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KeyCorp plans exchange offer for $1.74 billion of trust preferreds
By Angela McDaniels
Tacoma, Wash., May 27 - KeyCorp plans to hold an exchange offer for $1.74 billion of trust preferred securities issued by some of its subsidiaries, according to an S-4 filing with the Securities and Exchange Commission.
The company will offer to issue shares of common stock in exchange for the $175 million 5.875% trust preferreds issued by KeyCorp Capital V, the $75 million 6.125% trust preferreds issued by KeyCorp Capital VI, the $250 million 7% enhanced trust preferreds issued by KeyCorp Capital VIII, the $500 million 6.75% enhanced trust preferreds issued by KeyCorp Capital IX and the $740 million 8% enhanced trust preferreds issued by KeyCorp Capital X.
The proposed maximum number of common shares to be issued in the offer is 106,640,577.
The purpose of the exchange is to shore up the company's tier 1 common equity as required under the U.S. Treasury's Capital Assistance Program. KeyCorp was told it must raise $1.8 billion in additional tier 1 common equity.
In addition to the exchange offer, KeyCorp launched a public stock offering of $750 million and expects to raise the remainder of the capital through exchanges of its series A preferreds for common stock, exchanges of additional series of trust preferreds for common stock and/or additional offerings of common stock.
Morgan Stanley will be the sole arranger and lead manager, with UBS Investment Bank, Citigroup Global Markets Inc. and Wachovia Securities LLC as co-dealer managers.
D.F. King & Co. Inc. (212 269-5550 for banks and brokers, 800 431-9633 for others) will be the information agent.
KeyCorp is the holding company for KeyBank and is based in Cleveland.
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