US-based co-working space operator WeWork said on Tuesday that it has entered into an agreement with Goldman Sachs for a letter of credit worth over US$1.7 billion, Reuters reported.
Photo credit: Eloise Ambursley
“We are pleased that WeWork and SoftBank Group Corp. have entered into a commitment letter with Goldman Sachs for a new US$1.75 billion senior secured letter of credit facility,” WeWork was quoted as saying in the report. The company added that the facility is still being syndicated and is expected to be available in January.
The new line of credit is part of SoftBank’s US$5 billion pledged debt financing for WeWork, which was announced in October, after the US company withdrew its plans to go public.
The company got a US$9.5 billion bailout from SoftBank, which includes up to a US$3 billion tender offer and a US$1.5 billion payment from SoftBank due next year, in addition to the US$5 million debt financing.
Citing a source, the report said WeWork will not be asked to post cash collateral for the Goldman-backed letter of credit, which is expected to free up about US$800 million in restricted cash.
SoftBank previously said that the new debt would come after the tender offer is finished. The tender offer is now expected to be completed until Q1 2020, the source said.
Goldman Sachs had owned a 1.4% stake in WeWork, but the company said it lost US$80 million in its stake in the company in the third quarter.
WeWork has been restructuring its business following its shelved IPO. Last month, it announced it has laid off 2,400 of its employees to cut costs.
Editing by Charmaine de Lazo
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