WeWork Bonds Are Crashing (Again)

Neumann!!

Amid tumbling valuations, questionable investor support, and now IPO delays (or even longer-term postponements), WeWork bond prices have just cratered back to pre-IPO-filing lows…

Source: Bloomberg

With rumors that valuations have cratered to around $10-12 billion, is anyone surprised?

That is not what Masayoshi Son wants to see.

As we noted previously, if WeWork does follow the advice of its equity sponsor to delay the IPO, it may soon find itself in a liquidity crisis as it will also lose access to a $6 billion loan from a group of banks, including JPMorgan Chase and Goldman Sachs, that was contingent on the IPO raising at least $3bn in new investment.

The sudden loss of more than $9 billion in total new capital which had already been factored into the company’s growth trajectory, would force a dramatic change in the We Company’s corporate strategy according to the FT; it would also cripple its aggressive expansion strategy that has seen it open 528 locations in more than 110 cities.

And considering the company’s gargantuan losses – by the end of 2019 the company will have burned through $6 billion since 2016 – it might, as some have speculated, even lead to the company’s bankruptcy, which brings up even more pertinent questions: what would happen to the US commercial real estate sector where WeWork has emerged as one of the biggest players?