Press Release Announcing WCI Communities Buyout Offer was a Hoax
The story precipitated a 29% increase in WCI stock today before the hoax was uncovered.
Palm Coast, Florida – July 21, 2008 – Over the weekend several media offices in Southwest Florida received a faxed press release purportedly from WCI Communities WCI is one of Florida’s largest builders of luxury homes and condominiums and the developer of oceanfront condominiums at Palm Coast’s exclusive Hammock Dunes community in Northeast Florida.The faxed press release announced a buyout deal for the financially troubled builder. At least one news department accepted the story as fact and ran with it.
Yesterday, a GoToby.com reader emailed me the link to a story on "News-Press.com" in Fort Myers. The story referenced the faxed press release which stated that WCI Communities could be sold to an unknown buyer for $220 million. "Stock prices would reach $5.25 under the deal" the story added. The stock had closed at $1.37 Friday.
Before posting the article, I sought verification but could find none on the Internet. Late yesterday, another site posted that the story was false. Today, the hoax was verified in a "real" press release from WCI Communities which announced that "the media outlet stories that have reported that WCI has received a buyout offer are false in all regards. No press release was issued by the Company regarding a buyout of the Company."
The farce story comes days after WCI announced that it had disbanded a committee it had formed to consider any potential offers, including a possible deal with a Carl Icahn affiliate. Icahn owns 14.5% of WCI stock and is its Chairman.
WCI stock opened at $1.59 then rose to $1.77 before sliding back to $1.37. Icahn offered $22.00 per share only 14 months ago but was (fortunately for him) rebuffed by the then current board. WCI faces a critical $125 million debt payment on August 5th. They hope to exchange the debt for a long term secured debt at a much higher interest rate. (related story)
The webpage containing the original News-Press story has been removed.
SEC Should Take Action on That
That phoney press release sounds like an effort to "hype" the price of WCI stock. Whoever did that should be chased down and prosecuted by the SEC.