WCI amendment resets revolver spread at Libor plus 300 bps, term loan at Libor plus 350 bps

By Sara Rosenberg

New York, Aug. 21 - WCI Communities Inc.'s recently announced credit facility amendment revised pricing on the revolver to Libor plus 300 basis points and on the term loan to Libor plus 350 bps, according to an 8-K filed with the Securities and Exchange Commission Tuesday.

Changes to financial covenants include an EBITDA to fixed charges ratio that now cannot be less than 0.50 times at the end of any fiscal quarter through Dec. 31, 2008, 1.0 times at March 31, 2009, 1.25 times at June 30, 2009, 1.50 times at Sept. 30, 2009, 1.75 times at Dec. 31, 2009 and 2.0 times at the end of any fiscal quarter thereafter.

Maximum permitted housing inventory is now limited to 50% of trailing 12 months homebuilding closings through Dec. 31, 2008, and 35% thereafter.

And, debt to tangible net worth now cannot exceed 2.15 times at the end of any fiscal quarter through Dec. 31 and 1.75 times at the end of any fiscal quarter thereafter.

In addition, the company agreed to provide lenders with mortgages and other security documents covering substantially all assets as security, as well as to obtain appraisals and other property-specific reports.

Sales of assets in excess of $100 million and not in the ordinary course of business will require approval by a majority of the lenders.

As was previously reporter, the revolver has been reduced to $700 million from $850 million, with subsequent reductions to $600 million on July 1, 2008 and to $550 million on July 1, 2009.

The term loan has been reduced to $262.5 million from $300 million, with a subsequent reduction to $225 million on July 1, 2008.

The amendment also waived any default arising from certain changes in the composition of the company's board of directors.

Under a recent agreement, WCI's board of directors will be decreased to nine members from 10 immediately prior to the 2007 annual meeting. The board has agreed to nominate a slate of directors for election at the annual meeting, consisting of Don E. Ackerman, Charles E. Cobb and Hilliard M. Eure, III (the incumbent nominees), Carl C. Icahn, Keith Meister and David Schechter (the Icahn nominees) and Craig W. Thomas, Nick Graziano and Jonathan R. Macey (the other stockholders nominees).

The amendment was completed on Aug. 17.

Bank of America is the agent on the revolver and Key Bank is the agent on the term loan.

Simultaneously, the company amended its revolving credit construction loan agreement so that it provides for a $390 million loan priced at Libor plus 300 bps. Wachovia Bank is the agent on this loan.

WCI is a Bonita Springs, Fla.-based builder of traditional and tower residences in highly amenitized lifestyle communities.

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