TORONTO, Oct. 15 /CNW/ -- Keystone North America Inc. ("Keystone") (TSX: KNA, KNA.UN), announced today that it has entered into a support agreement with Service Corporation International ("SCI") and a wholly-owned subsidiary of SCI (the "Support Agreement"). Under the terms of the Support Agreement, SCI has agreed to offer to purchase all the outstanding shares of Keystone, including those represented by income participating securities, at $8.00 per share. The offer price represents a 34% premium to Keystone's 20-day volume-weighted average share price.

The entering into of the Support Agreement follows a comprehensive review of strategic alternatives commenced by Keystone's board of directors in May 2009, which included, among other things, a confidential sale process involving both potential financial and strategic buyers. The board of directors of Keystone has unanimously determined that the offer to be made by SCI is fair and in the best interests of the Company and that it will recommend that shareholders tender to the offer.

"Keystone's board of directors unanimously supports this transaction as it provides Keystone's shareholders with significant value and liquidity", noted Lorie Waisberg, Chairman of Keystone.

The transaction is expected to close in the first quarter of 2010, and is conditioned upon the tender of at least two-thirds of Keystone's outstanding common shares (calculated on a fully diluted basis). The transaction is also subject to customary closing conditions, including the receipt of regulatory approvals, including expiration of the waiting period under the Hart-Scott-Rodino Antitrust Act.

The Support Agreement also provides for, among other things, a non-solicitation covenant on the part of Keystone, subject to customary "fiduciary out" provisions, which entitle Keystone to consider and accept a superior proposal, subject to SCI's right to match and the payment to SCI of a termination fee in an amount of $6.0 million. In addition, the Support Agreement requires that Keystone not declare, pay or set aside for payment any further dividends, following the payment of the previously declared and announced dividend payable on October 15, 2009. Should the transaction not be completed by February 28, 2010, the offer price will be increased by $0.07 per share per month beginning on March 1, 2010 until completion. Keystone will continue to pay interest on its outstanding subordinated notes, including those represented by income participating securities.

BMO Capital Markets is acting as Keystone's financial advisor and assisted Keystone's board of directors with its comprehensive review of strategic alternatives. Keystone has received opinions from each of BMO Capital Markets and Scotia Capital Inc.