SoftBank Group is assembling a rescue financing plan for WeWork that may value the office-sharing company below $8 billion, reported Bloomberg.
The new figure is a fraction of the $47 billion valuation the start-up commanded as recently as January 2019, the talks are fluid and the terms could change.
WeWork, reeling since it scrapped its initial public offering (IPO), has been considering duelling plans from SoftBank and JPMorgan Chase & Co. to shore up its finances before it runs out of cash as early as next month.
JPMorgan has been pitching investors on a $5 billion junk-debt package for WeWork. The unsecured and secured notes portion of the bank’s plan are being offered on a best-efforts basis, meaning banks have not committed to funding the deal irrespective of investor demand.
The bank has been sharing its proposal with about 100 investors as it tries to line up support for what would be one of the riskiest debt offerings in recent years.
Uncertainty around WeWork’s future has whipsawed its bonds in recent weeks. The debt plunged to record lows last week as the company weighed a financing package that included debt that could yield 15 per cent, only to erase those losses a day later amid reports that SoftBank was considering a new investment.
The debt currently trades at around 85 cents on the dollar and has not been near par since before the company pulled its IPO last month.
The financing would come directly from the Japanese firm, rather than its Vision Fund. SoftBank would not amass a majority of voting rights, though its stake would increase. Part of the package may include non-voting preferred stock.
Part of the appeal of the SoftBank plan is the office-sharing company’s longstanding relationship with the investment behemoth. At the same time, it would further dilute existing shareholders and employees—a consideration in favour of the JPMorgan proposal.