WeWork - One Month from Bankruptcy?



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Posted by Ed 54 days ago
Nearly out of Cash, WeWork Shifts into Shrink & Survive Mode
 
House cleaners come in, halt all new leases, dump side businesses, sell corporate jet, lay off thousands, purge “Adam’s posse” – in just two days.
 
 
WeWork is fighting for survival. It’s burning through so much cash that it needs billions of dollars pronto. The collapsed IPO dream has cut off the money pipeline from retail investors. S&P now downgraded the company to B-, deep junk, citing the “heightened uncertainty” about its “ability to raise capital to support aggressive growth and the pressure this places on liquidity.”
 
S&P is worried that WeWork is going to run out of money. WeWork’s bonds ended trading Thursday at a yield of 10.01%.
 

With the money from retail investors out of reach, institutional investors and banks must now roll up their sleeves and stick their hands in, and risk getting them cut off in the process, and they’re not eager, and the clock is ticking.
 
 
https://wolfstreet.com/2019/09/26/nearly-out-of-cash-wework-shifts-into-shrink-survive-mode/
 
 
 

COMMENTS

Ed 45 days ago
Was WeWork Ever Going to Work?
 
Tech investors are often the last to see what’s so problematic about the disrupters.
 
 
Imagine for a moment that Adam Neumann, the co-founder of WeWork and until several days ago its chief executive, came to you looking for a job. He is barefoot (he has been photographed walking around Manhattan this way), he talks about his ambition to live forever, to lead the free world and to “solve the problem” of “150 million orphans” through the growth of a desk-rental company seeking to “to elevate the world’s consciousness.”
 

Would you make him a branch manager at Staples? Or would you call his mother?
 
 
https://www.nytimes.com/2019/10/04/nyregion/wework-Adam-Neumann.html

Ed 36 days ago
WeWork to Run Out of Cash by Next Month Without New Funds
 
WeWork needs new financing before the end of November to avoid running out of money, two people familiar with the matter said.
 

The office-sharing company is trying to reach terms on a financing package to ease the cash crunch, including one that’s contingent on an equity injection, most likely by SoftBank Group Corp., one of the people said, asking not to be identified discussing private talks. One of the people said a deal is expected in the next two to three weeks.
 

Analysts had previously estimated that the company would run out of money by the middle of next year. WeWork parent We Co. had been counting on an initial public offering -- and a $6 billion loan contingent on a successful IPO -- to meet its cash needs, but that plan unraveled amid questions about its future profitability. The company’s new co-chief executive officers have been moving to slash costs and spin off businesses in an effort to slow its cash bleed.
 
https://www.bloomberg.com/news/articles/2019-10-11/wework-to-run-out-of-cash-by-next-month-without-new-financing 
 
 
My sources inform me that Wework requires tenants in HK to pay two month's rental deposit + the first's months rent when signing a lease. 
 
And that when asked if Wework would waive the two months deposit in light of the fact that Wework might close the doors permanently in a month were told 'no - the deposit cannot be waived - that is company policy'
 
 
 

Ed 35 days ago
WeWork’s Mad Dash for Cash Rages as JPMorgan Peddles Risky Debt
 
 WeWork and its backers are furiously trying to line up two rescue plans before it runs out of cash as early as next month: one by SoftBank Group, the company’s largest shareholder, and another by JPMorgan Chase & Co., which won WeWork’s IPO mandate but ultimately didn’t pocket a fee as the plan collapsed and cut off WeWork’s access to new cash.
 
 “WeWork’s credit metrics remain off-the-chart ugly,” Vicki Bryan, chief executive officer of Bond Angle, a high-yield credit research company, said in a note Tuesday.
 
 
https://www.bloomberg.com/news/articles/2019-10-15/wework-s-mad-dash-for-cash-rages-as-jpmorgan-peddles-risky-debt?srnd=premium-asia 
 
 
Correct me if I am wrong but what we have here is a perpetual money burning machine....  that loses $2 for every buck of revenue it takes in. 
 
They operate in an industry that has zero barriers to entry - as evidenced by the dozens of competing co-working spaces in HK alone
 
It has committed to hundreds of long term leases globally but requires its tenants to sign leases as short as one month...  leaving it massively exposed to a downturn in the global economy. 
 
The company apparently has enough cash on hand to keep the doors open until the end of November. 
 
They are floating debt carrying a 15% rate of interest...   which obviously would increase their operating costs should this get placed.
 
 
If anyone at JP Morgan is reading this ...  please contact me as I have a list of potential suckers... uh hum... I mean investors.....  including the following:
 
I know of a boutique fund whose managers spend their lunch breaks in the public washroom in the IFC sniffing a concoction of glue, petrol and paint thinner.   I see them staggering out of the stalls  every time I go to my secret lunch spot and stop for a leak on the way back to my office.  The next time I run across them I would be more than happy to introduce this fantastic opportunity and get them to sign a loan agreement for a small finder's fee of 10%. 
 
Please do get in touch.  I am here to help. 
 
 
 
 
 

Ed 32 days ago
WeWork Valuation Collapse From Cash Crunch Could Crush Hong Kong Office Market
 

WeWork's woes could threaten many office space markets across the world, but the Financial Times has determined that Hong Kong could be the first domino to drop.

 

The demise of WeWork could be devastating for Hong Kong's office space market, already dealing with tremendous stress from social unrest and an overall economy that has been thrown into a technical recession.

 

Keith Hemshall, Cushman & Wakefield's head of office services in Hong Kong, said WeWork was "one of the key pillars of demand in the past one to two years."

 
 https://www.zerohedge.com/markets/wework-cash-crunch-could-be-disastrous-hong-kong-office-market

 


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