- WeWork is reportedly favouring JPMorgan to help refinance the struggling real estate company over SoftBank taking a controlling stake, according to Bloomberg.
- Citing anonymous sources, Bloomberg said JPMorgan’s $US5 billion refinancing package is the preferred option, which may include $US2 billion of unsecured payment-in-kind with a 15% coupon.
- Earlier this week it was reported SoftBank could take over control of WeWork at a valuation below $US10 billion, a fraction of what the Japanese investment firm valued the company at.
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WeWork is running out of cash fast and, according to Bloomberg, the real estate firm is favouring JPMorgan to help refinance the firm.
The refinancing package would come to roughly $US5 billion dollars, and would also include $US2 billion of unsecured payment-in-kind with a weighty 15% coupon, a source told Bloomberg.
People familiar with the situation told Bloomberg that SoftBank was being views as a “back-up plan,” as the takeover by the Japanese firm would reduce employees’ holdings.
This comes after the news reported on Monday that SoftBank was reportedly looking to step in to take a controlling stake in WeWork. The Japanese firm has long been one of WeWork’s major investors, so far investing at least $US11 billion into the firm. The controlling stake would be roughly worth $US10 billion, a fraction of what Softbank originally valued the firm at $US47 billion.
Last week it was reported that a deal for the refinancing package could come as soon as this week, as WeWork could reportedly run out of cash by the end of November.
JPMorgan has previously provided loans to WeWork and was set to be the lead underwriter on its failed IPO.
The proposed 15% coupon is roughly double than what WeWork paid on its debut bond according to Bloomberg, underscoring the uncertainty in which debt investors value WeWork and its ability to turn a profit any time soon.
Bloomberg added that the $US2 billion of unsecured debt may carry an additional “sweetener” for investors, as it could boost returns by 30% if WeWork gets a $US20 billion valuation, citing a person familiar with the situation.
The package could also include $US1 billion of secured debt, sold to investors and $US1.7 billion in letters of credit split among the participating banks, according to several people familiar.