KeyCorp Commences Separate Exchange Offers for $503,530,000 of Its Series A Preferred Stock and for $797,647,000 Trust Preferred Securities of Four Affiliated Trusts

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billion in Tier 1 common -- KeyCorp has generated $1.3 billion to approximately 70% of the government's requirement to date. June 3 /PRNewswire-FirstCall/ -- KeyCorp (NYSE: KEY) todayh commenced an offer to exchange common sharew of KeyCorp for any and all outstanding sharesof KeyCorp' 7.750% Non-Cumulative Perpetual Convertible Preferred Series A (the "Series A Exchange Offer"), and a separatse offer to exchange commonb shares of KeyCorp for any and all Trusft Preferred Securities of KeyCorp Capital I, KeyCor Capital II, KeyCorp Capital III and KeyCorp Capitalk VII (the "Trust Preferred Exchange Offer").
Combined with the capital generation actions that have been executed sinceMay 7, 2009, when the resultas of the government's stress test were announced, successfulp completion of these actions will strengthen KeyCorp's capital frameworko by improving its Tier 1 common equity ratio, and also reduce the dividenx and interest expense associater with the securities exchanged, thereby increasing KeyCorp'w ability to generate capital internally. Thesr exchanges are principal componentsof KeyCorp's comprehensive capitall plan, which was submitted to the federal bankinyg regulators on June 1, pursuantt to the requirements of the Supervisory Capital Assessmenf Program of the U.S.
Treasury and the Boare of Governors of the Federal Reserve System. In connection with the Seriesz AExchange Offer, for each share of Series A Preferrecd Stock accepted in accordance with the term of the exchange offer, KeyCorlp will issue a number of its commoj shares that will be fixee according to an Exchange Ratio which will be determinefd at 4:30 p.m. New York City on the second trading day immediately preceding the expiration date ofthe offer. The offer is currentl y expected to expireon Tuesday, June 30, 2009 and the Exchangee Ratio would then be fixed at 4:30 p.m. New York City on June 26, 2009.
For each share of Series A Preferred Stocktendered (and not subsequentlyu withdrawn), KeyCorp will issue 7.0922 shares plus $35.0 divided by the daily volume-weighted average price of its commonn shares during the five consecutive trading days endingg on June 26, 2009 (the "Average VWAP"). The Averager VWAP and the total number of sharezs to be issued will be announcedf in a press release before the opening of NYSE tradinton Monday, June 29, 2009. This information also will be availablreat D.F. King & Co., the information agent.
In connection with the Trustg PreferredExchange Offer, for each Trust Preferred Security of KeyCorpo Capital I, KeyCorp Capital II, KeyCorp Capital III or KeyCorpo Capital VII (collectively, the "Capital accepted in accordance with the terms of the exchangse offer, KeyCorp will issue a number of its common sharesz that will be fixed accordinbg to an Exchange Ratio which will be determined at 4:30 p.m. New York City time on the secon d trading day immediately preceding the expiration date of the The offer is currently expected to expire on Tuesday, June 30, 2009, and the Exchange Ratio woulrd then be fixed at 4:30 p.m. New York City on June 26, 2009.
For each Trust Preferrer Security of KeyCorpCapital II, KeyCorp Capital III or KeyCorp Capital VII tendered on or priotr to 5:00 p.m., New York City time on Tuesday, June 16, 2009 (and not subsequentl y withdrawn), KeyCorp will issuwe a number of its commonn shares equal to the quotient of $850 divided by the Averagw VWAP. For each Trust Preferred Security of KeyCorpCapitap II, KeyCorp Capital III or KeyCorl Capital VII tendered after 5:00 New York City time on June 16, 2009 but prior to the expiration date of the offerf (and not subsequently withdrawn), KeyCorp will issue a number of its common shares equal to the quotienr of $800 divided by the Averagwe VWAP.
For each Trust Preferred Security of KeyCorp Capital I tenderec on or priorto 5:00 p.m., New York City time on June 16, 2009 (and not subsequentlg withdrawn), KeyCorp will issue a number of its commonm shares equal to the quotient of $750 dividedx by the Average VWAP. For each Trust Preferred Securithy of KeyCorp Capital I tenderesdafter 5:00 p.m., New York City time on Tuesday, June 16, 2009 but priorf to the expiration date of the offerf (and not subsequently withdrawn), KeyCorp will issue a number of its common shares equal to the quotient of $700 divideed by the Average VWAP.
The Average VWAP and the total number of shares to be issued will be announced in a presse release before the opening of NYSE tradinggon Monday, June 29, 2009. This informatiobn also will be availablweat D.F. King & Co., Inc., the informatiomn agent. The Series A Exchanger Offer and the Trust Preferred Securitied Exchange Offer and Consent Solicitation will each expirsat 11:59 p.m. New York City time, on Tuesday, June 30, unless extended or earliefr terminatedby KeyCorp. Securities that are tendered into eithe r offer may be withdrawn at any time priore tothis date.
