SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Amendment No.
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California Coastal Communities Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
129915203
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(CUSIP Number)
Mellon HBV Alternative Strategies LLC
200 Park Avenue, Suite 5400
New York, NY 10166-3399
(212) 922-8200
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
May 11, 2006
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box. [X]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 148435100
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
Mellon HBV Alternative Strategies LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) (b)
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
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7 SOLE VOTING POWER
1,142,748
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8 SHARED VOTING POWER
0
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9 SOLE DISPOSITIVE POWER
1,142,748
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON
1,142,748
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (see Instructions)
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.2 %
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14 TYPE OF REPORTING PERSON (see Instructions)
IA
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Introduction:
Mellon HBV Alternative Investment Strategies LLC, a registered investment
adviser (the "Reporting Person"), on behalf of affiliated investment funds and
separately managed accounts over which it exercises discretionary authority,
beneficially owns 11.2% of the Common Stock of California Coastal Communities
Inc. (the "Company").
The Reporting Person is filing this Schedule 13D to amend its prior reporting on
Schedule 13G, to disclose that the Reporting Person's recent communication to
the Company, including that the Reporting Person may become involved in efforts
to influence the direction of the Company.
The Reporting Person's letter to the Company dated May 11, 2006 is attached
hereto as Exhibit A.
Item 1. Security and Issuer.
Security: Common Stock par value $0.01 per share (the "Shares")
Issuer's Name and Address.
California Coastal Communities, Inc.
6 Executive Circle
Suite 250
Irvine, CA 92614
A corporation organized under the laws of the State of Delaware.
Item 2. Identity and Background.
(a) Mellon HBV Alternative Strategies LLC.
(b) The Reporting Person is a Delaware limited liability company with its
principal executive offices located at 200 Park Avenue, Suite 5400,
New York, NY 10166-3399.
(c) The Reporting Person is a registered investment adviser under the
Investment Adviser Act of 1940. The Reporting Person exercises
discretionary control on behalf of affiliated investment funds and
separately managed accounts with respect to the Company's Shares, and
may be deemed the beneficial owner of such shares.
(d, e) During the last five years neither the Reporting Person, nor, to
the best of its knowledge, any of its directors or executive officers,
has been (i) convicted of any criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to federal or state
securities laws or finding any violation with respect to such laws.
(f) The Reporting Person is organized under the laws of Delaware.
Item 3. Source and Amount of Funds or Other Consideration.
The Reporting Person used funds from the working capital for purposes of
effecting investment transactions. The Reporting Person borrowed no funds to
purchase any of the Shares
Item 4. Purpose of Transaction.
The Reporting Person, for itself and for affiliated investment funds and
separately managed accounts over which it exercises discretionary authority,
acquired the Shares for investment purposes.
The Reporting Person is filing this Schedule 13D to amend its prior
reporting on Schedule 13G to disclose that the Reporting Person may become
involved in efforts to influence the direction of the Company. The Reporting
Person outlined its intentions with respect to the Company in a letter dated May
11, 2006 to the Company's management. That letter is attached hereto as Exhibit
A.
Item 5. Interest in Securities of the Issuer.
(a) As of May 10, 2006, funds affiliated with the Reporting Person and
separately managed accounts over which it exercises discretionary
authority beneficially own 1,142,748 shares of the Company's Common
Stock, representing approximately 11.2% of the outstanding Common
Stock (based on 10,161,462 shares reported outstanding as of May 1,
2006, as disclosed by the Company in its Form 10Q for the period ended
March 31, 2006 filed with the Commission on May 5, 2006).
(b) The Reporting Person, for itself and for affiliated investment funds
and separately managed accounts over which it exercises discretionary
authority, has sole power to vote or direct the vote and sole power to
dispose and to direct the disposition of the Shares.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
None, but see Introduction and Exhibit A to this Schedule 13D
Item 7. Material to be Filed as Exhibits.
Exhibit A: Letter to California Coastal Communities Inc. dated May 11, 2006
from Mellon HBV Alternative Strategies LLC.
