FULFILLS STRESS TEST REQUIREMENT TO RAISE $1.8 BILLION OF TIER I
COMMON EQUITY CAPITAL CLEVELAND, July 1 /PRNewswire-FirstCall/ --
KeyCorp (NYSE:KEY) today announced the final results of its offer
to exchange (the "Series A Exchange Offer") KeyCorp common shares
for any and all outstanding shares of its 7.750% Non-Cumulative
Perpetual Convertible Preferred Stock, Series A (the "Series A
Preferred Stock"), as well as the final results of its separate
offer to exchange KeyCorp common shares for any and all outstanding
trust preferred securities ("Trust Preferred Securities") of
KeyCorp Capital I, KeyCorp Capital II, KeyCorp Capital III, and
KeyCorp Capital VII (the "Trust Preferred Exchange Offer"). J.P.
Morgan Securities Inc. acted as KeyCorp's sole financial advisor in
connection with the Series A Exchange Offer. J.P. Morgan Securities
Inc. and Morgan Stanley acted as KeyCorp's joint financial advisors
in connection with the Trust Preferred Exchange Offer. In addition,
Morgan Stanley is KeyCorp's capital advisor on all of its capital
execution plans related to the U.S. Government's Supervisory
Capital Assessment Program ("SCAP"). In the aggregate, these
exchange offers generated approximately $540 million of additional
Tier 1 common equity toward fulfillment of the $1.8 billion
"capital buffer" that KeyCorp was required to raise under the SCAP
assessment. As a result of these, and previously executed exchange
offers, KeyCorp will also reduce its dividend and interest
obligations on exchanged securities by approximately $70 million
through the end of the SCAP assessment period. Together with the
$1.3 billion of Tier 1 common equity previously raised by KeyCorp
following receipt of the SCAP results, KeyCorp believes that it has
now complied with the requirements of the SCAP assessment, having
generated total Tier 1 common equity capital in excess of $1.8
billion. "These exchange offers are part of a broader capital plan
that Key has been implementing to strengthen our capital in the
event that the economy deteriorates in a manner that is consistent
with the government's 'more adverse scenario' from the SCAP
assessment," said Henry Meyer, KeyCorp Chairman and Chief Executive
Officer. "Throughout this financial crisis, KeyCorp's capital
ratios have been above the 'well-capitalized' levels set by federal
regulators. Nevertheless, the government's SCAP mandated that
KeyCorp hold even more Tier 1 common equity to absorb losses should
economic conditions worsen. With these actions we are even better
situated, with strong capital ratios." Both exchange offers expired
at 11:59 p.m., New York City time, on June 30, 2009. Approximately
2,130,461 shares of Series A Preferred Stock were validly tendered
and not withdrawn in the Series A Exchange Offer, and approximately
$294,014,000 aggregate liquidation preference of Trust Preferred
Securities were validly tendered and not withdrawn in the Trust
Preferred Exchange Offer. The table below lists the final amounts
that were validly tendered and not withdrawn as of the expiration
date for each series that was part of the Trust Preferred Exchange
Offer and the Series A Exchange Offer, the aggregate liquidation
preference remaining outstanding, and the number of KeyCorp common
shares issued in exchange for each series. The settlement for both
exchange offers is expected to occur on July 6, 2009. Upon
settlement, 2,904,839 shares of Series A Preferred Stock will
remain outstanding for trading on the New York Stock Exchange.
