Tags: wework | lenders | debt | package

WeWork Discusses $5 Billion Debt Package With Lenders

WeWork Discusses $5 Billion Debt Package With Lenders
(Andrei Gabriel-Stanescu/Dreamstime)

Friday, 11 October 2019 12:22 PM

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, according to people familiar with the matter.

The financing could come together as early as next week, said one of the people, who requested anonymity because the talks are private. WeWork needs new financing before the end of November to avoid running out of money, two people familiar with the matter said earlier.

We Co. was one of the year’s most hotly anticipated initial public offerings, 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 startup 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 bond prices climbed from record lows amid reports of the financing talks. Its senior unsecured notes due 2025 jumped nearly 4 cents on the dollar to around 86 at 11:09 a.m. in New York, after dropping to as low as 81.25 cents on Thursday, according to Trace bond trading data.

The terms and structure of the debt package are still fluid, the people said. Any term loan or bond as part of the package would be priced at a steep premium to the rate of Libor plus 4.75 percentage points that a prior delayed-draw term loan was set to carry, one of the people said.

Representatives for WeWork and JPMorgan declined to comment on the financing discussions.

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, have plunged into distressed levels during the past month, dropping more than 20 cents on the dollar amid mounting concerns about the company’s cash situation. Fitch Ratings and S&P Global Ratings have cut WeWork’s credit grade further into junk on liquidity issues.

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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, according to people familiar with the matter.
wework, lenders, debt, package
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2019-22-11
Friday, 11 October 2019 12:22 PM
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