Exhibit B: Executive Officers and Directors of Mellon HBV Alternative
Strategies LLC.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: May 11, 2006
MELLON HBV ALTERNATIVE STRATEGIES LLC
By: /s/ William F. Harley III
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William F. Harley III
Chief Investment Officer
Exhibit A
MELLON HBV ALTERNATIVE STRATEGIES LLC
200 Park Avenue, Suite 5400
New York, NY 10166-3399
(212) 922-8200
May 11, 2006
Via Facsimile And Via U.S. Postal Service
(949) 261-6550 - FAX
California Coastal Communities, Inc.
6 Executive Circle
Suite 250
Irvine, CA 92614
Attention:
Mr.Geoffrey W. Arens
Mr. Phillip R. Burnaman, II
Mr. Raymond J. Pacini
Mr. Thomas W. Sabin, Jr.
Dear Board Member:
As you are aware Mellon HBV and its affiliates currently hold 1.14 million
shares of California Coastal, or 11.2% of the equity, making us the second
largest stockholder in the Company. We have been supportive stockholders for
over three years as the Company has sought and finally received entitlement from
the Coastal Commission of the State of California to develop the Bolsa Chica
site. It is has always been clear to us that the uniqueness of the property as
the last available major residential development opportunity overlooking the
Pacific Ocean gives the asset tremendous scarcity value.
At a May 1st meeting with Ray Pacini and Tom Sabin of California Coastal we
provided our views on the strategic direction of the Company. We made it clear
that we did not want to assume the risk of developing the property nor wait over
two years before recognizing a return on our investment. We would prefer
monetizing the investment today by selling it to someone with the investment
mandate and risk profile that accommodates developing the site. We also take
little comfort in the fact that stockholders received none of the proceeds from
the sale of the lower mesa to the Wildlife Conservation Board. This brings into
question whether we as stockholders can realistically expect to see proceeds
from the future sale of homes at Bolsa Chica. Our lasting impression of the
meeting was that management seems inclined to push forward in building homes on
the property. We would suggest that if management wants to assume that risk,
they (and any stockholders with a similar view) can do it themselves by taking
the Company private.
Our preferred strategy is as follows. We want the Company to hire a reputable
investment bank, which will hold a public auction for the Bolsa Chica site under
the supervision of an ad hoc equity committee. Following the sale we expect the
proceeds to be returned to stockholders. It is our belief that the scarcity
value of this land will result in a sale process that generates proceeds of at
least $300 million - $350 million. This equates to $30 -$35 per share, exclusive
of the Oxnard project, the homebuilding business, and the Company's NOLs, and
also provides a potential buyer of the Bolsa Chica site with an extremely
attractive return on their investment. By our calculations, the ultimate value
to be garnered from developing and selling homes on the property is about $500
million, yielding an investor a very compelling IRR based on a three to four
year timeline, the mid-point of the assumed purchase range with likely
two-thirds of the purchase price in the form of debt financing and $100 million
in development costs. As we discussed at the May 1st meeting, it will be
important for any banker to widen the scope of potential investors beyond
traditional California real estate developers. We feel that contacting
non-traditional investors will be key to insuring a robust auction process for
the property. Finally, as we also mentioned in the meeting, we would have no
problem holding an equity stub in the existing homebuilding business,
particularly if a deal can be negotiated with the purchaser under which the
Company develops the Bolsa Chica site.
We are well aware of our rights as a stockholder, having carefully reviewed the
Company's Articles of Incorporation and Bylaws. We understand that holders with
at least ten percent (10%) of the outstanding capital stock can call a special
meeting of stockholders and that holders with at least fifty percent (50%) can
remove directors with or without cause. We intend to exercise these rights if
the current board does not agree to embark on the strategy we have outlined
above, or a similar strategy supported by a majority of your stockholders.
We look forward to discussing this with you further.
Sincerely,
MELLON HBV ALTERNATIVE STRATEGIES LLC
By: /s/ WILLIAM F. HARLEY III
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William F. Harley III
Chief Investment Officer
Exhibit B
Name and Business Address Title
William F. Harley, III Manager/Director/Chief Investment
c/o Mellon HBV Alternative Strategies LLC Officer
200 Park Avenue
Suite 5400
New York, NY 10166
William Yip Chief Operating Officer, Treasurer
c/o Mellon HBV Alternative Strategies LLC and Secretary
200 Park Avenue
Suite 5400
New York, NY 10166