IPO

WeWork Looking For A $2.75B Line Of Credit Ahead Of IPO

WeWork Looking For A $2.75B Line Of Credit Ahead Of IPO

New York-based startup WeWork, which rents office space and desks to workers, is looking for a $2.75 billion credit line in anticipation of an upcoming initial public offering, according to a report by Bloomberg.

The company is talking to banks and JPMorgan Chase — Chase is the leading candidate in the search. WeWork signed paperwork in April with the U.S. Securities and Exchange Commission for its IPO.

The IPO could potentially be one of the largest of the year, after Uber and Lyft went public earlier. WeWork is backed by SoftBank Group, which decided not to take a controlling stake earlier this year.

One of the things that a company will generally do before an IPO is get a credit line from a Wall Street bank, and the company will usually reward the bank that helps them; lenders will sometimes give better financing terms in return.

The company has recently started to expand beyond offices with offerings for apartment rentals and elementary schools. In January, the company rebranded itself as We Co.

Jeffrey Langbaum, an REIT analyst, said the company needs money for continued growth.

“WeWork needs access to cash to secure, design and lease office space to sustain robust revenue growth. The company had $6 billion in cash as of early 2019 after burning through $2.3 billion in 2018,” he said.

WeWork was the recipient of a $650 million revolver in 2014 from JPMorgan that expires in late 2020. WeWork’s junk-rated bonds, which were priced in 2018 and are due in 2025, were at $93.50, which is down from $99.63 earlier in the month.

WeWork said it lessened its loss in Q1 to $264 million. The IPO will test how investors feel about another tech company going public, especially with the relative disappointment of Uber and Lyft earlier this year. Lyft was down double digits since its debut in late March and Uber ended its first trading session down more than 7 percent.

Earlier this month, WeWork was given a valuation of $47 billion.

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