WCI Communities, Inc.	back to case studies
	Publicly traded, integrated land development and home builder Complex capital structure, including several tranches of senior secured debt, senior and junior subordinated bond facilities, and various classes of stock

Capstone was initially engaged jointly by counsel to the Senior Secured Revolver, Term Loan and Construction Loan Lenders to evaluate strategic options and to assist with the evaluation of a pending out-of-court debt restructuring and recapitalization of WCI Communities, Inc. (“WCI” or the “Company”).  With WCI’s subsequent Chapter 11 bankruptcy and eventual exit, Capstone’s role expanded to include advising the DIP Co-Agents.

WCI’s extensive businesses included the development of master planned communities; construction and sale of mid-to-high priced single family homes and high-rise condominium towers; construction and operation of amenities to include golf courses, restaurants & hotels, and retail & commercial real estate facilities; and the operation of brokerage & mortgage services.

During 2007 and 2008, WCI was impacted by the economic recession, a severe credit market contraction, and deterioration of the residential real estate market.  These conditions, combined with inefficient operations, impeded the Company’s ability to sustain its debt facilities and ultimately led to bankruptcy.

Restructuring Services:

Capstone’s restructuring team provided the following key services during the course of the engagement:

• Evaluated WCI’s existing operations, business strategy and management teams
• Assessed the achievability of business plans & liquidity projections
• Provided on-going oversight of performance and restructuring activities
• Analyzed and refined borrowing base structures and collateral pools
• Negotiated various aspects of and assisting with the syndication of the DIP Loan Facility
• Developed liquidation analyses
• Analyzed and challenged the Debtor’s enterprise valuations
• Formulated and built consensus towards a consensual restructuring
• Assessed and critically challenged the post-emergence business operations
• Sized, formulated and negotiated the post-emergence debt and equity structure

Valuation Services:

The capabilities of Capstone’s valuation team were utilized to provide the following services:

• Developing enterprise valuations
• Valuing various aspects of the emergent capital structure
• Challenging competing enterprise valuations

Outcome:

WCI was successfully shepherded through an operational and financial restructuring and emerged from Chapter 11 bankruptcy on September 2, 2009.  As such, WCI remains one of the very few Florida homebuilders to avoid liquidation.  Other notable achievements of the restructuring included:

• De-levering and rationalization of the debt structure
• Reallocation of equity among constituencies
• Pre and post emergence divestiture of non-core assets
• Rationalization of the overhead structure
• Business realignment towards land development
• Preservation of the option to pursue homebuilding upon market recovery