SoftBank Throws WeWork $1.5B Lifeline After Stock Slides 90% Since Listing

WeWork has struck a deal with bondholders and key backer SoftBank on a restructuring plan to cancel or convert to equity about $1.5 billion in debt and extend the maturity date of $1.9 billion in other debt, as the loss-making flexible space giant looks to overhaul its balance sheet and boost a cratering stock price.

The agreement will cancel $1.5 billion in total debt through the equitisation of $1 billion in 5 percent unsecured notes held by SoftBank at a discount to par value, Manhattan-based WeWork said Friday in a release. The startup-focused Japanese bank, one of WeWork’s early champions, will swap the remaining $609.5 million of its 5 percent unsecured notes into new debt and equity at a discount to par.

Under the terms of the deal, WeWork will have until 2027 to repay debts totalling $1.9 billion that were originally set to come due in 2025. The arrangement also promises more than $1 billion in fresh funding and capital commitments, including from an unnamed third-party investor, as well as backstops provided by bondholders such as funds managed by BlackRock, King Street Capital Management and Brigade Capital Management.

“The post-transaction balance sheet will allow the company to pursue value-additive growth opportunities, providing further upside potential,” WeWork said.

Stock Price Disappoints

The proposed restructuring, which is subject to shareholder approval, comes as WeWork’s stock price sits at below $1 a share after falling more than 90 percent since the company founded by former CEO Adam Neumann went public via a back-door listing in October 2021.

The co-working chain had settled on a merger with a special-purpose acquisition company as its means of going public after the cancellation of a much-hyped initial public offering in 2019. In the run-up to the failed IPO, WeWork had been valued at as much as $47 billion based on stake purchases by largest shareholder SoftBank.

The 2021 SPAC listing on the New York Stock Exchange valued WeWork at $9 billion, but the subsequent plunge in trading price has slashed the company’s market cap to around $716 million.

The co-working chain reported a loss of $527 million for the fourth quarter of 2022 and close to $2.3 billion for the full year, even as it pointed to December as its first profitable month ever in terms of adjusted earnings before interest, tax, depreciation and amortisation. WeWork said it expects to deliver positive adjusted EBITDA for the entirety of 2023.

Key Singapore Market

WeWork’s global network comprises more than 700 locations, including at least 230 spaces across Asia Pacific with most in China (109), India (44) and Japan (37).

Last September, the company launched what it dubbed its “largest location in the Pacific region” in Singapore. Occupying all 21 floors of the former HSBC headquarters at 21 Collyer Quay in Raffles Place, the flexible workspace spans a net lettable area of more than 220,000 square feet (20,439 square metres).

The opening of WeWork’s 14th location in Singapore reflected plans for a stronger presence in Asia’s wealthiest country after revenue shot up 30 percent year-on-year in the city-state in the second quarter of 2022.

“Singapore is a key market for WeWork and continues to be an attractive regional hub for large enterprises looking to establish a presence in Asia,” Samit Chopra, president and COO for EMEA and Pacific, said at the time.