WCI Communities Offers to Exchange Secured Debt for Convertible Notes to Avoid Financial Crisis

Company risks bankruptcy if $125 million in convertible notes are not repaid August 5th.

Palm Coast, Florida – July 9, 2008 – Florida real estate developer WCI Communities faces a debt crisis on August 5th when $125 million in convertible notes are due to be repaid. Industry sources say that the company does not have that much cash. It was announced today that WCI has offered to exchange secured debt, due in 2013, for the convertible notes.
 
The new debt would be secured and carry a coupon rate of 16%, compared to the 4% rate on the convertible notes. For the plan to proceed, at least 95% of the convertible notes must be tendered. In addition, WCI will need to amend and restate its existing credit facilities as well as sell additional second lien notes. The offer expires at midnight August 4th. Facing a similar crisis in January, WCI successfully negotiated an extension of its major credit facility and term loan, postponing payment until June, 2009.
 
WCI Communities is the developer of condominiums in Palm Coast’s luxury oceanside community of Hammock Dunes in Northeast Florida. WCI is headquartered in Bonita Springs, near Naples, Florida.
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