WCI Communities is taking one more step toward fading into obscurity. The Bonita Springs, Fla.-based company, which has been under Chapter 11 bankruptcy court protection since August 2008, announced its plans to file paperwork to deregister its common stock by March 30.
The move, which is possible because the company's common stock is held by less than 300 people, suspends its obligation to file periodic and current financial reports with the U.S. Securities and Exchange Commission (SEC), including 10-K, 10-Q, and 8-K forms.
"In light of the bankruptcy filing in August 2008, the company's board of directors determined that the benefits of remaining a reporting public company were outweighed by the financial costs of complying with the associated regulatory requirements," the news release announcing the change said.
While it will not be required to file the documents with the SEC after the deregistration, WCI said it will continue posting quarterly and annual financial results, including an annual audit on its Web site. It is determining whether it is required to file a full annual report to the SEC for the year ended Dec. 31, 2008.
The company said it plans to continue trading its shares in the Pink Sheets but won't guarantee there will be brokers who will handle the securities. The stock was trading at $0.05 the morning of March 26, down 24%.
The company, which specialized in highly amenitized communities, particularly high-rise luxury waterfront condominiums in Florida, was hit hard by the downturn. Even before the market began crumbling, WCI had high debt levels created by expanding into new markets in the Mid-Atlantic and Northeast. The expansion was too late to help the company much. While the high-rise second-home market in Florida deteriorated first, the poor market conditions spread to its other products and divisions as well. There were some quarters when the company actually lost more sales than it made as cancellations came rolling in at historic rates.
WCI garnered extra headlines in spring 2007, when billionaire investor Carl Icahn made a take-over attempt, buying up 14% of the company's stock and tendering an offer to buy all other stock for $22 a share. Icahn withdrew that offer after a month, even as the stock prices started to tumble.
In addition to stagnant sales, the costs of bankruptcy have been steadily eroding the company's bottom line. Fees for bankruptcy attorneys, auditors, and restructuring and public relations professionals cost $10 million in December alone, according to documents filed with the bankruptcy court.
At the end of the year the company listed its assets at $1.59 billion and its liabilities at $1.96 billion.