WeWork Secures $1.75 Billion Credit Line From Goldman Sachs
Office-space or real estate application WeWork has had a chequered past that the company is struggling to shake free from. The once might SoftBank Group from Japan took a hit on its balance sheet earlier this year when it announced that it's writing down its investment in WeWork. Now, more details on how WeWork and SoftBank plan to manage the $9.5 billion rescue package that the bank announced for the company earlier this year have surfaced. It's now being reported that Goldman Sachs has led a financing round for WeWork allowing the company to generate $1.75 billion in capital.
WeWork Gets $1.75 Billion In Credit Line From Investment Bank Goldman Sachs Allowing Company To Meet Terms Of Previous Credit Lines Worth $900 Million
WeWork axed its former CEO and founder Adam Neumann in September and cut down his voting rights through shares to 3:1 from an earlier 10:1. The move effectively took away Mr. Neumann's control of the company, and in his stead, WeWork's chief financial officer and chief automation officers were named as the company's co-CEOs. SoftBank proceeded to announce a bailout package for the company, with the bank also reportedly preparing a tender offer to buy out WeWork's insider shares in order to further cement control over the company.
Now, Bloomberg has confirmed that Goldman Sachs has led a financing round to extend a $1.75 billion line of credit to WeWork. This is expected to help the company resolve its prior commitments for credit lines that it has already opened, and allow it to free up approximately $900 million in cash.
WeWork will receive the facility next month, and Goldman will not be the only investor providing capital to the company. The news is likely to come as a breath of fresh air for the company's embattled management and investors, who have had to leap over one hurdle to another over the course of this year. WeWork was initially expected to sell its shares on the open market through an initial public offering, but then it canceled the decision.
It was also sued by investors early last month when a class-action lawsuit that also comprised of WeWork's employees alleged that SoftBank and the company's management caused the value of their holdings in the company to free-fall after the bank's WeWork bailout. WeWork also laid-off 2,400 employees in late November, as it looked to cut down costs.
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