Reuters
- WeWork has a huge pile of debt and now the firm’s failed IPO left has left it running out of cash much sooner than expected, the Financial Times said.
- Two sources told the Financial Times that the firm’s bankers are rushing to complete a new debt financing deal as soon as next week, to give WeWork the time to restructure.
- JPMorgan Chase, the bank that advised on the firm’s IPO, is leading the refinancing negotiations.
- Last week, Fitch Ratings downgraded WeWork’s debt even further into junk, with a scathing report that said the company has a “precarious liquidity position.”
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WeWork is running out of cash. Fast.
Two sources told the Financial Times that the real-estate firm’s bankers are rushing to complete a new debt refinancing package as soon as next week, as the firm could be out of cash by the end of next month.
Now, JPMorgan is reportedly leading the negotiations on refinancing — the bank also advised WeWork on its failed IPO. The bank is considering a sizeable contribution to the package, according to the Financial Times, which cited several people familiar with the matter.
The paper added that the debt will come at a much higher cost than previous loans, given WeWork’s recent financial history.
People familiar with the situation also told the FT that JPMorgan is trying to get other banks involved with the refinancing — Goldman Sachs also played a major part WeWork’s IPO attempt and the bank also recently rented out a WeWork office to be used as a backup trading floor.
Meanwhile, SoftBank, which has been one of the main contributors to WeWork in the past through its Vision Fund, may hold back on investing its cash.
The sources said that SoftBank is in talks to add new funding, which could raise fundraising to $2.5 billion — bringing its total investment in the real estate firm to $11.5 billion.
But this could yet unravel depending on negotiations, the sources said to the newspaper.
WeWork and JPMorgan declined to comment to Markets Insider.
Goldman Sachs and SoftBank did not immediately respond to Markets Insider requests for comment.
Just last week, Fitch Ratings the credit rating agency released a scathing report where it downgraded WeWork’s debt pile even further into junk, giving it a CCC+ status.
“WeWork will dramatically scale back its growth ambitions,” that led the company to its “precarious liquidity position,” Fitch said.
Fitch added: “The downgrade and outlook reflect WeWork’s uncertain liquidity profile in the absence of its earlier plan to raise at least $3 billion in an IPO plus $4 billion in senior secured debt along with $2 billion in letter of credit capacity.
WeWork was aiming to raise roughly $3 billion to $4 billion from its IPO attempt, cash the firm sorely needed.
