WCI plans credit facility amendment with convertibles exchange offer

By Sara Rosenberg

New York, July 16 - WCI Communities Inc. is looking to amend its revolving credit facility and term loan simultaneous with the consummation of an exchange offer for its $125 million of 4% contingent convertible senior subordinated notes, according to a T-3 recently filed with the Securities and Exchange Commission.

Under the revolver amendment, about $243.3 million will cease to be available and will be payable in full on the revolver's maturity date of June 11, 2010.

The revolver will have $150 million of availability and up to $100 million of that amount will be available for letters of credit.

Under the term loan amendment, about $132.3 million will remain outstanding, which will mature and be payable in full on Dec. 23, 2010.

Pricing and fees on the revolver and the term loan are expected to increase with the amendment. Currently, the revolver and the term loan are both priced at Libor plus 525 basis points. The revolver currently has a 25 bps unused fee.

Financial covenants under the amended revolver and term loan are expected to include a minimum ratio of appraised asset value to loans of 2.0 to 1.0. In addition, at least one of the following tests will have to be satisfied - minimum ratio of EBITDA to fixed charges of 0.5 to 1.0, minimum ratio of cash flow from operations to cash interest expense of 1.0 to 1.0 or minimum liquidity of $50 million.

The company is in discussions with the agent for the lenders of the revolver and term loan, but an amendment agreement is subject to the negotiation of satisfactory documentation, including intercreditor agreements with the second- and third-lien lenders, as well as to the receipt of lender consents.

Completion of the convertibles exchange offer is subject to certain customary conditions, including a 95% minimum tender condition, the amendment of the revolver and term loan, and the issuance of new second-lien notes.

WCI is offering to exchange its convertibles for new 16% senior secured notes due 2013.

The exchange offer will expire at midnight ET on Aug. 4, unless extended or terminated.

WCI is a Bonita Springs, Fla.-based homebuilding and real estate services company.

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