Goldman Sachs Agrees To $1.75B WeWork Credit Line For SoftBank
SoftBank is listed as the primary borrower in the deal, reportedly so that Goldman can sell the loan to potential partners as a safer bet. WeWork is named as a co-borrower.
The credit would replace $1.1B worth of previous loans, one of which had terms onerous enough to place WeWork at risk of running out of money before SoftBank stepped in with a $9.5B bailout package in November to take 80% ownership.
A previous bond sale when WeWork was still under Adam Neumann's leadership required the company to keep $500M in cash reserves, hampering its spending power, Bloomberg reports.
After the financing deal is completed, SoftBank will seek another debt package worth $3.3B to complete the non-equity portion of its bailout package, Bloomberg reports. The $4.5M in equity is split between a $1.5B investment that SoftBank accelerated onto WeWork's balance sheet in November, and a $3B tender offer to buy stock from existing shareholders, including Neumann.
The emergency financing was necessary as a result of the spectacular failure that was WeWork's attempted initial public offering in September. Goldman had partnered with JPMorgan Chase to sponsor that IPO, promising the startup a $6B loan package if it could raise $3B in equity.
As the Japanese investment giant has pieced together the money to fund its takeover of WeWork, it has installed leadership to implement SoftBank CEO Masayoshi Son's 90-day turnaround plan. SoftBank executive and former Sprint Chairman Marcelo Claure now leads the startup as executive chairman, with Ralf Wenzel and Mike Bucey also joining WeWork's C-suite from SoftBank executive positions.
Financially, SoftBank has changed its focus with WeWork as well. Much of its private investment into WeWork that drove its valuation sky-high was conducted through its tech-focused Vision Fund, backed primarily by Abu Dhabi's Mubadala Investment Co. and the Public Investment Fund of Saudi Arabia.