KKR Financial Holdings LLC is a specialty finance company. As of December 31, 2011, the Company operates in credit and other segments. The Credit segment includes primarily below investment grade corporate debt. The Other segments include all other portfolio holdings, including oil and natural gas working interests and overriding royalty interests. The Company�s holdings consist of corporate loans and high yield debt securities held in collateralized loan obligation (CLO) transactions that are structured as on-balance sheet securitizations and are used as long-term financing for its investments in corporate debt. The senior secured debt issued by the CLO transactions is primarily owned by unaffiliated third party investors and it owns the subordinated notes in the CLO transactions. The Company is externally managed and advised by KKR Financial Advisors LLC, a wholly owned subsidiary of KKR Asset Management LLC (KAM)