WeWork

[bonded]

WeWork ist ein US-amerikanisches Unternehmen, das Büroflächen und Coworking Spaces für Selbständige und Unternehmen anbietet. In Deutschland betreibt das Unternehmen Standorte in Berlin, Frankfurt am Main, Hamburg, Köln und München; weltweit bestehen 2019 über 650 Standorte.

Quelle: https://de.wikipedia.org/wiki/WeWork

 

 

WeWork and lenders led by JPMorgan are discussing a $5 billion credit line for the struggling company, Bloomberg reported.

The commercial real estate giant could run out of cash as soon as next month, Bloomberg and the Financial Times both reported.

The amount of financing it's now seeking is bigger than previously reported, and the amount of time it has left before it runs out of cash is significantly shorter.

WeWork was expecting to raise $3 billion in an initial public offeringlast month, which would have also unlocked $6 billion in additional debt financing, but all that fell through when it shelved its IPO.

 

Unless it gets new financing, WeWork could run out of money as soon as next month, according to both reports. That timeline is much shorter than previous estimates, including by Business Insider. Those earlier projections indicated that WeWork, without another cash infusion, likely could last until the middle of next year.

WeWork Is in Talks for $5 Billion Debt Package With Lenders (3)

Bonds rise on financing discussions as cash crunch looms

JPMorgan leading banks for package that could come next week

WeWork is in talks with lenders led by JPMorgan Chase & Co. about a $5 billion debt package, seeking to ease a cash crunch that could leave the office-sharing company short of money as soon as next month, according to people familiar with the matter.

One option that’s been floated is raising $3 billion or more of the debt package through the sale of high-yield bonds, some of the people said. The financing could start to more formally come together as early as next week, but it may take longer for its structure and terms to be finalized, said the people, who requested anonymity because the talks are private.

SoftBank Group Corp., the largest shareholder in WeWork, is currently in advanced talks to acquire more shares at a significantly lower valuation than the $47 billion WeWork had in January, said two people familiar with those discussions. SoftBank had already agreed to contribute another $1.5 billion to the company next April, according to WeWork’s now-withdrawn prospectus for an initial public offering.

The financing talks sent the company’s bonds to their biggest gain on record. WeWork needs new financing before the end of November to avoid running out of money, two people familiar with the matter said earlier.

We Co. was one of the year’s most hotly anticipated IPOs, but a turbulent process turned into a cautionary tale of private market exuberance and cost the company’s top executive his job. The fast-growing, money-losing startup had been counting on a stock listing -- and a $6 billion loan contingent on a successful IPO -- to meet its cash needs.

The company’s bond prices climbed from record lows amid reports of the financing talks. Its senior unsecured notes due 2025 jumped more than 8 cents on the dollar to 90.50 cents at 2:34 p.m. in New York, after dropping to as low as 81.25 cents on Thursday, according to Trace bond trading data.

 

The terms and structure of the debt package are still fluid, the people said. Any high yield bonds offered as part of the package would likely be priced at a premium to the yield commanded by WeWork’s outstanding bonds, which were issued with a 7.875% coupon and currently offer a yield of around 10%, some of the people said.

Spokeswomen for JPMorgan and WeWork declined to comment.

The company’s new co-chief executive officers have been moving to slash costs and spin off businesses in the past two weeks in an effort to slow its cash bleed. Analysts had previously estimated that the company would run out of money by the middle of next year.

WeWork’s bonds, which traded above par less than a month ago, plunged into distressed levels during the past month, dropping more than 20 cents on the dollar before Thursday amid mounting concerns about the company’s cash situation. Fitch Ratings and S&P Global Ratings have cut WeWork’s credit grade further into junk on liquidity issues.

 

“Fitch Ratings has warned that WeWork’s liquidity position is “precarious” and downgraded its bonds further. Analysts at Bernstein predict that the company will run out of cash in the first half of 2020 if it burns through readies at the current rate of $700m a quarter. According to reports, more money is needed by the end of November. WeWork lost $1.9bn on turnover of $1.8bn last year, taking net losses to $4.2bn since 2016.”

