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KeyCorp selling senior notes, common stock to repay TARP
By Andrea Heisinger
New York, March 18 - KeyCorp announced a sale of senior notes to help repurchase $2.5 billion of series B fixed-rate cumulative perpetual preferred stock, according to a press release on Friday.
The proceeds from the notes, along with a concurrent offering of $625 million of common stock, are being used to repurchase the 25,000 shares of preferreds issued to the U.S. Treasury as part of the Troubled Asset Relief Capital Purchase Program in late 2008.
Morgan Stanley & Co., Inc. and J.P. Morgan Securities LLC are managing the equity sale and likely the debt sale.
"These actions position Key to grow," said Henry Meyer, KeyCorp chief executive officer, in a news release. "Key has successfully returned to profitability, fortified its capital position, reduced expenses and is benefitting from its early and aggressive actions to reduce our risk profile."
Meyer added that the company's goal has been to be patient in repaying TARP in order to reduce shareholder dilution, and that repayment now is in the best interests of KeyCorp employees, customers and shareholders. That patience has been rewarded with capital replacement favorable to our peers, achieving our goal to limit shareholder dilution, he said.
"We believe the U.S. Treasury's investments in Key and hundreds of other banks across the nation contributed to stability and strength of the U.S. banking system during the financial crisis," Meyer said. "We are appreciative of having been a recipient of the TARP investment."
KeyCorp paid a total of about $282 million in dividends to the U.S. Treasury during the investment period, according to Meyer.
The financial services company is based in Cleveland.
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