KeyCorp sets exchange ratios in exchange offer for trust preferreds

By Angela McDaniels

Tacoma, Wash., Aug. 3 - KeyCorp determined the number of common shares to be exchanged for each of the trust preferred securities accepted in the exchange offer it began on July 8.

The company is offering to issue common stock in exchange for any and all of 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.

For the 8% trust preferreds, holders will receive 4.1518 common shares for each $25.00 liquidation preference of securities tendered by the early deadline and 3.9212 common shares for each security tendered after that time.

For the remaining trust preferreds, holders will receive 4.0596 common shares for each $25.00 liquidation preference of securities tendered by the early deadline and 3.8289 common shares for each security tendered after that time.

The early tender deadline was 11:59 p.m. ET on July 21, and the offer ends at 11:59 p.m. ET on Aug. 4.

The exchange ratios were set at 9 a.m. ET on Aug. 3. The number of common shares to be exchanged is equal to $22.50 divided by the volume-weighted average price of the company's stock during the five-day period ended July 31 for 8% trust preferreds tendered by the early deadline and $21.25 divided by the average VWAP for tenders after that time.

For the remaining trust preferreds, the exchange ratio is equal to $22.00 divided by the average VWAP for securities tendered by the early tender time and $20.75 divided by the VWAP for tenders after that time.

The VWAP is $5.4193.

As previously reported, the maximum amount of trust preferreds that will be accepted for exchange was reduced to $500 million from $1.74 billion. Securities will be accepted on a pro rata basis if the amount tendered exceeds the cap.

KeyCorp said that as of July 31, holders of about $538 million liquidation preference of trust preferreds had indicated that they would be tendering their securities in the exchange offer.

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.

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

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