While WeWork is making moves into its global expansion, the company has had to spend a large sum of money in order to do it. The company's next move is to generate and sell $702 million worth of bonds to their investors due in 2025 at an annual interest rate of 7.875 percent.
WeWork said in a statement that it intends to use the net proceeds from this offering for general corporate purposes as it continues to pursue a disciplined and focused global expansion by entering Indonesia, Thailand, Malaysia and the Philippines before the end of the year. WeWork plans to invest in product and service offerings to enhance value to its members and communities and invest in technology to optimize the way it programs space. Pending close of this transaction and including remaining contractual commitments from SoftBank, WeWork will have over $3 billion of cash and cash commitments on a pro forma basis.
The Notes have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the U.S. absent registration or an applicable exemption from such registration requirements. The Notes have been offered only to persons reasonably believed to be qualified institutional buyers.
WeWork also intends on entering London with TH Real Estate and Hong Kong with Standard Chartered Bank assisting with financing.
Other companies lending a hand include Fidelity Management, J.P. Morgan Investment Management, T. Rowe Price Associates, Goldman Sachs Group and Benchmark Capital.
WeWork is the latest upstart with big ambitions and negative cash flow to tap into debt investors’ desperation for yield. Uber did so in March and Netflix also boosted the size of their debt offerings.
Join us in Miami from the 20th to the 22nd of June for the Global Online Marketplaces Summit. Our summit theme is From Classifieds to Marketplaces – Capturing Value from the Transaction and we’ll hear from Global Leaders who are creating the Online Marketplaces of Tomorrow.