordance with guidelines set forth by each applicable rating agency, at least equal to the basic maintenance amount required by such rating agency under its specific rating agency guidelines, in each case, after giving effect to distributions. In determining whether a distribution may be made to holders of common stock under Maryland law, amounts that would be needed, if the Company were to be dissolved, to satisfy the liquidation preference of the MRP Shares will not be added to the Company’s total liabilities.

So long as senior securities representing indebtedness, including the Notes, are outstanding, holders of shares of common stock will not be entitled to receive any distributions from us unless (1) there is no event of default existing under the terms of our Borrowings, including the Notes, (2) our asset coverage (as defined in the 1940 Act) with respect to any outstanding senior securities representing indebtedness would be at least 300% and (3) the assets in our portfolio have a value, discounted in accordance with guidelines set forth by each applicable rating agency, at least equal to the basic maintenance amount required by such rating agency under its specific rating agency guidelines, in each case, after giving effect to such distribution.

Liquidation Rights

Common stockholders are entitled to share ratably in our assets legally available for distribution to stockholders in the event of liquidation, dissolution or winding up, after payment of or adequate provision for all known debts and liabilities, including any outstanding debt securities or other borrowings and any interest thereon. These rights are subject to the preferential rights of any other class or series of our stock, including the MRP Shares. The rights of common stockholders upon liquidation, dissolution or winding up are subordinated to the rights of holders of outstanding Notes and the MRP Shares.

Voting Rights

Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of the common stockholders, including the election of directors. The presence of the holders of shares of stock entitled to cast a majority of all the votes entitled to be cast shall constitute a quorum at a meeting of stockholders. Our Charter provides that, except as otherwise provided in the Bylaws, directors shall be elected by the affirmative vote of the holders of a majority of the shares of stock outstanding and entitled to vote thereon. There is no cumulative voting in the election of directors. Consequently, at each annual meeting of stockholders, the holders of a majority of the outstanding shares of stock entitled to vote will be able to elect all of the successors of the class of directors whose terms expire at that meeting, except that holders of preferred stock, as a class, have the right to elect two directors at all times. Pursuant to our Charter and Bylaws, the Board of Directors may amend the Bylaws to alter the vote required to elect directors.

Under the rules of the NYSE applicable to listed companies, we normally will be required to hold an annual meeting of stockholders in each fiscal year. If we are converted into an open-end company or if for any reason our common stock is no longer listed on the NYSE (or any other national securities exchange the rules of which require annual meetings of stockholders), we may amend our Bylaws so that we are not otherwise required to hold annual meetings of stockholders.

Issuance of Additional Shares

The provisions of the 1940 Act generally require that the public offering price of common stock of a closed-end investment company (less underwriting commissions and discounts) must equal or exceed the NAV of such company’s common stock (calculated within 48 hours of pricing), unless such sale is made with the consent of a majority of the company’s outstanding common stockholders. Any sale of common stock by us will be subject to the requirement of the 1940 Act.

Preferred Stock

In addition to our currently outstanding preferred stock, this section includes a brief description of the terms of the KYN MRP Shares to be issued in the Merger, as if such shares had been outstanding as of the relevant dates. The terms of the KYN MRP Shares will be substantially identical, as of the time of the exchange, to the outstanding KMF MRP Shares for which they are exchanged.

General

The table below sets forth the key terms of each series of KYN’s outstanding MRP Shares as of May 31, 2023, including the KYN Series U MRP Shares, KYN Series V MRP Shares and KYN Series W MRP shares to be issued in exchange for the KMF Series H MRP Shares, KMF Series I MRP Shares and KMF Series J MRP Shares, respectively, in connection with the Merger: