WeWork tells investors it lost $ 3.2 billion last year wooing them over the Spac deal

WeWork lost $ 3.2 billion last year when Covid-19 shut down its collaborative workspaces around the world, the office provider revealed in a pitch for $ 1 billion in new investments and a listing in stock Exchange.

Documents presented to potential investors describe losses that rose from $ 3.5 billion in 2019, as We work reduced capital spending from $ 2.2 billion in 2019 to just $ 49 million.

The documents, which were reviewed by the Financial Times, also show occupancy rates for its global portfolio fell to 47% at the end of 2020, from 72% at the start of the year, before the pandemic hit. hit.

Project Windmill documents show WeWork is aiming to go public at a valuation of $ 9 billion, including debt, through a merger with a special purpose acquisition company, or Spac.

WeWork is in discussion with BowX Acquisition Corp, a “blank check” company that raised $ 420 million in August, according to people familiar with the case and documents. BowX counts former basketball star Shaquille O’Neal as an advisor and is led by Vivek Ranadivé, the founder of California-based software group Tibco.

To make up for the remainder of the billion dollars sought by WeWork, both sides aim to line up institutional investors to secure the deal.

A listing for WeWork, though at a much lower valuation than it sought in an initial abortive public offering two years ago, will mark how Spacs has changed investor appetites for companies that once had money. hard to go public.

WeWork is once again presenting itself to investors not as a conventional owner, but as a high-tech platform, as it did in 2019. The documents seen by the FT describe the company as a ” global real estate technology platform ”and an“ asset light platform to manage and orchestrate flexible spaces ”.

Projections in the documents include a rapid rebound in occupancy to 90% – well above WeWork’s pre-pandemic level – by the end of 2022 and adjusted earnings before interest, taxes, depreciation and amortization of 485. million dollars next year.

An investor launched on the WeWork deal cast doubt on the company’s projections, which also predicted revenues to rise from $ 3.2 billion last year to $ 7 billion by 2024.

Such financial projections are prohibited in traditional IPO documents, but WeWork would not be subject to these restrictions as part of a merger with a Spac.

There is no guarantee that WeWork will eventually agree to merge with BowX and the company may have discussions with other parties over alternative financing.

WeWork’s January 2019 fundraiser from SoftBank, its largest funder, valued the loss-making company $ 47 billion, making it one of the most beloved ‘unicorns’ to ride the wave private capital.

But his expectations crashed on earth as he braced for an IPO slated for summer 2019, as investors focused on his lavish spending, record-breaking loss, and the erratic behavior of co-founder Adam Neumann.

SoftBank stepped in with multibillion-dollar bailout funding after the IPO collapse in late 2019 to help the company avoid bankruptcy, which executives at the time said was imminent . The Japanese investor installed SoftBank executive Marcelo Claure as executive chairman of WeWork and in February last year he appointed real estate veteran Sandeep Mathrani as the new chief executive, tasking him with reduce business costs.

A deal with BowX was made possible in part by the last month settlement of a legal dispute between SoftBank and WeWork investors, who would otherwise have been at the center of the office company’s attempt to go public.

As part of the settlement, SoftBank agreed to buy $ 1.5 billion in shares from Neumann, WeWork’s previous investors, including venture capital firm Benchmark and its employees.

The $ 3.2 billion loss in Project Windmill documents rules out WeWork’s activity in China, in which the company sold its majority stake in September.

WeWork and SoftBank declined to comment.

Additional reporting by James Fontanella-Khan in New York

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