Two weeks before WCI Communities is scheduled to face a $125 million debt call that its executives have publicly stated it probably won't have the cash to pay, the company has sweetened an offer to buy off the debt holders with new debt and stock.

The Bonita Springs, Fla.-based builder has said it doesn't expect to have the cash to pay off $125 million in notes that the bond holders have said they intend to exercise their rights to cash in on Aug. 5. Not being able to meet the note call could force the company into bankruptcy.

WCI offered Tuesday to exchange the contingent convertible senior subordinated notes with an Aug. 5 put date, a 4% interest rate, and a 2023 due date for new notes with a 17.5 percent interest rate, a 2012 due date, and a warrant to buy 33.7392 shares of common notes for every $1,000 in debt.

The offer Tuesday was the second the builder-developer has made to the note holders. The first was made two weeks earlier, on July 8, when the company offered to swap the old debt for notes with a 16 percent interest rate and a 2013 due date and no stock warrants.

It will take 90 percent approval for the deal to work. The offer expires at midnight Aug. 4, when the existing debt becomes payable in full.

At the end of this year's first quarter, WCI CEO Jerry Starkey warned that with less than $70 million in cash on hand, $1.6 billion in debt, and stripped of its goodwill, WCI might not be able to pay off the $125 million in convertible notes if the lenders exercised their right to be repaid in full on Aug. 5.

Plagued by cancellations in its high-rise condominiums as well as its single-family homes, the company lost more than $578 million last year. And its prospects for generating cash seem slim in the near term as demand for its products is nearly nonexistent. Generating cash through land sales, given the current depressed market for land, is not considered a viable option.

Recently the company suspended a committee created to look into alternatives for recapitalization, such as a buy-out of the company. Its talks with major shareholder Carl Icahn related to saving the company also appear to have ceased.

Icahn was viewed as a black knight a year ago when he swooped in, stating he intended to maximize the company's value after buying nearly 15 percent of the company's stock and offering to buy the rest of the company's stock at $22 per share. WCI responded by adopting a poison pill provision to impede takeovers and began shopping the company to other buyers.

No buyers came forward; Icahn revoked his $22 tender offer and then started insisting on board membership. He ended up with three slots, including the chairmanship.

Teresa Burney is a senior editor at Big Builder magazine.