KeyCorp launches exchange offer for 7.75% convertible preferreds

By Angela McDaniels

Tacoma, Wash., June 3 - KeyCorp has begun an offer to exchange shares of common stock for its $503.53 million of 7.75% non-cumulative perpetual convertible preferred stock, series A, according to a company news release.

For each preferred tendered, KeyCorp will issue 7.0922 shares plus a number of shares equal to $35 divided by the daily volume-weighted average price of its common shares during the five consecutive trading days ending on June 26.

The exchange ratio is subject to a maximum of 21.0922 common shares and a minimum of 7.0922 common shares, according to a schedule TO filed with the Securities and Exchange Commission.

The offer will expire at 11:59 p.m. ET on June 30.

The company is also holding an exchange offer for the trust preferred securities of KeyCorp Capital I, KeyCorp Capital II, KeyCorp Capital III and KeyCorp Capital VII.

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.

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

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