[bonded]

SoftBank Said to Plan $5 Billion Rescue Financing for WeWork (1)

SoftBank Group Corp. is in discussions to provide WeWork with roughly $5 billion in rescue financing, according to a person familiar with the matter.

The investment will come directly from SoftBank, rather than its Vision Fund, the person said, declining to be named because the talks are private.

SoftBank would not amass a majority of voting rights, though its stake would increase, the person said. Part of the package may include non-voting preferred stock.

The financing talks with SoftBank sent the company’s bonds to their biggest gain on record Wednesday. The gain of more than 8 cents on the dollar erased a record plunge a day earlier.

WeWork, reeling since its scrapped its initial public offering and in danger of running out of cash as early as next month, has been pursuing a pair of rescue plans to shore up its finances, one from SoftBank, its largest shareholder, and another from JPMorgan Chase & Co.

JPMorgan’s $5 billion package, which has been the company’s preferred option, would be one the riskiest junk-debt offerings in recent years. The plan has been been met with skepticism from investors, who are concerned about the company’s ability to service the debt.

Representatives for WeWork and SoftBank declined to comment. Nikkei reported details earlier Wednesday of SoftBank’s rescue financing.

 

WeWork’s Mad Dash for Cash Rages as JPMorgan Peddles Risky Debt

Company’s existing bonds plunged to record low on Tuesday

JPMorgan bankers have cast wide net in bid to find investors

By Claire Boston, Gillian Tan and Liana Baker

(Bloomberg) -- 

Bankers who two months ago were fighting for a piece of WeWork’s highly anticipated share sale are now scrambling to just keep the company alive.

WeWork and its backers are furiously trying to line up two rescue plans before it runs out of cash as early as next month: one by SoftBank Group, the company’s largest shareholder, and another by JPMorgan Chase & Co., which won WeWork’s IPO mandate but ultimately didn’t pocket a fee as the plan collapsed and cut off WeWork’s access to new cash.

JPMorgan is sharing its proposal -- an unusually risky $5 billion debt package that is WeWork’s preferred option -- with about 100 investors, according to a person with knowledge of the discussion. Several have expressed skepticism about WeWork’s ability to service the debt, and news of the proposal’s eye-popping terms sent the company’s existing bonds reeling to a new low on Tuesday.

At the same time, SoftBank is trying to pull together a backup option. The Japanese investment powerhouse would inject capital into WeWork and take a controlling stake, a move the company’s management hopes to avoid. To help it craft a proposal, SoftBank hired advisers at Houlihan Lokey to explore options for easing WeWork’s cash crunch, said people with knowledge of the discussions.

Both proposals share one thing: a lot of uncertainty.

“WeWork’s credit metrics remain off-the-chart ugly,” Vicki Bryan, chief executive officer of Bond Angle, a high-yield credit research company, said in a note Tuesday.

JPMorgan’s plan would raise $5 billion in one of the riskiest junk-debt offerings in recent years that could include $2 billion of pay-in-kind bonds yielding 15%. The bank is casting an unusually wide net for this type of offering, pitching investors ranging from some of the world’s largest asset managers to credit hedge funds with expertise in distressed investing, according to people familiar with the matter.

PIK Notes

Payment-in-kind notes, known as PIKs in industry parlance, give issuers the option to pay interest on debt with more debt. In buying PIK deals, investors are effectively betting that a cash-strapped company will be able to make good on a ballooning debt obligation when it matures. PIK debt has historically been favored by the likes of struggling energy companies and firms exiting bankruptcy.

While terms remain under discussion, the potential WeWork PIK could pay 5% interest in cash and 10% interest in debt that would accumulate and become due at maturity. That means that a $2 billion obligation with a 10% payment-in-kind option would grow to $2.7 billion after three years and $3.2 billion after five.

