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Riding a Real Estate Roller Coaster
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In March, the corporate raider Icahn made an unsolicited $22-a-share bid for the company worth about $920 million, a 16 percent premium at the time. The company rejected the offer and the two parties locked horns, even pushing back the company's June shareholder meeting to late August.
A truce was reached with a new board that made Icahn director, a move that Dietz, in an interview, cited as a possible plus.
"He has a lot of capital coming in behind him," Dietz said. "My guess would be that he would continue to support the company."
Icahn declined to comment on specific plans for the company, citing his role a director, and would only comment broadly on the state of the housing market.
"Sometimes it's darkest before dawn," Icahn said. "And admittedly, in the housing area, there may be some time before dawn. But if you have patience, these things generally work out very profitably."
In November, the company reported a third-quarter loss of $69.7 million ($1.66 a share), compared with a profit of $10.7 million (24 cents) in 2006. The company said it is having to lower prices on its units and spend more on incentives to get people to buy, and its costs are going up as its stretches out construction schedules and insurance gets more expensive.
"Demand continues to be unpredictable from week to week, and we saw an increase in defaults and cancellations during the third quarter," WCI's chief executive Jerry Starkey said in a statement.
The company's credit rating has been downgraded to junk status by rating agencies Moody's and Standard and Poor's. The company's stock closed at $4.05 a share last week, well off its 2005 highs, when prices topped $35.
On Friday, the company said its bankers had granted it an extension until Jan. 7 to work out a new financing agreement. If an arrangement cannot be worked out, the company warned that its lenders would have the right to take action, "including foreclosing on certain collateral and accelerating the maturity of the loans, which could result in the acceleration of substantially all our other outstanding indebtedness."
Alfred Hoffman, WCI's longtime champion, declined to comment for this article. He placed his holdings in a blind trust when he was named ambassador, and the trust has divested most of its holdings in the company over the past year, Dietz said.
