Softbank Again Saves WeWork With Another Recapitalization
With help from SoftBank, WeWork has dodged a financial crisis. WeWork is cutting debt below $2.4 billion, from $3.6 billion, and pushing the bulk of its maturities to 2027, from 2025. WeWork gets more than $1 billion of new funding and capital commitments and “cancels or equitizes” $1.5 billion of debt, including $1 billion held by SoftBank, which will be converted into equity, and $690.5 million in unsecured notes converted into debt and equity.
Piper Sandler analyst Alexander Goldfarb, who has a $5.50 target price on WeWork shares, says 42% of the debt will be converted to stock, 10% gets a haircut, and 48% gets new terms. SoftBank’s stake, he says, will rise to 72% from 57%, though the exact figure depends on the mix of debt and equity non-Softbank debtholders receive.
A person close to SoftBank says the firm isn’t committing new capital to WeWork and won’t consolidate it in its financial reporting by keeping its voting control below 50%. As Goldfarb notes, the deal avoids bankruptcy. But stockholders will be diluted; he estimates that WeWork’s share count will more than double. The shares, down 44% in 2023, fell 18.2% on the week.