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KeyCorp 8-K Report, Material Agreement (Aug 13, 2024)

Reports
Material Agreements·Securities & Listing·Exhibits & Filings
Filing Date
Filed August 13, 2024
Period End
August 12, 2024
In the record · 2016–202610-K1110-Q348-K141

KEY filed 11 annual reports (10-K), 34 quarterly reports (10-Q) and 141 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Aug ’16Aug ’16
  2. Leadership change8-K · Dec ’21Dec ’21
  3. Leadership change8-K · May ’26May ’26

01—Abstract

Summary

Summary of the 8-K filed August 13, 2024. Cited figures are marked; the original filing is the authoritative source.

KeyCorp entered into an Investment Agreement on August 12, 2024 with The Bank of Nova Scotia, under which the Bank will purchase Common Shares in two closings for aggregate consideration of approximately $2.8 billiona at a fixed price of $17.17 per share.

The shares would represent approximately 14.9%b of KeyCorp's issued and outstanding Common Shares immediately after the transaction. The First Closing, subject to conditions including expiration or early termination of the Hart-Scott-Rodino waiting period, would give the Bank 4.90% of outstanding Common Shares. The Second Closing, subject to the First Closing and receipt of bank regulatory approvals, would bring the Bank's stake to 14.90% (or up to 14.99% if the Bank gives notice at least two business days before closing).

The agreement gives the Bank governance rights, including two board designees upon the Second Closing, with the number of nominees declining over time as its ownership falls below 10%c and 5% thresholds. The Bank is subject to a lock-up until the first anniversary of the Second Closing, standstill restrictions capping its ownership at 19.99% and barring efforts to control governance, and a voting arrangement under which it generally votes with the Board until the 5% Fall-Away Date. KeyCorp also grants registration rights, including S-3 shelf rights and up to two underwritten shelf takedowns in any 12-month period, plus pre-emptive participation rights before the 5% Fall-Away Date.

The Share Issuances are intended to be exempt from registration under Section 4(a)(2) of the Securities Act, and the filing states that KeyCorp has not engaged in general solicitation. The full Investment Agreement is filed as Exhibit 10.1, with schedules omitted under Regulation S-K Item 601(a)(5) and certain personal information redacted.

02—Key points

Key Highlights

  1. Investment Agreement dated August 12, 2024 with The Bank of Nova Scotia for a stake of approximately 14.9% of KeyCorp's common shares.
  2. Aggregate consideration of approximately $2.8 billion at a fixed price of $17.17 per share.
  3. Two closings: First Closing for 4.90% ownership after HSR waiting period expiry or early termination; Second Closing for 14.90% (up to 14.99%) after bank regulatory approvals.
  4. Board rights: two director designees upon the Second Closing, one a senior Bank officer and one a third-party designee reasonably acceptable to KeyCorp, with nominees declining as ownership falls below 10% and 5%.
  5. Lock-up until the first anniversary of the Second Closing, a KeyCorp right of first offer on certain sales, and a standstill capping the Bank's ownership at 19.99% until the earliest of a change of control, five years after the Second Closing, or termination before the First Closing.
  6. Registration rights include continuous S-3 shelf rights and up to two underwritten shelf takedowns per 12-month period with expected gross proceeds of at least $500 million or inclusion of all the Bank's shares.
  7. Share Issuances are intended to be exempt from registration under Section 4(a)(2) of the Securities Act; the full agreement is filed as Exhibit 10.1.

03—Questions

Frequently Asked Questions

  1. How large is the proposed investment and at what price?

    The Bank of Nova Scotia would purchase Common Shares for aggregate consideration of approximately $2.8 billion at a fixed price of $17.17 per share.

  2. What ownership stake would the Bank of Nova Scotia hold?

    After the Second Closing, the Bank would hold approximately 14.9% of KeyCorp's issued and outstanding Common Shares, or 14.90% up to 14.99% if it gives notice at least two business days before that closing. The First Closing would give it 4.90%.

  3. What conditions must be met before the closings occur?

    The First Closing requires satisfaction or waiver of certain conditions, including expiration or early termination of the Hart-Scott-Rodino waiting period. The Second Closing requires the First Closing to have occurred and receipt of applicable bank regulatory approvals.

  4. What governance rights does the Bank of Nova Scotia receive?

    Upon the Second Closing, the Bank may designate two Board representatives, one a senior officer selected by the Bank and one a third-party designee reasonably acceptable to KeyCorp. Its board nomination rights decline as its ownership falls below 10% and 5%, and it cannot exceed 24% of Board members.

  5. What restrictions limit the Bank's ability to sell or influence KeyCorp?

    The Bank cannot transfer the acquired shares until the first anniversary of the Second Closing, subject to exceptions. Its standstill prevents it from acquiring shares that would exceed 19.99% ownership or seeking to change control of KeyCorp's governance. KeyCorp holds a right of first offer on certain Bank sales.

04—Continue

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