KeyBank sells $3.2B auto portfolio
In an effort to satisfy shareholders, KeyCorp is getting out of auto financing.
Last week, KeyCorp announced that KeyBank has sold its indirect retail auto portfolio, and that KeyCorp has entered into an accelerated share repurchase (ASR) program.
According to a news release, the company said KeyBank sold its $3.2 billion indirect retail auto portfolio to an entity managed by a wholly-owned subsidiary of Waterfall Asset Management.
Concurrently with the sale, KeyBank said purchased $2.8 billion of senior notes from a securitization collateralized by the sold contracts. KeyBank will remain the servicer of the auto paper.
KeyCorp chief financial officer Don Kimble explained the company’s reasoning through that news release.
“We are committed to returning capital to our shareholders and our share repurchase program is an important part of that commitment,” Kimble said. “The ASR transaction, which was aided by the capital generated from the sale of the indirect retail auto loan portfolio, further demonstrates our commitment to maximizing shareholder value.”
KeyBank was advised on the transaction by Morgan Stanley & Co. LLC as lead structuring and financial advisor and KeyBanc Capital Markets, as well as by legal counsel Sidley Austin LLP.
Waterfall Asset Management was advised on the transaction by legal counsel Morgan, Lewis & Bockius LLP.
The company went on to mention the total number of shares that KeyCorp will repurchase under the ASR program will be based on the volume-weighted average price of the common stock during the term of the ASR agreement, less a discount, and subject to potential adjustments pursuant to the terms and conditions of the ASR agreement.
Executives added that the final settlement of the share repurchases under the ASR agreement is expected to be completed during the fourth quarter.