WeWork’s board has hired the investment bank Perella Weinberg Partners LP as it weighs its options. With funds running low, the company expects to cut potentially thousands of jobs from its staff of about 12,500 this month, as it focuses on its core business of renting out office space.

Lending to WeWork is so potentially dicey that one junk-bond investor, Diamond Hill Capital Management’s John McClain, said anybody brave enough to do it would “be taking on substantial career risk.”

Feeling Risky? WeWork’s 15% Bonds Would Be for Bravest of Brave

The proposed yield in the new debt package underscores skepticism among debt investors that the company will be able to stem its cash bleed and become profitable anytime soon. It’s a costly option that may reward investors handsomely in the event of an actual turnaround.

Skeptical Reaction

The market’s initial reaction wasn’t encouraging. WeWork’s existing notes, $669 million of 7.875% bonds due in 2025, fell the most on record Tuesday morning after Bloomberg reported on the potential terms for a new debt package. The junk bonds dropped to a record low of 79 cents on the dollar to yield 13.4%, according to Trace, before recovering a bit.

SoftBank-Backed Compass Tells Employees: We’re Not WeWork

SoftBank’s advisers at Houlihan are working on cutting liabilities as WeWork mulls the debt package. Other measures for restructuring WeWork’s balance sheet could include renegotiating or terminating some existing leases to reduce WeWork’s indebtedness and cash burn. Future lease payment obligations as of June 30 were $47.2 billion, according to the prospectus for WeWork’s aborted IPO.

The new debt could come with a coupon nearly twice that of the junk bonds the company sold less than 18 months ago.

“If they are talking about doing a PIK note at a yield of 15%, the existing unsecureds have to reprice,” McClain said.

 

(Bloomberg) -- SoftBank Group Corp. is in discussions to provide WeWork with roughly $5 billion in rescue financing, according to a person familiar with the matter.
 

XS1642686676

SOFTBK 6⅞ PERP 6.875 7.07 93.500 -  94.250 7.02 B+ Ba3

USD XS1642682410

SOFTBK 6   PERP 6.000 6.30 92.750-93.250 6.27 B+ Ba3

 

 

[bonded]

WeWork board weighs up $10bn rescue plan from Japan's SoftBank

Proposal for US office-sharing company would lead to exit of co-founder Adam Neumann

Julia Kollewe

Tue 22 Oct 2019 09.05 BSTLast modified on Tue 22 Oct 2019 09.45 BST

 WeWork’s board will also consider a rival funding package from JP Morgan Chase, worth $5bn. 

The board of WeWork is meeting on Tuesday to consider a rescue plan worth almost $10bn (£7.7bn) from its biggest investor, Japan’s SoftBank, according to reports.

The proposal would keep the struggling US office-sharing company afloat and lead to the departure of its controversial chairman and co-founder, Adam Neumann.

Neumann is backing the plan because he would receive about $200m in return for giving up the chairmanship and his outsize voting rights, the Financial Times reported. The plan would more than halve his stake to less than 10% of the shares and voting rights.

Marcelo Claure, SoftBank’s chief operating officer, would become chairman. The Japanese conglomerate would end up owning 60% to 80% of WeWork under the proposal, which includes $5bn of new debt, as well as injecting $1.5bn in equity and an offer to buy up to $3bn of existing shares.

There is a rival funding package from JP Morgan Chase, worth $5bn, which includes $2bn of unsecured debt. The board will have to decide on Tuesday which one to accept. The company risks running out of cash by the end of November.

The emergency refinancing proposals come only two months after Neumann prepared to float the company on the US stock market. It had to postpone the planned initial public offering (IPO) last month after failing to drum up enough interest from investors, who questioned its large losses, business model and the way the company is run by Neumann.

The company’s valuation had been slashed to $15bn to $20bn, from $47bn at the start of the year, under its IPO plans. It will be cut to about $8bn under the refinancing plan.

