PYMNTS-MonitorEdge-May-2024

Cash-Strapped WeWork Turns To SoftBank For Funding

Cash-Strapped WeWork Turns To SoftBank For Funding

WeWork needs to be financed by the end of November or it will run out of money.

Bloomberg is reporting that the co-working company, which allows people to share office space, is working on a deal to help its cash woes. It is reportedly talking to SoftBank Group about an equity injection; the deal could be completed in the next few weeks.

Previous projections said WeWork would run out of money by the middle of 2020, and that its parent company, We Co., was working toward an initial public offering (IPO). It was also counting on a $6 billion loan dependent on the IPO, but that didn’t move forward due to a number of reasons, including questions about whether the company could actually be profitable.

In an effort to staunch the cash bleeding, the company has been moving to cut costs and spin off businesses.

At the end of September, as WeWork looked to reduce its costs and refocus, the co-working company’s two new co-CEOs reportedly committed to “strengthen our core business” following the ouster of Chief Executive Officer Adam Neumann. That process began by selling Neumann’s private airplane. The company was also looking to sell three businesses it acquired in recent years: Managed by Q, an office management startup; Meetup, an event organizing platform; and Conductor, a marketing company.

Talk of financing helped to lift the company’s stocks, as its senior unsecured notes – which are due in 2025 – went up 1.125 cents on the dollar to about 83.5 on Friday morning (Oct. 11). They were at about 81.25 cents a day earlier.

WeWork bonds were trading at an average a month ago, but recently dropped over 20 cents on the dollar to distressed levels. Fitch Ratings and S&P Global Ratings have both slashed WeWork’s credit grade into junk in terms of liquidity.

JPMorgan is reportedly considering making a large contribution.

PYMNTS-MonitorEdge-May-2024