WCI Communities and affiliates of Carl Icahn are announcing Monday that they have agreed to a new composition for the WCI Board of Directors which will be submitted to shareholders for approval at the Annual Meeting of Shareholders on August 30. As part of the agreement, The Icahn Group will withdraw its slate of nominees for the board, effectively ending its proxy contest.
Icahn offered to buy WCI for $22 a share earlier this year, but the builder turned the deal down.
Under the terms of the agreement, WCI will nominate for election and approve at the meeting Don E. Ackerman, Charles E. Cobb Jr., and Hilliard M. Eure III as well as three candidates designated by The Icahn Group, Carl C. Icahn, Keith Meister, and David Schechter.
"The current economic environment for our industry and company is challenging, and we believe it will be beneficial to move ahead together with Mr. Icahn and large shareholders as we address these market challenges," said Don E. Ackerman, chairman of the board of directors, in a press release.
In addition, pursuant to the agreement, the company has agreed to raise the trigger under its limited duration Shareholder Rights Plan from 15 percent to 25 percent (and to exclude there from securities, including convertible securities, purchased from the company pursuant to an offering by WCI to all of its shareholders).
"The significant presence of large shareholders proposed for the new board is a win for both WCI shareholders and the company. I am confident the new board will make the right moves to enable WCI to weather the difficult industry conditions it is facing today and position itself for a bright future," said Carl Icahn in a company press release.
The top priority of the new board, according to Ackerman, is to review WCI's performance regarding 2007 cash flow guidance.
WCI Communities also reported Monday that it has reached an agreement with its lenders to amend the company's revolving credit facility, term loan agreement, and tower facility. According to the Florida-based builder, the "amendments are intended to provide greater operational flexibility in the current market environment."
"The amendments provide for a waiver or consent to any default arising from certain changes in the composition of WCI's board of directors, adjust the pricing of the loans under the facilities, provide for certain commitment reductions, provide collateral for the loans, adjust certain financial coverage ratios and other covenants, and make certain other modifications," the company said in a press release.
The company's borrowing capacity under the revolving credit facility has been reduced from $850 million to $700 million, with subsequent reductions to $600 million on July 1, 2008 and to $550 million on July 1, 2009. The term loan agreement has been reduced from $300.0 million to $262.5 million, with a subsequent reduction to $225.0 million on July 1, 2008. As of June 30, 2007, the balance on the revolving credit facility was $360.6 million, the balance on the term loan agreement was $300.0 million, and the balance on the tower facility was $371.5 million.