WeWork reaches debt restructuring agreement with SoftBank

The deal will reduce the unprofitable office company's debt, giving it more financial leeway.

WeWork, the struggling office company, said Friday it has reached an agreement with SoftBank and other investors to significantly reduce debt and secure new financing.

The deal would cancel or convert to equity about $1.5 billion of the company's debt, reducing WeWork's total debt to less than $2.4 billion, it said the society. Additionally, the company will have until 2027 to repay $1.9 billion of its remaining debt, which is two years later than those debts currently mature.

The deal results in a tumultuous turn for WeWork, once considered by venture capitalists to be one of the most valuable and promising start-ups. The company, founded by Adam Neumann and backed by SoftBank, has sought to shake up the monotonous world of commercial real estate by renting trendy office space on a short-term basis to large corporations, small businesses and individuals. .

But that business model never lived up to the grand visions of Mr. Neumann and SoftBank founder and chief executive Masayoshi Son. In September 2019, the company abandoned an initial public offering, Mr. Neumann resigned as chief executive, and SoftBank spent billions to keep the business running.

The deal announced Friday will significantly reduce that debt, increase WeWork's balance sheet cash by $290 million and will give the company access to $475 million in new funding commitments. In a statement, WeWork said it was "ideally positioned to capture the tailwinds of the global transition to traditional office flexibility".

WeWork shareholders will be able to vote on the terms of the debt restructuring, and the company will also seek bondholder approval.

After an initial gain on the announcement, the price of the company's stock ended slightly lower on Friday, at less than 98 cents. Its shares were trading over $8 at the end of 2021 after WeWork went public by merging with a special purpose acquisition company.

WeWork said it had informed the Securities and Exchange Commission that it would be late filing its annual report because of its debt settlement. The company said it will strive to file the report by March 31.