Hammock Dunes Tower Condominium Developer, WCI, Facing Hard Times

WCI reports losses and uncertainty of continuing credit facilities

December 10, 2007 – Palm Coast, FL – Hammock Dunes condominium developer, WCI Communities, was named America’s Best Builder in 2004 by both the National Association of Home Builders and Builder Magazine. Heavily dependent on the tower condo market, WCI is at a critical juncture. WCI, which started building in 1946, is self-described as “a leading builder of traditional and tower residences in highly amenitized lifestyle communities.”

On December 7, 2007, WCI revealed it had initialed an extension to a limited waiver of performance to its three major credit vehicles:

• Senior Secured Revolving Credit Agreement (Credit Facility)
• Term Loan Agreement (Term loan)
• Revolving Tower Construction Agreement (Tower Facility)

The limited waiver was necessary because WCI was unable to comply with the Fixed Charge covenant of the Credit Facility and Term Loan. The extension, set to expire January 7, 2008, follows a previous waiver of performance dated August 17, 2007 that expired on December 7.

WCI states: “Until finalized it is not certain that we will reach agreement or obtain approval of the anticipated longer-term amendment. This amendment will be expensive and there can be no assurance that we will be able to comply with the amended covenants and other requirements. If WCI is unable to obtain the amendment or comply with its terms, the lenders would have the right to exercise remedies specified in the loan agreements, including foreclosing on certain collateral and accelerating the maturity of the loans, which could result in the acceleration of substantially all of our other outstanding indebtedness. In such a situation, there can be no assurance that we would be able to obtain alternative financing. In addition, if the Company is determined to be in default of these loan agreements, it may be prohibited from drawing additional funds under the Credit Facility and the Tower Loan, which could impair our ability to maintain sufficient working capital. Either situation could have a material adverse affect on the solvency of the Company.”

WCI released its third quarter 2007 results November 8. The entire press release covering the results can be view at WCI Quarterly Report.  Highlights include:

• Net loss of $69.7 million vs. profit of $10.7 million for the same period last year
• Loss of $118.8 million for the 9-months ended September 30
• Tower homebuilding orders were negative with 89 defaults and 8 gross new orders