Under a separation, which would take place through a tax-free spin-off, Levitt Corp. would become a separate publicly traded company. BankAtlantic Bancorp plans to request a private letter ruling from the Internal Revenue Service that the distribution of Levitt's shares to BankAtlantic Bancorp's shareholders will be tax-free to the latter company and to its stockholders.
Depending on the receipt of such a private letter ruling and any required regulatory approval, BankAtlantic Bancorp would expect the de-merger to take place in the third or fourth quarter. The spin-off would include all of the Levitt 100%-owned subsidiaries, which include Levitt and Sons, Core Communities and Levitt Commercial. The parent company also owns 40% of publicly traded Bluegreen Corp., which is involved in acquiring, developing, marketing and selling vacation resorts, golf communities and residential property.
Levitt and Sons is the nation's oldest homebuilder and first builder of planned suburban communities. Core Communities develops Florida master-planned communities. Levitt Commercial specializes in developing, redeveloping and participating in joint venture opportunities in retail and industrial projects.
"Levitt has grown significantly in the past several years and has clearly established a successful track record," BankAtlantic Bancorp Inc. CEO Alan B. Levan says in a statement. "In deciding on this course of action, we determined that Levitt Corp.'s future growth prospects would be better met as a free-standing entity, with independent access to capital and debt markets. Further, we believe this action will augment the ability of our banking subsidiary, BankAtlantic, to expand its capital access and improve its growth potential."
Levan added that the company believes the separation will improve investor interest.
"Levitt Corp. has delivered solid results and has been a consistent performer," he said. "However, we do not believe Levitt's value and contribution has been fully reflected in the pricing of BankAtlantic Bancorp's stock. In spinning off Levitt Corp., we would be returning BankAtlantic Bancorp to its more traditional roots as a Florida-based financial services and banking company, creating a separate, premier real estate development company. As a result, our hope is to unlock shareholder value, increase investor interest and result in each company trading at multiples more comparable with their respective market sector peer groups."
If the proposed separation is completed, Levitt Corp. would be owned by the BankAtlantic Bancorp shareholders. Based on assumptions, the new Levitt Corp. would have had $207.8 million in gross revenue, $159.7 million cost of sales, $19.6 million in after-tax earnings and $97.4 million in equity in 2002, had this deal been in place for the year.
Levitt expects to do a "reverse split" of its stock to bring the book value per share of the post-spin-off Levitt Corp. to a normal range.
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