WeWork seeks to raise up to $ 4 billion in debt before it goes public: source

By Joshua Franklin

(Reuters) – WeWork Cos, a shared office space manager, is looking to raise $ 3 billion to $ 4 billion in debt before being made public, said one familiar with the case, in order to strengthen investor confidence in the company.

The potential issuance of debt securities underscores how Uber Technologies Inc. is making its disappointing debut on the public market. and Lyft Inc prompted other high-growth, early-stage startups to want to make a public announcement to reevaluate their projects.

Uber and Lyft have publicly announced their debuts earlier this year, but both investors have been criticized by investors for their heavy losses and the lack of a schedule for achieving profitability.

WeWork, which is losing money, has been confronted with questions about the sustainability of its business model, which is based on short-term revenue agreements and long-term loan liabilities.

A substantial debt offer could allow it to position itself with potential investors as part of a planned initial public offering (IPO) by providing sufficient financing to make it profitable.

The money collected via the debt placement, which will be separated from the funds that WeWork would receive as part of an IPO, could reach $ 10 billion over the next few years, the source said, warning that there was still no certainty that the supply would eventually materialize.

WeWork has met with leaders of investment banks Goldman Sachs and JPMorgan Chase & Co to discuss the offer of debt securities, the source said.

Representatives of WeWork, Goldman Sachs and JPMorgan declined to comment.

The Wall Street Journal had previously announced news of the potential supply of debt securities.

WeWork, which was renamed earlier this year under the name of We Company, has filed documents for an initial public offering.

We said in May that losses were down slightly in the first quarter from the previous year, to $ 264 million. The company was recently valued at $ 47 billion during a private fundraiser.

WeWork, which was co-founded in 2010 by CEO Adam Neumann, has contributed to the development of "coworking", or shared work space, focused on startups, entrepreneurs and freelancers.

To date, the New York-based company has raised about $ 8.4 billion, according to the PitchBook data provider.

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In January, the Japanese company SoftBank increased its stake in WeWork by $ 2 billion in a multibillion-dollar contract to its existing growth financing and share buyback goals.

(Report by Joshua Franklin in New York, additional report by Mekhla Raina in Bengaluru, edited by Chris Reese)