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July 23, 2009
Share ThisOn July 22, 2009, KeyCorp (KEY)">KEY) announced an amendment to its previously announced offer to exchange common shares for any and all trust preferred securities of KeyCorp Capital V and KeyCorp Capital VI, and any and all enhanced trust preferred Securities of KeyCorp Capital VIII, KeyCorp Capital IX and KeyCorp Capital X (collectively referred to as the "Trust Preferred Securities").
KeyCorp is amending the offer to reduce the amount of Trust Preferred Securities that will be accepted for exchange from $1,740,000,000 in aggregate liquidation preference of outstanding Trust Preferred Securities to a maximum total of $500,000,000. The maximum number of KeyCorp common shares that may be issued in the offer remains unchanged at 158,518,835 shares.
As of July 21, 2009, prior to the end of the Early Tender Period, holders of approximately $534 million aggregate liquidation preference of Trust Preferred Securities had indicated that they would be tendering Trust Preferred Securities in the exchange offer.
KeyCorp will determine the liquidation preference of Trust Preferred Securities that will be accepted from each tendering holder in the Exchange Offer on a pro rata basis, if upon expiration KeyCorp receives in excess of $500,000,000 in aggregate liquidation preference of outstanding Trust Preferred Securities. All other terms of the offer remain unchanged.
KeyCorp, a bank-oriented financial service company, provides a wide range of products and services such as commercial and retail banking, commercial leasing, investment management, consumer finance, as well as investment banking products to individual, corporate, and institutional clients throughout the U.S. and, for certain businesses, internationally.
On July 22, 2009, KeyCorp also reported its second quarter 2009 net loss from continuing operations of $236.0 million or $0.69 per diluted share, substantially worse than our estimates as well as consensus.
Though the company has taken steps to reduce its exposure to the Commercial Real Estate (CRE) home builders segment, we anticipate further reserve building as a result of higher losses in the CRE portfolio in the coming quarters. Further, we expect elevated provision requirements combined with high overhead costs and weak net interest to put significant pressure on the company's profitability in the intermediate term.
As such, we maintain our Sell rating on the shares of KEY.
Read the full analyst report on "KEY"
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