KeyCorp determines $797.65 million trust preferreds exchange ratio

By Susanna Moon

Chicago, June 29 - KeyCorp said it calculated the exchange ratio for the $797,647,000 trust preferred securities issued by KeyCorp Capital I, KeyCorp Capital II, KeyCorp Capital III and KeyCorp Capital VII.

The exchange offer will expire at 11:59 p.m. ET on June 30. The payment date is July 6.

For securities tendered by the expiration, KeyCorp will issue 132.5732 common shares per KeyCorp floating-rate capital 1 trust preferred and 151.5123 shares for each of the remaining trust preferreds.

For notes tendered by 5 p.m. ET on June 16, the early tender date, the company will issue 142.0428 shares per each capital trust preferred and 160.9818 for each of the remaining series.

KeyCorp determined the ratio based on a total exchange value of $750 for each $1,000 liquidation preference of the capital trust preferreds divided by $5.2801, the average volume-weighted average price of its common shares during the five consecutive trading days ending on June 26.

For the remaining trust preferreds, the ratio was based on an exchange value of $850 divided by the average VWAP of $5.2801.

The total exchange value for the four series included a $50 premium for notes tendered by the early tender date.

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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