WeWork is in talks with lenders led by JPMorgan Chase & Co. about a $5 billion debt package, seeking to ease a cash crunch that could leave the office-sharing company short of money as soon as next month, reported Bloomberg.
One option that is been floated is raising $3 billion or more of the debt package through the sale of high-yield bonds. The financing could start to more formally come together as early as next week, but it may take longer for its structure and terms to be finalised.
SoftBank Group, the largest shareholder in WeWork, is currently in advanced talks to acquire more shares at a significantly lower valuation than the $47 billion WeWork had in January. According to WeWork’s now-withdrawn prospectus for the listing, the digital giant agreed to contribute another $1.5 billion to the company next April 2019.
We Co. was one of the year’s most hotly anticipated initial public offerings (IPOs), but a turbulent process turned into a cautionary tale of private market exuberance and cost the company’s top executive his job. The fast-growing, money-losing start-up had been counting on a stock listing—and a $6 billion loan contingent on a successful IPO—to meet its cash needs.
The company’s new co-chief executive officers have been moving to slash costs and spin off businesses in the past two weeks in an effort to slow its cash bleed. Analysts had previously estimated that the company would run out of money by the middle of next year.
WeWork’s bonds, which traded above par less than a month ago, plunged into distressed levels during the past month, dropping more than 20 cents on the dollar before Thursday amid mounting concerns about the company’s cash situation.