- WeWork bonds hit record lows early Tuesday following reports that the company is eyeing a risky refinancing package from JPMorgan.
- The co-working company’s 7.875% bonds maturing in 2025 sank to 79.3 cents on the dollar Tuesday morning.
- The JPMorgan package would amount to roughly $US5 billion and may include $US2 billion in unsecured payment-in-kind with an unusually heavy 15% coupon, according to a Bloomberg report.
- Read the full timeline of WeWork’s downfall here.
WeWork’s bonds hit record lows early Tuesday after reports claimed the company is eyeing a risky refinancing offer from JPMorgan.
The co-working company’s 7.875% bonds maturing in 2025 tanked to 79.3 cents on the dollar Tuesday morning. The notes saw a similar tumble in late September after news of its cancelled IPO fuelled investor worry.
The firm is reportedly favouring a refinancing deal with JPMorgan over an offer from SoftBank, according to Bloomberg. The proposed refinancing package would amount to roughly $US5 billion and may include $US2 billion of unsecured payment-in-kind with a weighty 15% coupon.
The news arrived a day after it was reported SoftBank was looking to purchase a controlling stake in WeWork. The Japanese investment giant has been one of WeWork’s biggest investors, and has invested at least $US11 billion in the firm. A controlling stake would reportedly cost at least $US1o billion.
The lifeline would secure capital WeWork was previously expecting to take in from its public offering. However, the package is risky for the firm’s bondholders, as WeWork’s murky financial prospects and shifted leadership leave it in a relatively precarious position.
WeWork pulled plans for a 2019 IPO after analyst scrutiny marred the company’s lofty valuation and led to CEO Adam Neumann’s stepping down. The company’s board named executives Sebastian Gunningham and Artie Minson to replace Neumann as co-CEOs.
“We have decided to postpone our IPO to focus on our core business, the fundamentals of which remain strong,” Minson and Gunningham said in a September 30 statement. “We have every intention to operate WeWork as a public company and look forward to revisiting the public equity markets in the future.”
The bonds hit all-time highs in August after the company said in its IPO filing it would pay off a portion of the bonds and raise an additional $US6 billion in debt funding should it succeed in its public offering by the end of the year.
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