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Homebuilder WCI Sees Stock Rise After Renegotiating Bank Loans

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By ANTHONY McCARTNEY, The Associated Press

Published: January 17, 2008

TAMPA - Upscale homebuilder WCI Communities Inc. renegotiated loan terms with two banks Wednesday, sending its stock prices higher and setting aside speculation that the company was headed for bankruptcy.

Specifics terms weren't released, but the homebuilder said it will have greater financial flexibility to navigate the troubled housing market. WCI has been trying to stay afloat in the face of weak demand, canceled orders and growing inventory - problems experienced by many other builders during the U.S. housing market downturn.

WCI already has received at least three loan extensions from two banks - Bank of America Corp. and KeyCorp's KeyBank - as it sought flexibility to pay interest on debt. The banks agreed Wednesday to new terms on WCI loans and credit that will expire on June 30, 2009.

The agreement amounted to a reprieve for the Bonita Springs-based developer, which had said it might have to declare bankruptcy if it didn't reach an agreement on a $700 million secured revolving line of credit and a $263 million secured bank loan.

WCI President and chief executive Jerry Starkey thanked lenders and said WCI will work to "aggressively reduce overhead and search for avenues to lower our cost of doing business."
Bank of America representatives did not return calls seeking comment Wednesday. A KeyBank spokeswoman declined comment, citing privacy regulations.

Locally, WCI is building the West Shore Yacht Club, a luxury home project along West Shore Boulevard, south of Gandy Boulevard in Tampa. It also is building homes in Sun City Center, a retirement community.

A proposed WCI condominium project slated for the Rocky Point area in Tampa is on hold, pending stronger sales at the West Shore development, the company has previously said.

The company also received support Wednesday from one of its largest shareholders, billionaire investor Carl Icahn. Named WCI's chairman in September, Icahn told CNBC in an interview that he wasn't assuming the company is near bankruptcy and that others shouldn't either.

After falling more than 20 percent earlier in the day, WCI shares rebounded Wednesday afternoon to close up 32 cents, or 15 percent, to $2.44. The stock continued to jump in after-hours trading, rising 68 cents to $3.12. The stock is still far below its 52-week high of $24.20 set last February.

The stocks of other homebuilders also rose Wednesday. Los Angeles-based KB Home closed up $1.13, or 6.6 percent, to $18.13, and Miami-based Lennar Corp. closed up 28 cents, or 2 percent, to $14.25.

However, some experts noted that WCI's financial position remains precarious. "The company is at the mercy of its creditors," said Chris Lafakis, associate economist with Moody's Economy.com.

WCI is the nation's 33rd-largest homebuilder, according to 2006 sales. The company builds tower residences and traditional homes in upscale communities in the mid-Atlantic and Northeast, but most of its business is in Florida.

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