WeWork (WE) Announces Agreement To Significantly Deleverage Capital Structure and Bolster Liquidity For Continued Growth

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WeWork Inc. (NYSE: WE) (“WeWork”), the leading global flexible space provider, today announced that it has entered into a series of agreements with an ad hoc group representing over 60% of the company’s public bonds, a third-party investor, and SoftBank’s Vision Fund II (“SoftBank”) which will provide the company with an improved and sustainable balance sheet. The ad hoc group includes funds and accounts managed by King Street Capital Management, L.P., funds and accounts managed by BlackRock, funds and accounts managed by Brigade Capital Management, and other leading financial institutions.

Collectively, the transactions announced today will reduce WeWork’s net debt by approximately $1.5 billion at closing, extend a significant maturity wall from 2025 to 2027, and result in new funding and new and rolled capital commitments of over $1.0 billion once completed. Following the completion of the transactions (a summary of which can be found here), the company is expected to be fully capitalized for the business plan filed in conjunction with today’s announcement. Broad support for the comprehensive agreement demonstrates investors’ and stakeholders’ conviction in WeWork’s business plan and growth strategy.

Transactions Reinforce WeWork’s Market Leading Capabilities and Growth Trajectory

Building on WeWork’s improving financial and operational metrics, the ad hoc group of public bondholders, a third-party investor, and SoftBank have agreed to support a series of transactions, which will result in a more sustainable capital structure:

  • Enhanced liquidity: Transactions deliver approximately $540 million in new funding, $175 million in new capital commitments, and $300 million in rolled capital commitments, totaling over $1.0 billion, and net incremental liquidity of over $500 million after cancelation of SoftBank’s prior $500 million senior secured note purchase agreement
  • Debt reduction: Cancels approximately $1.5 billion of total debt through the equitization of approximately $1.0 billion of SoftBank unsecured notes, and discounted exchanges of unsecured notes. Pro forma for the transaction, WeWork will have less than $2.0 billion in net debt at closing
  • Debt maturity extension: Extends fiscal year 2025 maturity wall by two years; approximately $1.9 billion of pro forma debt will now mature in 2027

PJT Partners LP served as exclusive financial advisor, and Kirkland & Ellis LLP served as exclusive legal advisor to WeWork. Houlihan Lokey served as exclusive financial advisor, and Weil, Gotshal & Manges LLP served as exclusive legal advisor to SoftBank. Ducera Partners LLC served as exclusive financial advisor, and Davis Polk & Wardwell LLP served as exclusive legal advisor to the ad hoc group of public bondholders.

To view a summary of the transactions, click here.

Building on Strong Business Progress

In the past several quarters, WeWork has demonstrated consistent material growth in all key financial and operational metrics. In fiscal year 2022, the company increased revenue by 26% year-over-year, increased physical memberships by 17% year-over-year, and grew physical occupancy to 75%, a 12% increase year-over-year.

At year-end 2022, memberships for WeWork All Access and On Demand grew to approximately 70,000, an increase of 56% year-over-year. WeWork Workplace, which launched in July 2022, has had over 220 companies sign on to the platform, comprising over 42,000 licenses sold as of year-end.

As a result, WeWork achieved Adjusted EBITDA profitability for the first time in company history in December 2022. Further, WeWork projects to be Adjusted EBITDA positive in fiscal year 2023 and achieve continued material improvement in Adjusted EBITDA and Free Cash Flow in each year thereafter.

As the global leader in the flexible workspace market, WeWork continues to be ideally positioned to capture tailwinds of the global shift towards flex from traditional office. This is demonstrated by the company’s leading and growing market share in major markets around the world. In New York, while WeWork’s portfolio accounts for approximately 1% of total office stock, fourth quarter desk sales equated to 23% of total square feet leased in the traditional market. Similarly, in London, WeWork sales equated to 44% of all traditional leasing activity in the fourth quarter alone.

WeWork’s Annual Report

WeWork intends to file a Notification of Late Filing on Form 12b-25 with the SEC with respect to its Annual Report on Form 10-K as of and for the year ended December 31, 2022 (the “Form 10-K”) as the Company needs additional time to reflect these material transactions in its financial statements and related disclosures. WeWork intends to file its Form 10-K on or before Friday, March 31, 2023.



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