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KeyCorp's 5.7% trust preferred holders give consents to cut covenant
By Marisa Wong
Madison, Wis., April 27 - KeyCorp announced that as of April 26, the holders of a majority in liquidation amount of the outstanding 5.7% trust preferred securities issued by KeyCorp Capital VI delivered their consents to terminate a replacement capital covenant.
As a result, the covenant was terminated effective as of Thursday, according to an 8-K filed Friday with the Securities and Exchange Commission.
KeyCorp announced the consent solicitation on April 16. The solicitation was scheduled to expire at 5 p.m. ET on April 27. The company said previously that the solicitation could be terminated early if the needed consents were received before the expiration time.
As previously reported, the replacement capital covenant, originally dated Feb. 27, 2008 and amended on March 3, 2008 and on Feb. 24, 2011, was entered into for the benefit of holders of the 5.7% trust preferreds in connection with the issuance of KeyCorp's 8% junior subordinated debentures due 2068 and KeyCorp Capital X's 8% enhanced trust preferred securities.
Under the terms of the covenant, KeyCorp agreed not to repay, redeem or purchase the 8% debentures due 2068 and the 8% enhanced trust preferreds before March 15, 2048 unless it raises specified funds from the issuance of certain qualifying securities.
Now that the covenant has been terminated, KeyCorp will be able to repay, redeem or purchase any or all of the securities, regardless of whether it has issued any qualifying securities.
Holders had to be of record as of April 10 to deliver their consents.
KeyCorp will pay a consent fee of $5 per $1,000 in liquidation amount of trust preferreds for which a consent was delivered.
Morgan Stanley & Co. LLC (800 624-1808 or 212 761-1057) is the solicitation agent. Deutsche Bank Trust Co. Americas (800 735-7777) is the information and tabulation agent.
KeyCorp is a Cleveland-based financial services company.
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