Business|WeWork Reaches a Debt Restructuring Deal With SoftBank
The statement volition trim the unprofitable bureau abstraction company’s debt, giving it much fiscal breathing room.
March 17, 2023, 11:54 a.m. ET
WeWork, the struggling bureau abstraction company, said connected Friday that it had reached a deal with SoftBank and different investors to importantly trim its indebtedness and unafraid caller financing.
The statement would cancel oregon person into equity astir $1.5 cardinal of the company’s debt, reducing WeWork’s full indebtedness to little than $2.4 billion, the institution said. In addition, the institution volition person until 2027 to repay $1.9 cardinal of its remaining debt, oregon 2 years aboriginal than those debts are presently acceptable to mature.
The woody represents the culmination of a tumultuous thrust for WeWork, erstwhile regarded by task capitalists arsenic 1 of the astir invaluable and promising start-ups. The company, founded by Adam Neumann and backed by SoftBank, sought to shingle up the humdrum satellite of commercialized existent property by leasing hep bureau abstraction connected a short-term ground to ample corporations, tiny businesses and individuals.
But that concern exemplary ne'er rather lived up to the expansive visions of Mr. Neumann and Masayoshi Son, the laminitis and apical enforcement astatine SoftBank. In September 2019, the institution scrapped an archetypal nationalist offering, Mr. Neumann stepped down arsenic main enforcement and SoftBank spent billions to support the steadfast going.
The pandemic leveled different large blow, greatly reducing the request for bureau space. WeWork has spent the past fewer years cutting costs by renegotiating and terminating leases with commercialized landlords, making advancement toward becoming a sustainable business. But the institution remains unprofitable and carries a ample debt.
The woody announced connected Friday volition greatly trim that debt, summation the currency connected WeWork’s equilibrium expanse by $290 cardinal and springiness the institution entree to $475 cardinal successful caller financing commitments. In a statement, WeWork said it was “ideally positioned to seizure tailwinds of the planetary displacement towards flex from accepted office.”
WeWork’s shareholders volition get to ballot connected the presumption of the indebtedness restructuring, and the institution volition besides question support from bondholders.
The company’s banal terms was level connected Friday, hovering astir $1. Its shares traded astatine much than $8 successful precocious 2021 aft WeWork went nationalist by merging with a peculiar intent acquisition company.
WeWork said it had notified the Securities and Exchange Commission that it would beryllium precocious successful filing its yearly study due to the fact that of its indebtedness deal. The institution said it would purpose to record the study by March 31.