 

 

[bonded]

WeWork Inc.’s rapid growth has left more investors exposed to the company’s tenancies than just its bond holders.

 

Some $2.6 billion of loans underlying U.S. commercial mortgage backed securities are secured on properties that have WeWork tenancies. Some have more than 50% exposure to the office-sharing company’s rents.

WeWork’s parent company We Co. had been counting on an initial public offering and loan deal to meet its funding needs, but this plan fell through on concerns about the company’s profitability. Now, the company is said to be weighing a rescue package from its principal backer SoftBank Group Corp. and potentially another from JP Morgan Chase & Co.

 

Deutsche Bank Securities Inc.

WeWork exposure in CMBS

·        Since issuance, WeWork corporate bonds have traded with an average basis of 253bp higher than the High Yield index. Since the IPO withdrawal, however, the absolute spread and spread versus High Yield have shot up. WeWork bonds now trade at over 1,100 spread and over 700bp wider than the High Yield index.

·        WeWork signs long leases and then sublets with short leases for a profit. In a downturn, this strategy is risky as tenants depart. For comparison, Regus (now under IWG) is another company that uses this strategy; it went bankrupt during the last down cycle.

·        CMBS investors have expressed concern WeWork will walk away from lease obligations. Re-tenanting the space would be difficult given the highly specific build-out.

·        WeWork memberships and workstation capacity grew between Q2 2017 and Q2 2019 by roughly 300% each.

·        Although revenues and memberships grew to record levels, some operating efficiency measures have declined. Workstation utilization (memberships divided by workstations) peaked in Q3 2018 at 90%. And revenues per membership have not exceeded the Q3 2017 peak of over $7k per member.

·        New York City is WeWork's largest single market by a wide margin. CompStak leasing data identifies 5.3mm square feet of WeWork leased space in Manhattan as of the end of August 2019. The next nearest city in WeWork's portfolio was Los Angeles with 2.3mm square feet, less than half of the Manhattan space. Despite WeWork's size, it still represents less than 2% of the New York metro area's inventory (455mm sqft, JLL Q2 2019).

·        WeWork's leasing activity was enough to materially impact net absorption of supply in New York City. From 2015 until 2018, WeWork absorbed enough square footage to account for over 60% of new completions in New York city.

·        We identified 37 CMBS loans (across 57 deals) with $4.2bn of balance that have WeWork as a tenant.

·        Office landlords face an elevated risk with WeWork in its current state, particularly in this later cycle environment. If WeWork eventually returns office space it has the most potential to impact the New York and California city markets where WeWork leases over 6mm and 4mm square feet, respectively, in each market.

CMBS investors said "WeWorry" to WeWork's expansion

WeWork postponed plans for its IPO1 over two weeks ago after expected proceeds failed to meet the company's target. The company's name was changed to We, but we use WeWork as it remains known among investors.WeWork corporate debt (7.9%, May 2025) is the only actively traded WeWork security and provides a view of investor's opinions on the company's health. WeWork debt has been volatile since the IPO announcement: the bonds recently hit a new low price of $80.00 on news of an additional $5bn debt offering to bolster cash balances at the company.

Since issuance, WeWork corporate bonds have traded with an average basis of 253bp higher than the High Yield index. The basis to the High Yield index got as tight as 92bp when investors believed a successful IPO would allow the bonds to be called with a make-whole premium. Since the IPO withdrawal, however, the absolute spread and spread versus High Yield have shot up. WeWork bonds now trade at over 1,100 spread and over 700bp wider than the High Yield index

 

CMBS have reasons to be cautious of WeWork

CMBS investors have reasons to be cautious. WeWork is a new tenant that has quickly grown on a business model of signing long term leases in order to sell short term leases. The business model is not new, but WeWork has added the community factor along with a large rent premium. Rating agencies have also been citing increasing WeWork concentration and business model concerns. We go into further details about concerns below:

·        Leveraged to CRE cycle. WeWork signs long leases and then sublets with short leases for a profit. In a downturn, this strategy is risky as tenants depart. For comparison, Regus is another company that uses this strategy; it went bankrupt during the last down cycle.

