November 29, 2020

SoftBank commits $1.1 billion to WeWork at the same time as members drop – enterprise information

SoftBank Group Corp. is including $1.1 billion to its WeWork dedication because the co-working firm weathers declining membership amid the coronavirus pandemic, in keeping with a employees memo obtained by Bloomberg Information.

The brand new financing, “one other signal of SoftBank’s continued assist for our enterprise,” boosts the New York-based firm’s accessible money and unfunded money commitments to $4.1 billion, in keeping with chief monetary officer Kimberly Ross’s memo, the contents of which have been confirmed by a spokeswoman. The funding is within the type of senior secured notes.

“Covid-19 has had an impression on our enterprise,” Ross wrote. Whereas WeWork’s second-quarter income rose 9% to $882 million from a yr earlier, that marked a decline from its $1.1 billion haul on this yr’s first three months.

The corporate’s membership base fell 12% to 612,000 within the second quarter from that prior interval.

One vibrant spot: “We’ve seen renewed demand from main enterprise firms as they search for flexibility on a worldwide scale,” Ross wrote. The proportion of enterprise members was 48% within the second quarter, a slight enhance from the primary.

The corporate has been centered on whittling prices after its preliminary public providing was shelved final yr. Its money burn — or free money outflow — was $671 million within the quarter, as a result of $116 million in non-recurring restructuring bills which included severance linked to layoffs. Nonetheless, the money burn was lower than the $1.three billion in WeWork’s peak outflow within the fourth quarter of 2019, Ross famous. The agency just lately exited leases for would-be places in Baltimore’s Harbor Level and at 149 Madison Ave in Manhattan. It has 843 places in 150 cities throughout 38 international locations.

The brand new funding from SoftBank comes after its roughly $100 billion Imaginative and prescient Fund recorded losses after writing down WeWork’s valuation to $2.9 billion, down greater than 90% from its $47 billion peak.

SoftBank has invested greater than $10 billion in WeWork.

Final month, We Co., the mother or father of WeWork, requested a decide to dismiss a lawsuit introduced by two of its board members towards SoftBank for reneging on a $three billion supply to purchase the co-working firm’s carefully held shares.

The brand new debt financing replaces a $1.1 billion dedication that was conditional on the tender supply agreed to final October, a SoftBank consultant mentioned.

WeWork’s $669 million of seven.875% senior unsecured notes due Might 2025 final traded on August 5 at 70 cents on the greenback, greater than double a low of 35.25 cents on the greenback in March, in keeping with Hint knowledge.