KEYCORP NEW

Current report

Following the final purchase under the Investment Agreement, Scotiabank will hold a significant equity interest in our business and may exercise influence over us, including through its ability to designate up to two directors to KeyCorp’s Board of Directors. In addition, the Investment Agreement is accounted for as a financial instrument at fair value with changes in fair value recorded through earnings, which may have an adverse impact on our results of operations.

Current report

In August 2024, KeyCorp entered into an Investment Agreement with Scotiabank, pursuant to which Scotiabank agreed to purchase, in two closings, such number of KeyCorp’s Common Shares that, taken together with all other Common Shares then owned by Scotiabank and its affiliates, would represent approximately 14.9% of the issued and outstanding Common Shares of KeyCorp on a post-transaction basis. The first closing occurred in August 2024 and Scotiabank currently holds approximately 4.9% of KeyCorp’s outstanding Common Shares. We cannot provide any assurance that the second closing under the Investment Agreement will occur in a timely manner, or at all. Following the second closing, Scotiabank is expected to hold approximately 14.9% of KeyCorp’s issued and outstanding Common Shares. In addition, under the Investment Agreement, following the second closing, Scotiabank will be entitled to designate up to two directors to KeyCorp’s Board of Directors, subject to specified minimum ownership requirements. As a result of the amount of Common Shares that will be held by Scotiabank, together with its director designation rights, Scotiabank may be able to influence our policies and operations and impact matters requiring shareholder approval. In addition, the existence of a large shareholder may have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management, or limiting the ability of our other shareholders to approve transactions that they may deem to be in the best interests of our company. The interests of Scotiabank with respect to matters potentially or actually involving or affecting us and our other shareholders, such as future acquisitions, financings, and other corporate opportunities and attempts to acquire us, may conflict with the interests of our other shareholders.

Current report

In addition, because the exact number of shares to be issued by us to Scotiabank at the second closing is dependent on the total shares outstanding at the time of final purchase, equity classification of the Investment Agreement is precluded and, therefore, the Investment Agreement is accounted for as a financial instrument at fair value with changes in fair value recorded through earnings. As of September 30, 2024, the value of the financial instrument did not have a material impact to our results of operations or financial condition. As a result of the potential future volatility in the market price of our Common Shares used in the fair value estimation of the financial instrument, our financial statements and results of operations may fluctuate in future periods, based on various factors, many of which are outside of our control. Accordingly, we may recognize non-cash gains or losses on the financial instrument for each reporting period and the amount of such gains or losses could be material.

Current report

On August 30, 2024, KeyCorp issued 47,829,359 Common Shares for approximately $821 million in gross proceeds to Scotiabank pursuant to the first closing under the Investment Agreement, which was exempt from registration under the Securities Act of 1933, as amended, by virtue of the exemption provided by Section 4(a)(2) of the Securities Act.