WeWork CEO’s Lenders Seek Changes to His $500 Million Credit Line
Neumann’s Lenders Seek Changes to His $500 Million Credit Line
(Bloomberg) -- Banks that provided a $500 million credit line to WeWork Chief Executive Officer Adam Neumann are looking to revise the terms as his company’s struggle to go public casts doubt on the value of his collateral.
The frosty reception to WeWork’s initial public offering has raised concerns within the consortium of lenders that shares Neumann pledged for the loan have decreased in value and may not adequately cover the potential risk, people briefed on the discussions said, asking not to be named because the matter is private. It’s unclear what changes they may seek, or what right they may have to make demands.
Neumann arranged a credit line of as much as $500 million from JPMorgan Chase & Co., UBS Group AG and Credit Suisse Group AG secured by some of his shares in WeWork, according to the company’s regulatory filings. As of July 31, he had drawn $380 million of the principal amount available, the filings show.
A spokeswoman for WeWork didn’t respond to a request for comment, and representatives for the three banks declined to comment.
Talks with potential investors in recent weeks have pushed down expectations for WeWork’s IPO valuation to $15 billion or even lower, compared with a January fundraising round pegging the company’s value at $47 billion, Bloomberg and other publications have reported. Earlier this week, WeWork pushed back its market debut. Among concerns that investors have voiced are Neumann’s controversial style and his control of the company.
Neumann’s lenders have the ability to make a margin call if the stock declines below specific prices, regulatory filings show, without indicating what impact -- if any -- estimated valuations might have. The credit line is scheduled to mature next September, but may be extended at the discretion of lenders.
--With assistance from Michelle F. Davis.
To contact the reporters on this story: Gillian Tan in New York at gtan129@bloomberg.net;Sonali Basak in New York at sbasak7@bloomberg.net
To contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net, ;Michael J. Moore at mmoore55@bloomberg.net, David Scheer, Pierre Paulden
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