KeyCorp begins exchange offer for $797.65 million of trust preferreds

By Angela McDaniels

Tacoma, Wash., June 3 - KeyCorp has begun an exchange offer and consent solicitation for the $797,647,000 trust preferred securities issued by KeyCorp Capital I, KeyCorp Capital II, KeyCorp Capital III and KeyCorp Capital VII, according to a company news release.

For each KeyCorp Capital I trust preferred tendered by 5 p.m. ET on June 16, KeyCorp will issue a number of its common shares equal to the quotient of $750 divided by the average volume-weighted average price of its common shares during the five consecutive trading days ending on June 26.

For KeyCorp Capital I trust preferreds tendered after that time but before the offer expiration, the number of common shares issued will equal the quotient of $700 divided by the average VWAP.

For the remaining trust preferreds, the number of shares to be issued for each security tendered by 5 p.m. ET on June 16 will equal the quotient of $850 divided by the average VWAP. The ratio will be $800 divided by the average VWAP for trust preferreds tendered after that time.

The company is also holding an exchange offer for its 7.75% non-cumulative perpetual convertible preferred stock, series A.

These exchanges are the principal components of KeyCorp's plan to improve its tier 1 common equity ratio as required under the Supervisory Capital Assessment Program of the U.S. Treasury and the Federal Reserve System. KeyCorp was told it must raise $1.8 billion in additional tier 1 common equity.

Computershare Trust Co., NA (781 575-2332) is the exchange agent, and D.F. King & Co., Inc. (800 431-9633 or, for bankers and brokers, 212 269-5550) is the information agent.

As previously reported, the company announced plans on May 27 to hold an exchange offer for the 5.875% trust preferreds issued by KeyCorp Capital V, the 6.125% trust preferreds issued by KeyCorp Capital VI, the 7% enhanced trust preferreds issued by KeyCorp Capital VIII, the 6.75% enhanced trust preferreds issued by KeyCorp Capital IX and the $740 million 8% enhanced trust preferreds issued by KeyCorp Capital X.

KeyCorp is the holding company for KeyBank and is based in Cleveland.

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