- WeWork and lenders led by JPMorgan are discussing a $US5 billion credit line for the struggling company, Bloomberg reported Friday.
- The commercial real-estate giant could run out of cash as soon as next month, Bloomberg and the Financial Times reported.
- The amount of financing it’s now said to be seeking is bigger than previously reported, and the amount of time it’s now believed to have before running out of cash is significantly shorter.
- WeWork was expecting to raise $US3 billion last month in an initial public offering that would have also unlocked $US6 billion in additional debt financing, but all that fell through when it shelved its IPO.
- Read all of Business Insider’s WeWork coverage here.
WeWork is talking to lenders about a $US5 billion lifeline in an effort to forestall imminent insolvency, Bloomberg reported on Friday.
JPMorgan, which previously loaned money to the commercial real-estate giant and was set to be the lead underwriter on its since-failed initial public offering, is heading up the effort, according to both Bloomberg and an earlier report in the Financial Times. A deal could be closed as soon as next week, both outlets reported.
Both reports said WeWork could run out of money as soon as next month without new financing. That timeline is much shorter than previous estimates, including by Business Insider. Those earlier projections indicated that WeWork, without another cash infusion, could most likely last until the middle of next year.
A JPMorgan spokeswoman, Tasha Pelio, declined to comment on the reports. Representatives for WeWork did not immediately respond to emails seeking comment.
WeWork’s cash is running low
The amount of new funds said to be under discussion is about a quarter larger than previous reports suggested the company was seeking, adding a further indication of the pressure it’s under.
WeWork was planning to raise some $US3 billion in an IPO last month, a move that would have unlocked another $US6 billion in debt financing from JPMorgan and other lenders. When the IPO fell through, so too did the original debt deal.
The company would pay a high price for the new loans. The interest rate would reportedly be significantly higher than the Libor rate plus 4.75 percentage points it was set to pay under the previous, but now cancelled, debt deal, according to the two reports.
Since the company shelved its IPO, WeWork has ousted its CEO, Adam Neumann, and numerous executives, made plans to sell off or shut down subsidiaries, including its WeGrow private school, and put its corporate jet up for sale.
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- Read more:
- WeWork opened 400 locations in 3 years. In some cases, it used deep discounts to convince existing customers to relocate to help fill them.
- Even after ousting Adam Neumann as CEO, WeWork could still go public this year – if it prices its IPO low enough
- Firing Adam Neumann doesn’t solve WeWork’s biggest problem: The underlying business stinks
- Renovation work on WeWork CEO Adam Neumann’s $US10.5 million Manhattan townhome led to disputes with contractors over $US1 million in alleged unpaid bills
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