KeyCorp will issue approximately 29.2 million KeyCorp common shares
in exchange for the Series A Preferred Stock tendered and accepted
by KeyCorp for exchange and approximately 46.3 million KeyCorp
common shares in exchange for the Trust Preferred Securities
tendered and accepted by KeyCorp for exchange, as further described
in the table below. In addition, KeyCorp has obtained consents from
holders of a majority in aggregate liquidation preference of the
Trust Preferred Securities of KeyCorp Capital I and KeyCorp Capital
II to amend the amended and restated trust agreements of KeyCorp
Capital I and KeyCorp Capital II, respectively, in order to enable
the redemption of any trust preferred securities of each of the
KeyCorp Capital I and KeyCorp Capital II trusts held by KeyCorp or
its affiliates as described in more detail in the applicable
exchange offer documents. KeyCorp, KeyCorp Capital I and KeyCorp
Capital II will enter into such amendments promptly and will then
proceed to redeem the Trust Preferred Securities of KeyCorp Capital
I and KeyCorp Capital II held by KeyCorp as a result of the
consummation of the applicable exchange offer. A separate cash
consent fee of $2.50 per $1,000 liquidation preference of Trust
Preferred Securities of KeyCorp Capital I and KeyCorp Capital II
will be paid to tendering and/or consenting holders. Based on the
final count by the exchange agent, Computershare Trust Company,
N.A., the results of the Series A Exchange Offer and the Trust
Preferred Exchange Offer are as follows: CUSIP Title of Issuer
Aggregate Aggregate Approximate Securities Liquidation Liquidation
Number of Preference Preference Common Tendered/ Remaining Shares
to be Accepted Outstanding Issued 493267405 Series A KeyCorp
$213,046,100 $290,483,900 29,232,025 Preferred Stock 49326MAA3
Floating KeyCorp $42,100,000 $156,550,000 5,885,303 Rate Capital
Capital I Securities 49325YAA7 6-7/8% KeyCorp $77,229,000
$82,088,000 12,427,565 Capital Capital Securities II 49326QAA4
7-3/4% KeyCorp $86,403,000 $103,277,000 13,840,358 Capital Capital
Securities III 49327LAA4 5.70% Trust KeyCorp $88,282,000
$161,718,000 14,184,875 Preferred Capital Securities VII In the
near future, KeyCorp also expects to launch a separate exchange
offer of KeyCorp common shares for outstanding trust preferred
securities of KeyCorp Capital V, KeyCorp Capital VI, KeyCorp
Capital VIII, KeyCorp Capital IX, and KeyCorp Capital X (the
"Retail Trust Preferred Exchange Offer"). There are currently $1.74
billion aggregate liquidation preference of trust preferred
securities outstanding for these trusts, primarily held by retail
investors. Only a portion of these would be expected to be tendered
in any exchange offer. KeyCorp has filed with the Securities and
Exchange Commission (the "SEC") a registration statement on Form
S-4 (Registration No. 333-159490) with respect to the Retail Trust
Preferred Exchange Offer, although it has not yet been declared
effective by the SEC and, as of the date hereof, KeyCorp has not
yet commenced the Retail Trust Preferred Exchange Offer. Morgan
Stanley will be the Sole Arranger and Lead Manager on the Retail
Trust Preferred Exchange Offer, and Morgan Stanley, UBS Investment
Bank, Citi and Wells Fargo Securities will act as dealer managers.
The complete terms and conditions of the Retail Trust Preferred
Exchange Offer will be set forth in exchange offer documents for
the Retail Trust Preferred Exchange Offer, and will be sent to
holders of the trust preferred securities upon commencement.
