WeWork sets up a $1.75 billion credit line with Goldman Sachs as part of its massive bailout package

Reuters

• WeWork arranged a $1.75 billion letter of credit with Goldman Sachs on Tuesday as the startup looks to recover from the brink of bankruptcy, Reuters reported.
• The credit line is in the process of being syndicated and part of SoftBank’s $9.5 billion bailout plan for the coworking company.
• The full tender offer isn’t expected to be completed until the first quarter of 2020 and is subject to regulatory approval, a source told Reuters. WeWork won’t need to post any collateral for the credit line.
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WeWork secured a $1.75 billion letter of credit with Goldman Sachs on Tuesday as the coworking company rises from the brink of bankruptcy, Reuters reported.

The credit line is in the process of being syndicated, and the funds are set to be available in January, according to Reuters. The letter is part of SoftBank’s $9.5 billion WeWork bailout that was first announced in October.

“We are pleased that WeWork and SoftBank Group Corp have entered into a commitment letter with Goldman Sachs for a new $1.75 billion senior secured letter of credit facility,” WeWork told Reuters in a statement, adding that WeWork will not need to post collateral for the credit line.

The full tender offer isn’t expected to finish until the first quarter of 2020 and is subject to regulatory approvals, a source told Reuters. The letter of credit with Goldman should release roughly $800 million in previously restricted cash, the source added.

The investment bank’s stakes in WeWork and other unicorn startups like Uber ate away at its third-quarter profits. Goldman said it lost $80 million from its WeWork investment alone as the startup tumbled from $47 billion valuation to bankruptcy talks in less than two months. 

The about-face for WeWork’s lofty valuation was a sign of healthy investor judgment, Goldman CEO David Solomon later said in a Bloomberg TV interview.

“The capital markets process worked,” Solomon said. “At the end of the day where the rubber meets the road is what are investors willing to pay for a company when they have the transparency of the real financial information?”

Goldman was set to be one of the top underwriters for WeWork’s canceled initial public offering, but later sold part of its stake in the coworking firm before the IPO.

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