WeWork Cos. is in talks with banks about arranging a $2.75 billion credit line ahead of a planned initial public offering (IPO), 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 (SEC) 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
|
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.
Copyright 2019 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.
Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
- Informative weekly newsletter featuring news, analysis, real-world case studies, and other critical content
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
