According to news reports, WeWork is exploring the possibility of issuing junk bonds to fulfill its funding needs after its biggest shareholder SoftBank reportedly urged the group to shelve its pending IPO plans.
The company has issued junk bonds 2018, but investors wouldn’t be as receptive now given its recent slash in valuation and uncertainty around its finances.
“If the company’s value is in question the whole thing unravels,” said John McClain, a portfolio manager at Diamond Hill, in an interview with Business Insider.
Click here for more BI Prime stories.
WeWork’s days of running between different groups of investors to fund itself may well have caught a snag.
In a flurry of bad news this week, the company’s IPO is potentially set to be shelved on the recommendation of its largest shareholder SoftBank, and WeWork’s latest plan to issue junk debt to meet its funding needs is spooking investors.
Unprofitable, propped up by billions in funding from SoftBank, and with more than $1 billion in long-term debt outstanding, WeWork’s plan to tap junk-bond markets to sustain itself has caused consternation. It has gone to high-yield bond investors before, but that was back in 2018, when junk bonds …read more
Source:: Businessinsider – Finance