WeWork Obtains $1.75 Billion Credit Line From Goldman Sachs

WeWork Obtains $1.75 Billion Credit Line From Goldman Sachs

Last week it was rumored that Goldman Sachs would provide a new line of credit to bailout Softbank’s money-losing investment in WeWork, thus saving Goldman’s money-losing bet on the struggling shared office space company.

Now it appears sources familiar with the situation have confirmed to Bloomberg that Goldman has provided a $1.75 billion line of credit as the first step in SoftBank’s pledge to put together $5 billion in debt financing for WeWork as part of its bailout package. The new credit line would free up $800 million in cash that WeWork had set aside for covenants on its previous credit line.

“We are pleased that WeWork and SoftBank Group Corp. have entered into a commitment letter with Goldman Sachs,” Erin Clark, a spokeswoman for WeWork, wrote in an email to Bloomberg.

“WeWork and Softbank are co-obligors on a senior-secured and unsecured basis, respectively.”

She added that WeWork didn’t post any cash collateral under the financing deal with Goldman.

Clark said the credit line could be tapped as early as next month, preventing WeWork for imminent death.

WeWork’s bond prices have responded positively to the bailouts from SoftBank and Goldman in the last month, have climbed 10 cents to 82.317 on the dollar, but that’s only after a plunge following a failed IPO in September.

Goldman, a top investor in WeWork, took an $80 million loss when WeWork valuations crashed from $39 billion to about $8 billion in under a year.

Goldman appears to be fully committed to supplying capital to the struggling company.

Sources said the new credit line would replace an existing one that totals $1.1 billion, allowing the company to free up working capital to cover lease payments and other expenses.

Before Goldman agreed to the new credit line with SoftBank for WeWork, the fund approached Mitsubishi UFJ, Sumimoto, and Mizuho banks in late November. 

It was reported that all three banks balked at the idea to provide SoftBank with more capital so it could bailout WeWork unless it can develop a credible turnaround strategy. 

At the end of the day, the Japanese banks passed on the deal to save WeWork as Goldman has arranged the credit line as part of WeWork’s rescue package. 

Has WeWork become Silicon Valley’s biggest “zombie” unicorn?

Tyler Durden

Tue, 12/17/2019 – 21:45

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