WeWork Said to Pick JPMorgan to Manage $6B Debt Offering, Lead IPO

The final timing for WeWork’s upcoming initial public offering has yet to be set, however, the office-sharing startup is close to finalising the details of a $6 billion debt offering, in a deal which indicates a launch date of not later than September for the equity listing.

In a move which rivals the audacity of WeWork’s valuation, which is estimated at between $36 billion and $47 billion, the debt package ties the company’s access to the credit infusion to the success of its IPO, which is said to be aimed at raising $3.5 billion in fresh cash.

The company, which has yet to comment publicly on the scale of its stock offering, is said in a Reuters report to have chosen JP Morgan Chase to manage its debt offering, with a separate Bloomberg account indicating that the bank has been chosen to serve as lead underwriter of what would be the second-largest US IPO this year. Goldman Sachs is also said to be in line to underwrite the public listing.

Debt Deal Tied to IPO of at Least $3B

WeWork’s money team is said to be busy finalising terms with its bankers for a $2 billion letter of credit, as well as for a $4 billion structured loan, according to sources cited in a Bloomberg story, with the debt facility only being made available if WeWork’s IPO raises at least $3 billion.

The company’s loan financing package is structured so that it can be drawn down beginning in September, reinforcing reports of an IPO that month, with later tranches to be made accessible in August 2020, and March 2021, contingent on the company reaching performance targets, according to the Bloomberg account.

Bankers at JP Morgan Chase are said to have indicated that the firm headed by finance kingpin Jamie Dimon will commit up to $800 million to the combined debt offering, with other institutions asked to make a decision regarding their involvement before mid-August.

Banks which do choose to participate in the loan are said to be in line for up front fees equal to 3 percent of their commitments, with the loan secured against WeWork’s cash holdings and leases.

While details have not yet been confirmed by WeWork or JP Morgan, the loan is said to be priced at Libor plus 475 basis points and would be equivalent in seniority to WeWork’s existing bonds.

JPMorgan, Goldman in Lead for Equity Listing

At the same time that the company has been working out its debt deal, the Softbank-backed unicorn is reportedly offering JP Morgan and Goldman Sachs some rich fees for handling the equity sale.

JP Morgan is expected to be named as the lead position in managing WeWork’s public debut, according to Bloomberg, with Goldman also likely to be involved, although terms have yet to be finalised.

Fees for underwriting the IPO are said to have climbed to 3.5 percent – more than double the 1.3 percent that WeWork’s Softbank stablemate Uber provided for its $8.1 billion offering.

Since going public three months ago, Uber shares have continually traded below their IPO price – a reality which has clouded the outlook for WeWork’s debut.