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Lenders force WCI Communities into Chapter 11

Al Hoffman Jr. stepped down as CEO in 2005 amid the boom.

Al Hoffman Jr. stepped down as CEO in 2005 amid the boom.

The developer that built much of Sun City Center, Carrollwood Village and the Westshore Yacht Club became the latest victim of the housing meltdown Monday. WCI Communities Inc., one of Florida's most prominent builders, filed for Chapter 11 bankruptcy protection.

The company, based in Bonita Springs, was unable to arrange the financing it needed to stay in business after lenders demanded repayment of $125-million in debt. Directors fired chief executive Jerry Starkey and named David Fry to the interim position.

"We need to restructure our debt and bring our capital structure in line with today's marketplace realities," Fry said. "We believe Chapter 11 provides the most efficient and timely process for accomplishing this."

The company will continue to sell and build homes during the reorganization, and lenders have agreed to provide $50-million to continue operations. The bankruptcy filing includes 130 WCI subsidiaries, but does not include Prudential WCI Realty, WCI Mortgage and some joint ventures.

WCI traces its origins to Tampa-based Florida Design Communities, which builder Al Hoffman Jr. founded in 1985. Florida Design and Westinghouse's real estate division, WCI, merged in 1998. The company went public four years later at $19 a share and was named the National Association of Home Builders' "Builder of the Year" for 2004. As Florida real estate boomed, the stock peaked at $36 a share.

In a move of stellar timing, Hoffman stepped down as CEO in 2005 to become ambassador to Portugal, a post he held until last November. Friends say he has moved back to southwest Florida and is now active in John McCain's presidential campaign.

WCI shareholders, including billionaire investor Carl Icahn, have watched the value of their holdings evaporate. The stock lost 48 percent of its remaining value Monday, closing at 66 cents a share. The New York Stock Exchange suspended trading and said it will delist the stock.

Icahn had offered to buy the whole company for $22 a share in March 2007, but the company turned him down. He became chairman last September and continued to acquire shares, saying WCI was "a unique vehicle to take advantage of the current market disarray." In December he reported he owned 6.4-million shares directly or indirectly.

However, WCI faced canceled orders and growing inventory. Although it also built homes in the mid-Atlantic and Northeast, most of its business was in Florida. Last week the company reported it lost $100.2-million in its second quarter.

Information from Times wires was used in this report. Helen Huntley can be reached at hhuntley@sptimes.com or (727) 893-8230.

Lenders force WCI Communities into Chapter 11 08/04/08 [Last modified: Sunday, August 10, 2008 10:06am]
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