Holders are urged to read carefully the exchange offer documents
relating to the securities they hold. This press release is neither
an offer to purchase nor a solicitation to buy any shares of
securities, nor is it a solicitation for acceptance of the exchange
offers referenced herein. The exchange offer is not being made in
any jurisdiction in which the making or acceptance thereof would
not be in compliance with the securities, blue sky or other laws of
such jurisdiction. None of KeyCorp or its affiliates, the trustees
of any capital trusts whose securities were subject to the Trust
Preferred Exchange Offer, or KeyCorp's exchange agent, information
agent, financial advisors or capital advisor in either exchange
offer is making any recommendation as to whether or not holders
should tender their Trust Preferred Securities or Series A
Preferred Stock in connection with the exchange offers. Copies of
the Prospectus and letter of transmittal relating to the Retail
Trust Preferred Exchange Offer may be obtained from D.F. King &
Co., Inc., the information agent for the Retail Trust Preferred
Exchange Offer, at (800) 431-9633 or, for bankers and brokers, at
(212) 269-5550 (Collect). The exchange agent for the Retail Trust
Preferred Exchange Offer is Computershare Trust Company, N.A.,
which may be contacted at (781) 575-2332. The Prospectus, letter of
transmittal and other related documents for the Retail Trust
Preferred Exchange Offer have also been or will be filed with the
SEC on Form S-4 and may be obtained for free at the SEC's website,
http://www.sec.gov/ Cleveland-based KeyCorp is one of the nation's
largest bank-based financial services companies, with assets of
approximately $98 billion. BusinessWeek Magazine named Key the top
bank in its Customer Service Champ 2009 edition, ranking Key 11th
out of the top 25 companies that include many known for their
customer service acumen. Key companies provide investment
management, retail and commercial banking, consumer finance, and
investment banking products and services to individuals and
companies throughout the United States and, for certain businesses,
internationally. For more information, visit https://www.key.com/.
You may obtain these documents by contacting KeyCorp, Investor
Relations, at (216) 689-4221 or by email at . This press release
contains information that we believe constitute "forward-looking
statements\" about our financial condition, results of operations,
asset quality trends and profitability. Forward-looking statements
are not historical facts but instead represent only management's
current expectations and forecasts regarding future events, many of
which, by their nature, are inherently uncertain and outside of
KeyCorp's control. KeyCorp's actual results and financial condition
may differ, possibly materially, from the anticipated results and
financial condition indicated in these forward-looking statements.
Factors that may cause actual results to differ materially include,
among other things: (1) adverse capital markets conditions and the
inability to raise equity and other funding in the capital markets;
(2) further downgrades in our credit ratings; (3) unprecedented
volatility in the stock markets, public debt markets and other
capital markets, including continued disruption in the fixed income
markets; (4) changes in interest rates; (5) changes in trade,
monetary or fiscal policy; (6) asset price deterioration, which has
had (and may continue to have) a negative effect on the valuation
of certain asset categories represented on KeyCorp's balance sheet;
(7) continuation of the recent deterioration in general economic
conditions, or in the condition of the local economies or
industries in which we have significant operations or assets, which
could, among other things, materially impact credit quality trends
and our ability to generate loans; (8) continued disruption in the
housing markets and related conditions in the financial markets;
(9) increased competitive pressure among financial services
companies due to the recent consolidation of competing financial
institutions and the conversion of certain investment banks to bank
holding companies; (10) heightened legal standards and regulatory
practices, requirements or expectations; (11) the inability to
successfully execute strategic initiatives designed to grow
revenues and/or manage expenses; (12) increased FDIC deposit
insurance premiums; (13) difficulty in attracting and/or retaining
key executives and/or relationship managers; (14) consummation of
significant business combinations or divestitures; (15) operational
or risk management failures due to technological or other factors;
(16) changes in accounting or tax practices or requirements; (17)
new legal obligations or liabilities or unfavorable resolution of
litigation; and (18) disruption in the economy and general business
climate as a result of terrorist activities or military actions.
For additional information on KeyCorp and the factors that could
cause KeyCorp's actual results or financial condition to differ
materially from those described in the forward-looking statements
consult KeyCorp's Annual Report on Form 10-K for the year ended
December 31, 2008, and subsequent filings with the Securities and
Exchange Commission available on the Securities and Exchange
Commission's website (http://www.sec.gov/). Forward-looking
statements are not guarantees of future performance and should not
be relied upon as representing management's views as of any
subsequent date. We do not assume any obligation to update these
forward-looking statements. key Media INVESTOR Newsroom:
http://www.key.com/newsroom RELATIONS: http://www.key.com/ir
DATASOURCE: KeyCorp CONTACT: Media, William C. Murschel,
+1-216-828-7416, , Analysts, Vernon L. Patterson, +1-216-689-0520,
, or Christopher F. Sikora, +1-216-689-3133, , all of KeyCorp Web
Site: https://www.key.com/
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