WCI Communities 4% contingent convertible notes become convertible

By Jennifer Chiou

New York, Aug. 22 - WCI Communities, Inc.'s $125 million principal amount of 4% contingent convertible senior subordinated notes due 2023 are now convertible, according to a 10-Q filing with the Securities and Exchange Commission.

The notes are convertible following the downgrade of WCI's ratings by both Standard & Poor's and Moody's Investors Service.

In August, Moody's lowered the company's credit rating to B3 from B2 and the credit rating on its subordinated debt to Caa2 from Caa1.

In July, S&P lowered WCI's company credit rating to CCC+ from B+ and lowered the credit rating on the subordinated debt to CCC- from B-.

In February, as a result of WCI's significant debt leverage and declining market conditions, S&P and Moody's lowered the corporate credit rating to B+ from BB- and to B2 from B1, respectively, as well as the rating on the subordinated debt to B- from B and to Caa1 from B2, respectively.

Upon conversion of the notes, WCI will pay a cash amount equal to the lesser of par and the cash conversion price as specified in the supplemental indenture governing the notes. In the event that the cash conversion price exceeds par, the company said it may elect to issue common stock or pay an amount of cash equal to the difference between the cash conversion price and par.

As of June 30, the cash conversion price per $1,000 principal amount of convertibles would result in the holder receiving an amount less than par, and no holders have requested conversion.

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

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