WeWork Is In Talks For $2.75 Billion Credit Line
WeWork, provider of office spaces on rent is now looking to make some space for itself among the bulls and bears.
(Bloomberg) -- WeWork Cos. is in talks with banks about arranging a $2.75 billion credit line ahead of a planned initial public offering, according to people with knowledge of the matter.
JPMorgan Chase & Co. is leading the potential financing, said the people, who asked not to be identified because the plans aren’t public. Representatives for the bank and WeWork declined to comment.
WeWork, which rents office space and desks to workers around the world, said in April it had filed paperwork confidentially with the U.S. Securities and Exchange Commission for an IPO. It could be the year’s biggest offering after Uber Technologies Inc. WeWork’s largest backers include SoftBank Group Corp., which earlier this year decided against taking a controlling stake.
Securing a credit line from Wall Street often precedes an IPO. Companies going public routinely reward banks that make big credit commitments with roles in their IPOs, with lenders sometimes offering better terms on the financing in return.
WeWork was founded in 2010 and rose to become one of the world’s most valuable startups. The New York-based company has ambitions to go beyond the office with nascent businesses in apartment rentals and elementary schools. It took a symbolic step toward encapsulating those goals in January by rebranding itself as We Co., though it hasn’t reincorporated under the new moniker.
What Bloomberg Intelligence Says
“WeWork needs access to cash to secure, design and lease office space to sustain robust revenue growth. The company had $6 billion in cash as of early 2019 after burning through $2.3 billion in 2018.”
--Jeffrey Langbaum, REITs analyst
Click here to read the research
In 2014, WeWork obtained a $650 million revolver led by JPMorgan that expires in late 2020, according to data compiled by Bloomberg. The company’s junk-rated bonds, priced in 2018 and due in 2025, closed at $93.50 on Tuesday, a decline from a peak of $99.63 earlier this month
WeWork said earlier this month that its loss narrowed slightly to $264 million in the first quarter. Its IPO will test public investors’ appetite for another tech-infused, cash-burning business after Uber’s disappointing debut.
--With assistance from Ellen Huet.
To contact the reporters on this story: Gillian Tan in New York at gtan129@bloomberg.net;Michelle F. Davis in New York at mdavis194@bloomberg.net
To contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net, ;Michael J. Moore at mmoore55@bloomberg.net, Daniel Taub, Dan Reichl
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