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Keycorp Limited (ASX:KYC) Notice of Scheme Meeting and IE Deems Acquisition Fair and Reasonable

Approval by the Supreme Court of Victoria to hold a shareholders’ meeting to vote on the Scheme of Arrangement in relation to the proposed acquisition of all shares in Keycorp Limited (ASX:KYC) by Archer Capital VCLP GF 1.

 

The Scheme consideration of $0.58 per share is higher than the assessed value of Keycorp shares by the independent expert of between $0.54 and $0.55 per share.

 

The independent expert’s report has concluded that the Scheme is fair and reasonable and in the best interests of shareholders in the absence of a superior proposal.

 

The Board reaffirms its support for the Scheme as being in the best interests of all shareholders in the absence of a superior proposal.

 

The Notice of Meeting and Scheme Booklets will be dispatched to all Keycorp shareholders by 21 October 2010.

 

The Scheme meeting is scheduled for 19 November 2010 in Melbourne.

 

Keycorp Limited (ASX:KYC) advises that it has received the approval of the Supreme Court of Victoria to hold a shareholder meeting to vote on the Scheme of Arrangement (Scheme) in relation to the proposed acquisition of all shares in Keycorp Limited by Overland Transaction Services Pty Ltd, a wholly owned subsidiary of Archer capital VCLP GF, LP (Archer Capital).

 

The Scheme Booklet, setting out information for Keycorp shareholders on the proposed acquisition, has been registered with the Australian Securities and Investments Commission and filed with the Australian Securities Exchange. Scheme Booklets will be dispatched to all Keycorp Limited (ASX:KYC) shareholders by 21 October 2010.

 

The Scheme consideration of $0.58 per share is higher than the assessed value of Keycorp shares by the independent expert, Grant Thornton, of between $0.54 and $0.55 per share. The independent expert has also concluded that the Scheme is fair and reasonable and, accordingly, is in the best interests of all shareholders in the absence of superior proposal.

 

The Board’s recommendation of the Scheme was subject to the independent expert’s report. As a result of the report, the Directors remain unified in their support for the offer by Archer Capital and unanimously recommend that all shareholders vote in favour of the Scheme in the absence of superior proposal.
 

Keycorp Limited (ASX:KYC) Chairman, Mr. Rob Bishop, said: “The board is firmly of the view that the Archer offer presents a superior outcome to all other carefully explored alternatives. The independent expert’s report further reflects the board’s view on valuation, and that the scheme is in the best interests of shareholders.”

The Scheme Booklet sets out in detail the benefits of the Scheme, including:

 

An attractive 42% premium for shareholders on the underlying enterprise value of the business;

 

A premium of 20.8% to the 12 month volume weighted average price (VWAP) and a premium of 14.4% to the 3 month VWAP, both to the last close price before announcement of the Offer;

 

Shareholders realize the full value of the Company in cash; and

 

The Scheme avoids the risk and potential dilutive effect to Shareholders associated with the funding of any available growth strategy.

 

In addition, the Board considers the Scheme to be attractive to shareholders for the following reasons:

 

Allows shareholders the opportunity to realize the full value of the Company. The alternative, to return surplus cash to shareholders would only realize part of the value of the Company as the Board is planning to retain current cash reserves for either acquisitions or working capital requirements. Returning the cash to shareholders would leave the business with insufficient capital to fund any meaningful growth; and

 

Provides a liquidity event for shareholders whereby they can exit their shareholding with certainty in return for cash. This is important given Keycorp is a very thinly traded stock and that approximately 25% of current cash reserves are required to fund working capital, lease finance and other commitments that cannot be released except via takeover.

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