·        Tenant quality. While WeWork has sought to sublease to larger corporations, its key tenants are riskier freelancers and small businesses. Corporate accounts still account for less than half of WeWork's membership base.

·        Competition. The co-working space is competitive (Knotel, Industrious, Regus, Convene, Spaces) and landlords have started to pursue "in house" initiatives to compete with WeWork. n Lease rejection. CMBS investors worry WeWork will walk away from lease obligations. Re-tenanting WeWork space could be costly given the highly specific build-out.

·        Lease rejection risk is greater today, with reputational risk less acute.

o   On September 20th, Boston Fed governer Eric Rosengren flagged co-working office spaces as a risk to commercial real estate. "I am concerned that commercial real estate losses will be larger in the next downturn because of this growing feature of the real estate market, which could ultimately make runs and vacancies more likely due to this new leasing model..."

o   "Office-space sharing companies often use special purpose entities to lease space in order to shield themselves in case of bankruptcy. The basic model provides you the opportunity to, in effect, not be required to pay your lease off..."

 

https://www.boerse-berlin.com/index.php/Bonds?isin=USU96217AA99

[Toni]

 

[stagflation]

Handelsblatt:

Zitat

Bürovermieter Wework warnt vor Insolvenz – Aktie bricht ein

 

Die Papiere des US-Bürovermieters fallen zeitweise um mehr als 30 Prozent. Wework braucht nach eigenen Angaben frisches Geld – oder muss das Insolvenzrecht in Anspruch nehmen.

[stagflation]

Heise Newsticker:

Zitat

Wework ringt ums finanzielle Überleben

 

Gemeinschaftsbüro-Vermieter Wework soll kurz vor einem Insolvenzantrag stehen, sagt das WSJ. Gläubiger gewähren schon die zweite Nachfrist.

...

Einst von Investoren mit 47 Milliarden US-Dollar bewertet, arbeite Wework jetzt an seinem eigenen Insolvenzantrag.

...

Angesicht dieser Nachrichten hat sich der Aktienkurs der Firma am Mittwoch bei hohem Handelsvolumen fast halbiert; zum Schluss des Börsenhandels an der New York Stock Exchange (NYSE) war ein Anteil nur noch 1,22 US-Dollar wert. Im Tagesverlauf touchierte das Papier sogar ein neues Rekordtief von 1,05 Dollar.

 

Und hier der Kursverlauf bei Onvista:

 

In 2 Jahren von 500 US-$ auf 1,22 US-$ ...

[Holgerli]

CNBC: WeWork, once valued at $47 billion, files for bankruptcy

[stagflation]

Heise Newsticker:

Zitat

Am Freitag tauchte plötzlich ein "Übernahmeangebot" auf. Ein Finanzinvestor namens Cole Capital Funds wollte 51 Prozent der Wework-Aktien übernehmen und dabei neun US-Dollar je Aktie zahlen. Mehr als das Achtfache des Schlusskurses vom Vortag. "Wir haben Gott, rechtliche, finanzielle und andere Berater konsultiert, damit sie uns bei dieser Transaktion unterstützen", beteuerte das Unternehmen, das auf seiner Website mit "rechtschaffenen" Investionen und "besten Strategien seiner Klasse" wirbt.

 

Wie ein Aufkauf von 51 Prozent der Aktien dazu beigetragen hätte, die offenen Rechnungen Weworks zu zahlen, war der Mitteilung Cole Capitals nicht zu entnehmen. Inzwischen hat Wework seine Mitteilung über das absurd anmutende "Offert" wieder zurückgezogen, ein rettender Ritter mit offener Schatulle ist nicht in Sicht.