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WeWork includes rescue plans from SoftBank and JPMorgan



WeWork's board, which does not have enough money for shared office space, was able to choose between two competing financial bailouts on Tuesday, experts said. One is offered by SoftBank and the other by a financial consortium led by JPMorgan Chase.

SoftBank, a Japanese technology group that is already WeWork's largest external shareholder, offers to acquire a controlling stake by accelerating an investment of $ 1.5 billion. It had planned to invest up to $ 3 billion next year To invest US dollars in shares of other investors, two people said. SoftBank also offers credit lending from a consortium of financial institutions, including itself, totaling $ 5 billion.

JPMorgan's proposal consists of several parts, including new bonds, some of which, according to experts, would have high interest rates on its plans. This package could amount to about 5 billion US dollars.

The potential cash inflow comes at a critical time for WeWork, which scrapped an IPO last month after Wall Street halted its huge losses – it had an operating loss of $ 1.4 billion in the first six months of the year with a turnover of 1.5 billion US dollars.

JPMorgan also maintains extensive relationships with WeWork. It was one of the main insurers of the broken I.P.O. and granted Mr. Neumann large loans. The bank had discussions with WeWork to renegotiate a $ 6 billion financing package tied to the public offering.

WeWorks need for cash is behind the urgent efforts. The company's rapid expansion requires a steady flow of money to pay the rent and renovate new locations.

In the 18 months to the end of June, WeWork spent nearly $ 4 billion to finance operations and expand into new space. All this would not have been possible without a huge cash flow from SoftBank.

The I.P.O. and loans that depend on supply should take up to $ 10 billion. WeWork must now try to make do with a much smaller financial infusion.

Some Wall Street analysts had estimated that WeWork will run out of cash at its recent growth rate in the middle of next year. However, other experts claim that the company is already facing a financial shortage.

Vicki Bryan, Managing Director of Bond Angle, a research firm, said WeWork might have only been able to claim $ 1.5 billion of the $ 2.5 billion it allegedly had by the end of June. The remainder of the money appears to be limited as it included collateral for customers or was held by the company's subsidiaries.

In the first half of the year WeWork consumed about $ 1.5 billion. If the company continues to spend money at this rate, it may have used up most of its unrestricted cash.


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