The We Company needs to take care of something before its initial public offering: raising a few billion dollars by selling its considerable debt.
The company, which remains unprofitable, wants to raise up to $3 billion or $4 billion through a debt facility that could eventually increase to $10 billion, according to the Wall Street Journal. The We Company hopes that this will help boost confidence in its business, especially following the IPOs of Lyft and Uber, whose stock prices are below the value of their debuts. The We Company, which rebranded from WeWork earlier this year, lost $1.9 billion last year and has been frequently compared to the two ridesharing companies. It was valued at $47 billion earlier this year, though the Financial Times recently reported that some investors don’t believe the public markets will match that valuation.
JPMorgan Chase and Goldman Sachs are structuring the deal. It would allow the startup to use its cash flows from individual buildings to fund interest payments on the debt.
The transaction could be finalized over the next few weeks, and the We Company hopes to move forward with its IPO late this year or early next year. The We Company would not need to raise as much money from public stockholders if it raises billions in new debt, and the deal also aims to show off the value of WeWork’s leases and its ability to control profitability. [WSJ] – Eddie Small