Commercial Property

WeWork formally shelves IPO

Bonds in the office space provider fell to a record low after news was made public

Photograph: Haruka Sakaguchi/The New York Times

Mon Sep 30 2019 - 16:27

WeWork is formally withdrawing the prospectus for its scrapped initial public offering, capping a botched effort to go public that cost its top executive his job.

"This puts an official pause on our process of becoming a public company," Artie Minson and Sebastian Gunningham, who took over last week as co-chief executives of WeWork parent We Co, said in a note to staff on Monday. "Rest assured, WeWork will become a public company, but we can only IPO once and we want to do it right."

WeWork bonds fell to a record low after the news became public with its 2025 notes falling as much as 2.2 US cents on the dollar to 85 cents.

The withdrawal ends a turbulent process that turned one of the most hotly anticipated IPOs into a cautionary tale of the public market's reticence to pay up for a business model that's unproven. Co-founder Adam Neumann stepped down as chief executive last week after concerns about corporate governance and the money-losing startup's aggressive growth.

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“While this may feel disappointing, the leadership team and our board have decided to take a step back to assess where we are as a company,” the co-chief executives said in the internal note on Monday. “These past few months have not been easy, but our team has been incredibly resilient. We are now focused on improving our core business - balancing expansion with a focus on profitability.”

Postpone

WeWork will likely postpone the offering until next year, Bloomberg reported last week. The delay sidelines what was expected to have been the second-biggest IPO in the US this year and also threatens a $6 billion credit financing that was contingent on a successful offering. The credit facility will be unwound if the IPO doesn’t happen this year, a person with knowledge of the matter said.

The company is in talks with investment banks about a new $3 billion loan, which would also be contingent on raising a substantial amount of new equity, people familiar with the matter told Bloomberg on Tuesday. A likely source of that equity infusion is SoftBank Group, the company’s largest shareholder, they said. – Bloomberg

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