Last December billionaire financier Carl Icahn called WCI Communities' chairman of the board Don Ackerman to say he wanted to talk about ways to increase the company's stock price and indicated he wanted to buy some. Ackerman sent him away. That day the stock price closed at $17.57.
On Thursday, (Sept. 6) just shy of nine wild months later, Icahn took over Ackerman's job and, effectively, control of the company. The stock price closed at $8.60.
"Despite the rough road ahead, I believe in the long-term value of the Company and view the WCI platform as a unique vehicle to take advantage of the current market disarray," said Icahn, who was elected unanimously by the company's recently elected re-cast board, which includes Icahn, two of his associates and two representatives of large stockholding entities, an independent professor, as well as three former WCI board members, including Ackerman.
The Bonita Springs, Fla.-based company also announced that the board has decided to pull the company off the market since it had not received any definitive offers to buy it.
WCI is, however, still looking for ways to infuse the heavily indebted company with cash, perhaps by issuing more stock. The company was heavily leveraged, nearly to 70 percent, even before the downturn started to take its heaviest toll.
It had hoped to bring in $1 billion in cash this year to pay down the debt, but the market slowdown has continued in both its single-family home business as well as its high-rise luxury towers, where cancellations by investors reached 17 percent in the first half of this year. Now it looks as though it may not be able to bring in half its original goal.
After Ackerman sent Icahn away, he bought nearly 15 percent of the company's stock last January. To hold off a potential takeover, WCI's board promptly enacted a poison pill shareholder's rights agreement that would trigger if any buyer accumulated more than 15 percent of the stock.
Icahn began criticizing the company's management, proposed his own slate of board members for election and issued a tender offer to buy all shares for $22 each. Later Icahn let his tender offer expire.
At prodding from Icahn, WCI's board hired Goldman Sachs to look into selling the company and told Icahn that they had other potential buyers who would bring more to the table than he could. But those buyers appeared to lose interest after the market continued to deteriorate, WCI officials said.
Just before its scheduled Aug. 30 shareholder's meeting, WCI's managers struck an agreement with Icahn, agreeing to create a new board that included Icahn and his representatives in the mix.