WeWork Nears Deal for Capital Injection and Debt Conversion, Sources Say

WeWork Inc. struck a deal to cut about $1.5 billion of debt on a net basis and secured more than $1 billion of capital commitments as Chief Executive Officer Sandeep Mathrani works to push the firm toward profitability.

(Bloomberg) — WeWork Inc. struck a deal to cut about $1.5 billion of debt on a net basis and secured more than $1 billion of capital commitments as Chief Executive Officer Sandeep Mathrani works to push the firm toward profitability.

As part of the debt reduction, key investor SoftBank Group Corp. will convert $1 billion of unsecured notes into equity, WeWork said Friday in a statement.

On Thursday, WeWork stock surged the most since early February, climbing 13% to 98 cents after a Bloomberg News report that it was nearing a deal. WeWork stock has slumped nearly 32% this year through Thursday’s close after tumbling 83% in 2022. 

The transaction marks a major step for the coworking company to get back on firmer footing after a botched attempt at an initial public offering in 2019 and the high-profile ousting of its co-founder Adam Neumann. 

Under Mathrani’s leadership, the company eventually went public, sold off side businesses and ended leases with less-profitable buildings. And while the pandemic pressured office companies, WeWork’s occupancy levels have bounced back from the lows.

Still, the startup is burning through cash. Mathrani initially projected that the company would be profitable by the end of 2021. In Friday’s statement, WeWork projected that it’ll have positive adjusted earnings before interest, taxes, depreciation and amortization this fiscal year.

WeWork’s recent results signaled some optimism: Adjusted EBITDA was positive in December. 

The deal announced Friday will bolster the firm’s liquidity with about $540 million in new funding, $175 million in capital commitments, and $300 million in rolled capital commitments, according to the statement. The company also extended its fiscal year 2025 debt maturities by two years.

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