WeWork reaches settlement with creditors, rebuffs Neumann bid

Wework

29/04/2024 20:23

By Dietrich Knauth
       NEW YORK, April 29 (Reuters) - Shared office space
provider WeWork announced on Monday a settlement with its junior
creditors and a new cash infusion from its senior lenders,
moving ahead with a bankruptcy deal that rejects a $650 million
offer from co-founder and former owner Adam Neumann. 
    During a hearing in Newark, New Jersey, U.S. Bankruptcy
Judge John Sherwood signed off on the New York-based,
SoftBank-backed company sending its restructuring plan to a
creditor vote, putting it on track to exit bankruptcy by the end
of May. 
    The restructuring, now supported by all of WeWork's major
creditors, would hand the company's equity to its senior lenders
and cancel its $4 billion in debt. 
    The revised bankruptcy deal includes up to $450 million in
new funding from SoftBank  9984.T , a group of senior
bondholders that includes King Street Capital, and Cupar
Grimmond, a company affiliated with WeWork technology partner
Yardi Systems. 
    After the restructuring, Cupar Grimmond would own a majority
of WeWork's equity, and SoftBank would have 16.5%, although
SoftBank's share could rise to as high as 36%, depending on how
WeWork decides to equitize some separate credit facilities it
has funded.
    Steven Serajeddini, a lawyer for WeWork, said at Monday's
hearing that the company reached settlements over the weekend to
win the support of two factions of junior creditors that
previously opposed its restructuring deal, including a
court-appointed creditors committee and a group of bondholders
including Antara Capital. In exchange for their support, WeWork
agreed to pay $32.5 million to its junior creditors, including
$8.5 million to the bondholders. 
    WeWork used its bankruptcy to negotiate a significant
reduction in future rent costs from its landlords, ultimately
reaching deals to save $8 billion. WeWork canceled leases at
about 160 of its 450 locations during bankruptcy.
    Neumann and his new company, Flow Global, have argued that
WeWork is selling its equity to "hand-picked" insiders instead
of trying to get the highest bid. 
    Neumann's attorney Susheel Kirpalani said at Monday's
hearing that the $450 million provided by WeWork's lenders was
really a sale of the company's equity, disguised as a bankruptcy
loan. If the company was for sale, it should have engaged with
Neumann, Kirpalani said.
    The judge disagreed, saying that WeWork's secured lenders
had the right to reject Neumann's offer if it was not high
enough to buy out the debt they are owed. Sherwood said he would
not "second-guess" the decision by those lenders to take WeWork
equity in exchange for canceling the debt they are owed.  
    "There might be a number at which the secured lenders would
cash out, but we know now it's not $650 million," Sherwood said.
    WeWork, once valued at $47 billion, expanded at breakneck
speed but racked up steep losses before filing for bankruptcy
protection in November 2023. The company estimates that its
post-bankruptcy equity is worth about $750 million.
    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
WeWork founder Neumann wants bankruptcy court's help in bid to
repurchase company     urn:newsml:reuters.com:*:nL2N3GW362
WeWork targets Chapter 11 exit by May 31, secures $8 billion in
rent reduction     urn:newsml:reuters.com:*:nL3N3GB2VR
Adam Neumann bids over $500 million to buy back WeWork, source
says     urn:newsml:reuters.com:*:nL3N3G344V
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Dietrich Knauth; Editing by Will Dunham and
Alexia Garamfalvi)
 ((Dietrich.Knauth@thomsonreuters.com;))