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Builder WCI FilesChapter 11

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By SHANNON BEHNKEN

The Tampa Tribune

Published: August 5, 2008

TAMPA - Luxury homebuilder WCI Communities, which has a large, waterfront project under way in South Tampa, filed for Chapter 11 bankruptcy protection Monday morning.

This comes after the Bonita Springs-based company failed to obtain new financing and some holders of $125 million convertible notes insisted last week on being paid in cash by today.

The bankruptcy documents were filed in U.S. Bankruptcy Court in the District of Delaware and included 130 of the company's subsidiaries.

As part of the restructuring, Chief Executive Officer Jerry Starkey will leave the company and David Fry will serve as interim CEO, WCI said in a written statement.

"The company, with all diligence, has attempted to avoid a bankruptcy filing," the company's chairman, billionaire investor Carl Icahn, says in the written statement.

"However, the filing became necessary because of the recent failed effort to obtain financing and the recognition that the company's entire $1.8 billion of debt may soon be in default."

In a Chapter 11 filing, companies can reorganize debt and other obligations with an eye toward emerging in better financial shape.

Shares tumbled almost 50 percent in morning trading, falling 60 cents, to 66 cents. They traded as high as $10 a share during the past 52 weeks. The stock ended the day at 2 cents, down $1.24 or 98 percent, after trading was halted.
WCI Communities builds retirement homes and "lifestyle communities" in Florida, mostly for retirees and wealthy vacationers from the New York and Washington areas.

WCI already had received multiple loan extensions from two banks - Bank of America Corp. and KeyCorp's KeyBank - as it sought flexibility to pay the interest on its debt. The banks agreed in January to new terms on WCI loans and credit that were set to expire next June.

Locally, WCI Communities is known for developing Sun City Center in southern Hillsborough County. The only Bay-area project underway now is Westshore Yacht Club, overlooking Tampa Bay in South Tampa.

The bankruptcy filing won't affect plans for the development, said Tom Mulligan, company spokesman.

"The future of the development will be affected more by the real estate market than this filing," Mulligan said. "Development decisions will continue to be made the same way as they were before the bankruptcy filing."

In November, WCI said construction at Westshore Yacht Club was on hold until the real estate market improved. Mulligan said nothing has changed.
Westshore Yacht Club is on 74 acres and initially included plans for 539 homes. One of three planned towers is complete. At least 60 percent of the single-family homes and town homes planned for the project are complete.

Before the filing, the company reached a definitive agreement with its principal secured lenders regarding the terms on which the company will have access to more than $50 million cash to continue operating its business.

The company, which began developing master-planned communities in 1946, said it will continue to sell, build and deliver homes.

WCI has properties in Florida, Connecticut, Maryland, New Jersey, New York and Virginia.

Information from The Associated Press was used in this report. Reporter Shannon Behnken can be reached at (813) 259-7804 or sbehnken@tampatrib.com.

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