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Money-losing WeWork seeks $2.75 billion credit line in advance of planned IPO

WeWork plans USA listing, Frankfurt Am Main, Germany - 04 Apr 2019
WeWork rents office space and desks to workers around the world.
(Mauritz Antin / EPA/Shutterstock)

WeWork Cos. is in talks with banks about arranging a $2.75-billion credit line ahead of a planned initial public offering, 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 for an IPO. It could be the year’s biggest offering after Uber Technologies Inc., which raised $8.1 billion but has seen shares slide since its May 10 debut.

WeWork’s largest backers include SoftBank Group Corp. Earlier this year, SoftBank decided against taking a controlling stake in WeWork, which doubled its sales last year but also more than doubled its losses to $1.93 billion.

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WeWork said this month that its loss narrowed slightly to $264 million in the first quarter. Still, its IPO will test public investors’ appetite for another tech-infused, cash-burning business after Uber’s disappointing debut.

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 start-ups. The New York 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.

“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,” said Jeffrey Langbaum, REITs analyst for Bloomberg.

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In 2014, WeWork obtained a $650-million revolving credit line from 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.


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