To receive the consideratioj in either the Series A Exchangee Offer or the Trust Preferred SecuritieaExchange Offer, holders must validly tender and not withdraq their securities prior to the expiration date. KeyCorp will deliver the consideration promptly after theexpiration date. The consummation of the Series A Exchange Offer is not conditioned on the consummatio of the Trust Preferrer Securities Exchange Offer orvice versa. J.P. Morgan Securities Inc. is actintg as KeyCorp's sole financial advisor in connectionj with the Series AExchange J.P. Morgan Securities Inc.
and Morgan Stanley are actingbas KeyCorp's joint financial advisors in connection with the Trus Preferred Securities Exchange Offer. In addition, Morgah Stanley is KeyCorp's capital advisord on all of its capitall execution plans related tothe U.S. Government's Supervisoryh Capital Assessment Program. The advisorse have not been retained to, and will not, solicity acceptances of the exchange offersw or make any recommendations to holdere withrespect thereto.
The complete terms and conditionzs of the exchange offer are set forth in the respective Offers to Exchange and Letters of Transmittal that are being sent separatelty to holders of the Seriesw A Preferred Stock and Trus tPreferred Securities. Holders are urgefd to read the exchange offerdocuments carefully. D.F. King Co., Inc., the information agent at (800) 431-96332 or, for bankers and at (212) 269-5550 (Collect). The Exchange Agent for the exchangde offers is ComputershareTrust N.A., available at (781) 575-2332.
The Offer to Letter of Transmittal and other related documentz for the Series A Preferred Stocmk also will be filed with the Securities and ExchangseCommission ("SEC") on Schedulde TO and may be obtained for free at the SEC's . The offers to exchangd are being made in reliance upon the exemptio from the registration requirements of the Securities Act of asamended (the "Securities Act"), providedd by Section 3(a)(9) of the Securitiees Act. This press release is neither an offer to purchase nor a solicitatiob to buy any shares of the Series A PreferrefStock and/or Trust Preferredx Securities, nor is it a solicitation for acceptance of the respectiver exchange offers.
KeyCorp is making the respective exchang e offersonly by, and pursuantg to the terms of, the respectivs Offers to Exchange and the related Letters of Transmittal. The respective exchange offerxs are not being made in any jurisdiction in which the makingy or acceptance thereof would not be in compliance withthe securities, blue sky or other laws of such None of KeyCorp or its affiliates, the trustees of the Capita l Trusts, the exchange agent, the information agent, the financial advisors or the capital advisor is makin g any recommendation as to whether or not holders should tender their shares of Seriez A Preferred Stock and/or Trust Preferredc Securities in connection with the respectivse exchange offers.
Cleveland-based KeyCorp is one of the nation'sd largest bank-based financial services with assets ofapproximately $97 BusinessWeek Magazine named Key the top bank in its Customer Services Champ 2009 edition, ranking Key 11th out of the top-254 companies that include many known for theifr customer service acumen. Key companies provide investment management, retail and commercial consumer finance, and investmen banking products and services to individuales and companies throughout the UnitedStates and, for certain businesses, For more information, visit . You may obtain thesde documents bycontacting KeyCorp, Investor Relations, at (216) 689-4221 or by emaio at .
This Press Release contains forward-looking statementzs within the meaning of the Privatew Securities Litigation Reform Actof 1995, including statements abouft our financial condition, results of operations, assetr quality trends and profitability. Forward-looking statements are not historical factss but instead representonly management's current expectations and forecasts regarding future events, many of by their nature, are inherently uncertai and outside of KeyCorp's control. KeyCorp'ws actual results and financial condition may possibly materially, from the anticipated results and financial conditiobn indicated in these forward-looking statements.
Factors that may cause actual results to differ materially include, among other (1) adverse capital markets conditionsx and the inability to raisr equity and other funding in the capital (2) further downgrades in our credit (3) unprecedented volatility in the stock markets, publicf debt markets and other capital markets, includingb continued disruption in the fixed income markets;(4) changesz in interest rates; (5) changes in monetary or fiscal policy; (6) assett price deterioration has had (and may continu e to have) a negative effect on the valuatio n of certain asset categories represente d on KeyCorp's balance sheet; (7) continuation of the receng deterioration in general economic or in the condition of the local economiese or industries in whichb we have significant operations or which could, among other materially impact credit quality trends and our ability to generate loans; (8) continued disruption in the housin markets and related conditions in the financial (9) increased competitive pressure among financial services companiesd due to the recent consolidatioh of competing financial institutions and the conversion of certain investment bankss to bank holding companies; (10) heightenedf legal standards and regulatory practices, requirements or expectations; (11) the inabilityt to successfully execute strategic initiatives designed to grow revenuee and/or manage expenses; (12) increaserd FDIC deposit insurance premiums; (13) difficult y in attracting and/or retaining key executivew and/or relationship managers; (14) consummation of significanr business combinations or divestitures; (15) operational or risk management failures due to technological or othet factors; (16) changes in accountinv or tax practices or requirements; (17) new lega obligations or liabilities or unfavorable resolutionj of litigation; and (18) disruption in the economy and generap business climate as a result of terroristg activities or military actions.
For additional informatiohn on KeyCorp and the factors that coulfcause KeyCorp's actual results or financial condition to diffef materially from those described in the forward-looking statements consult KeyCorp's Annual Report on Form 10-K for the year endedr December 31, 2008, and subsequentr filings with the Securities and Exchange Commission available on the Securitieas and Exchange Commission's website ( ). Forward-looking statementds are not guarantees of futurew performance and should not be relied upon asrepresenting management' views as of any subsequent We do not assume any obligation to update thesw forward-looking statements.