Last night, WCI Communities got another reprieve from its lenders, which agreed to amend the terms of its senior secured revolving credit line and term loan. This was the fourth time in as many months that its banks have extended their loans after the Bonita Springs, Fla.-based builder and developer had violated covenants. In their latest concession, the banks have agreed to modify, suspend, or waive certain covenants through June 30, 2009.

The agreement was hammered out after the Wall Street Journal and published articles suggesting that filing for protection from creditors under Chapter 11 might have been WCI's next option had it not been able to renegotiate the terms of its loans. However, Carl Icahn, the billionaire investor who is WCI's chairman and one of its largest shareholders, told CNBC yesterday that he didn't think bankruptcy was necessarily the company's next move. And the Journal article points out that banks in general have been remarkably reluctant to cut off home builders' credit, primarily because the banks don't want to get stuck with land or half-finished projects that collateralize their debt. In WCI's case, Bank of America and KeyCorp's KeyBank, which respectively are the bank agents for the builder's revolving and term loans, agreed to sign off on the borrowing amendments.

The banks had previously arranged to be the secured creditors for WCI's $700 million revolving credit line and $263 million term loan. As part of the amended agreement, the banks reduced WCI's total commitment available under the revolver and the outstanding amount of the term loan, converted a portion of the revolver to non-revolving status, and agreed to increase the pricing on the loans. (Neither the banks nor WCI provided details about these terms.)

In a statement, WCI's president and CEO Jerry Starkey said that his company remains "focused" on reducing debt and generating cash flow, which is now the standard response by struggling public home builders. But the company isn't quite ready yet to conduct a fire sale. Last week, the Naples Daily News reported that WCI had informed a prospective buyer that it would not be selling a luxury golf course community in that market, Tuscany Reserve, which had previously been among the assets the builder said it wanted to dispose of. The newspaper reported that investors had lowered their offer for this property, to $51 million from $63 million. In addition, the tax advantage that WCI would have earned had it sold Tuscany Reserve in 2007 no longer is available.

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