By Rebecca Melvin
New York, June 13 - KeyCorp priced $650 million non-cumulative perpetual convertible preferred stock on Thursday at par of $100 with a dividend of 7.75% and an initial conversion premium of 20%, according to a news release.
The series A preferred stock was priced at the cheap end of talk, which was for a dividend of 7.25% to 7.75% and a premium of 20% to 25%.
Concurrently, KeyCorp priced $1 billion, or 85.106 million common shares, at $11.75 a share, for a combined capital raise of $1.65 billion.
The combined registered offerings were "significantly" oversubscribed, KeyCorp chief executive Henry Meyer said in the release.
The convertibles, which have a par price of $100 per share, have a greenshoe of $97.5 million.
They are non-callable for five years, with forced conversion thereafter at a price hurdle of 130%.
There are no investor puts, and dividend protection is via a conversion rate adjustment off $0.1875 per quarter dividend threshold amount.
Takeover protection will be via a standard make-whole table. Settlement is via stock only.
Citigroup is the bookrunner for the offerings, with KeyBanc Capital Markets Inc., UBS Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Inc., and Morgan Stanley & Co. Inc. serving as joint lead managers.
Proceeds from the offerings are intended to restore capital to strengthen KeyCorp's balance sheet following the accounting charges, and for general corporate purposes.
Cleveland-based KeyCorp is a regional bank.
| Issuer: | KeyCorp
|
| Issue: | Non-cumulative perpetual convertible preferred stock, series A
|
| Amount: | $650 million
|
| Greenshoe: | $97.5 million
|
| Concurrent offering: | $1 billion of common stock at $11.75 a share
|
| Maturity: | Perpetual
|
| Bookrunner: | Citigroup
|
| Dividend: | 7.75%
|
| Price: | Par, $100 per preferred share
|
| Conversion premium: | 20%
|
| Conversion ratio: | 7.0922
|
| Conversion price: | $14.10
|
| Price talk: | 7.25%-7.75%, up 20%-25%
|
| Call: | Non-callable for five years, with forced conversion thereafter at 130%
|
| Puts: | No puts
|
| Takeover protection: | Yes
|
| Pricing date: | June 12
|
| Settlement date: | June 18
|
| Distribution: | Registered
|
| Listing: | NYSE: KEY PrG
|
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