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WeWork Says It Has Access to Billions of Dollars in Debt

WeWork Says It Has Access to Billions of Dollars in Debt

(Bloomberg) -- WeWork’s top executives said Wednesday that the company has the support of its key investor and access to billions of dollars in debt, seeking to reassure staff after SoftBank Group Corp. signaled it may abandon a plan to buy back more stock in the co-working startup.

A notice to WeWork shareholders Tuesday indicated that SoftBank could delay or abandon an agreement to spend $3 billion to purchase stock held by investors and employees. In the email to staff Wednesday, WeWork executives said the stock purchase “has no bearing on SoftBank’s funding commitment to WeWork itself and does not impact our current liquidity and financial strength of the business.”

The WeWork staff memo obtained by Bloomberg was signed by Marcelo Claure, WeWork’s executive chairman and a SoftBank executive, and Sandeep Mathrani, WeWork’s chief executive officer. The duo pointed to SoftBank’s previous actions -- specifically its funding of a $1.5 billion equity commitment and backstopping of a $1.75 billion letter of credit facility.

SoftBank has committed $3.3 billion in debt financing, but a third of that is contingent on SoftBank completing the purchase of stock from WeWork shareholders. The remaining $2.2 billion is an executed unsecured funding facility not contingent on the tender offer, they said.

“There should be no doubt in SoftBank’s support of WeWork and the strategic five-year financial plan that we all continue to execute on together,” the executives wrote.

A spokesperson for WeWork parent company We Co. declined to comment. Axios earlier reported the contents of the memo.

The message is unlikely to alleviate concerns around WeWork’s business. The company reported a net loss of $1.25 billion in the third quarter alone. Claure has said he has a plan to turn closely-held WeWork into a sustainable business over the next five years.

In the email to employees, Claure and Mathrani said that amid the turbulence induced by the coronvirus pandemic, WeWork is evaluating a range of actions to ensure it remains “well positioned” to succeed in both the short and long term, without specifying what those are. “The current environment also reinforces the importance and urgency of WeWork becoming a profitable and self-sustaining business,” they wrote.

The duo also defended the decision to keep WeWork spaces open in cities across the globe, citing dependence from member companies, which include providers of personnel to hospitals, clinics and food banks.

©2020 Bloomberg L.P.