WCI, Icahn Group reach 'win-win' deal to end proxy contest

By Lisa Kerner

Charlotte, N.C., Aug. 20 - WCI Communities, Inc. said it has agreed with affiliates of Carl Icahn to a new composition for the WCI board of directors. WCI shareholders will be asked to vote on the agreement at the company's annual meeting on Aug. 30.

The Icahn Group will withdraw its slate of nominees for the board, thus ending its proxy contest.

Under the agreement, WCI will nominate for election and approve at the meeting current board chairman Don E. Ackerman, current board members Charles E. Cobb, Jr. and Hilliard M. Eure, III, and Icahn Group candidates Carl C. Icahn, Keith Meister and David Schechter.

In addition, WCI and the Icahn Group agreed to nominate and approve Craig W. Thomas, of S.A.C. Capital Advisors, LLC, Nick Graziano of Sandell Asset Management Corp. and Yale Law professor Jonathan R. Macey.

The Icahn Group agreed to vote its shares in favor of the nominees, and WCI agreed to "raise the trigger" under its limited duration shareholder rights plan to 25% from 15%.

"The significant presence of large shareholders proposed for the new board is a win for both WCI shareholders and the company," Icahn said in a company news release.

Priorities for the new board include reviewing WCI's performance relative to announced 2007 cash flow guidance and assessing capital requirements in the difficult market conditions, Ackerman noted.

"Based on this review, WCI will decide whether it should raise new capital to strengthen its balance sheet," Ackerman said.

"In this regard, the company will explore various alternatives, and the new shareholder representatives on the board have expressed an interest in exploring a rights offering on terms and conditions favorable to all shareholders, should it be determined that additional capital is required."

In July, WCI said that despite initial interest from several companies, it had yet to find a buyer. WCI attributed the lack of a buyer in part to "deteriorating conditions and uncertainty in the homebuilding and debt markets."

The company planned to continue the sale process while reducing spending and overhead expenses.

As previously reported, in June Icahn urged fellow WCI shareholders not to vote at or attend the company's annual meeting in order to preclude the re-election of the company's board prior to completing a sale of WCI. Icahn's $22-per-share cash tender offer for WCI's stock expired on May 18, with none of the approximately 10.8 million shares tendered being purchased by his affiliates because of WCI's poison pill.

WCI is a Bonita Springs, Fla., builder of master-planned lifestyle communities.

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