Monday, homebuilding and real estate services provider WCI Communities, Inc. (WCI) said that the company and about 130 of its wholly-owned subsidiaries had filed voluntary petitions to restructure their debt and capital. The company also announced the departure of its chief executive officer.
The Bonita Springs, Florida headquartered company said that the filing would exclude its Watermark real estate brokerage, which does business as Prudential Florida WCI Realty, as well as its WCI Mortgage business and certain other joint ventures in which WCI is a partner.
Prudential Florida WCI Realty will continue to provide real estate services, including new home and resale brokerage services, as well as foreclosure and rental management services. WCI Mortgage, an affiliate of Well Fargo Home Mortgage, will continue to offer mortgage packages and will honor all of its existing obligations, WCI noted.
Carl Icahn, chairman of WCI's Board of Directors said, "The company, with all diligence, has attempted to avoid a bankruptcy filing. 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. This was confirmed when certain holders of the company's $125 million convertible notes informed the company that they rejected its exchange offer and instead insisted on being paid in cash in full on August 5, 2008."
WCI also announced the departure of its chief executive officer Jerry Starkey with immediate effect. The company also announced that Jerry Starkey would be available for consultation and cooperation as necessary. The company and Starkey have agreed upon a mutually satisfactory severance package.
WCI said its board has appointed David Fry, currently the chief operating officer, as interim president and chief executive officer, pending the selection of a permanent CEO. The company said it would initiate a search for a new chief executive officer and president immediately.
Fry joined WCI in 1995 and was appointed as chief operating officer in November 2007. In addition to his new responsibilities, Fry will continue to be responsible for WCI's operations nationwide.
Along with its Chapter 11 filing, the company said it is terminating its offer to exchange $125 million of 4.0% contingent convertible senior subordinated notes due 2023. WCI said it would instruct the exchange agent to return the notes, which were tendered for their exchange, to their respective tendering bondholders.
WCI is currently down $0.60 or 47.62% and trades at $0.66.
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