SoftBank To Take Control Of WeWork With $6.

5 Billion Bailout

by Tyler Durden
Mon, 10/21/2019 - 15:54

Less than a week we reported that according to the Nikkei, Softbank was set to provide WeWork with a $5 billion bailout
loan, one which we dubbed tongue in cheek a pre-petition DIP loan.

SOFTBANK PLANS TO FINANCE WEWORK WITH ABOUT $5B: NIKKEI

DIP Loan Secured

— zerohedge (@zerohedge) October 16, 2019
It now appears our assessment was accurate, because moments ago CNBC's David Faber, and Dow Jones moments later,
confirmed that WeWork appears to have snubbed a debt deal being arranged by JPM (arguably due to its exorbitant
interest rate demands, which last week was rumored to be between 8% and 15%), and was instead set to hand over
control to Japan's venture capital debacle, SoftBank, which is set to spend $4-5 billion on new WeWork equity, in a deal
which values WeWork around $8 billion (we suppose this is pre-money valuation), and which together with WeWork's
existing ownership to the tune of $10BN invested by way of its Vision Fund, would grant SoftBank full control over the
flaming fiasco that is WeWork, whose valuation has crashed from $47BN a few months ago to less than $8BN.

As Dow Jones adds, the SoftBank investment would total $6.5 billion, including a $5 billion loan, which means its equity
investment would be "only" $1.5 billion.

In other words, SoftBank is throwing even more good money after a vanity investment whose value is arguably zero, but
because SoftBank wants to be able to still show idiotic slides such as this one...

How do you know it's the biggest bubble in history? This slide from Softbank pic.twitter.com/065dyDrwZW
— zerohedge (@zerohedge) September 8, 2019
... without inspiring riotous laughter, it has no choice but to buy WeWork a few more quarters of breathing room, just
so SoftBank isn't forced to mark its investment at zero. And speaking of the $5BN in new capital, which the company
desperately needed as it would have run out of cash as soon as next month, it will be WeWork - which currently burns
through $3 billion per year -roughly 18 months of time unless somehow the company manages to slash its cash burn...
which it can of course do, but it will also cripple its revenue, as its entire "scalable" business model is premised upon
selling one dollar for 50 cents.

Take that model away, and SoftBank just threw away another $5 billion. What happens then? Well, there's a tweet for
that too.

When is the BOJ's bailout of Softbank?

— zerohedge (@zerohedge) September 5, 2019

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