WeWork\u2019s corporate bonds slumped to a fresh low Monday after a series of reports pointed to a bumpy path ahead for the office-share venture as it seeks to shore up investor confidence following its nearly $10 billion bailout.<\/p>\n
While U.S. bond markets were shuttered for the Veteran\u2019s Day holiday, WeWork\u2019s nearly $700 million of outstanding junk bonds traded elsewhere at a fresh average low of $78.65 cents on the dollar Monday, down from an average of $82.20 cents on the dollar Friday, according to bond data and trading platform MarketAxess.<\/p>\n
Bond prices move in the opposite direction of yields, and at Monday\u2019s trading levels, WeWork\u2019s debt was set to yield 13.52%, almost double its 7.875% yield at issuance some 18 months ago when the company still was considered a rising star in real-estate markets.<\/p>\n
The company\u2019s bonds briefly punched above 91 cents on the dollar on Oct. 14 amid optimism about a planned multibillion-dollar rescue of the platform, but sank in trading the next day as bankers circulated a rescue proposal that would have added more debt to the company<\/a>.<\/p>\n The bonds, which mature in May 2025, have struggled since to stay above 85 cents on the dollar in trading, according to MarketAxess. <\/p>\n Investors on Monday were digesting a Wall Street Journal<\/a> report over the weekend that detailed how WeWork repeatedly locked horns with the U.S. Securities and Exchange Commission over its use of controversial financial metrics, particularly one called a \u201ccontribution margin,\u201d which was being used to drum up investor support ahead of its ill-fated IPO.<\/p>\n Despite the SEC scuffle over the metric, it still appeared in several pages of WeWork\u2019s new \u201c90-day game plan\u201d<\/a> unveiled Friday, which the company hoped would highlight its turnaround strategy through staff cuts, an exit of non-core businesses and a refocus on leasing flexible office space to big corporate tenants.<\/p>\n \u201cWe will focus on the core WeWork desk business, prioritize disciplined growth with profitability, and right-size our operations to account for this long-term strategy,\u201d the company said in its investor presentation dated Oct. 11, but released late Friday.<\/p>\n But the company\u2019s debt already had drifted lower by the time reports<\/a> emerged Monday that WeWork had been sounding out T-Mobile\u2019s outspoken Chief Executive John Legere for a potential CEO role.<\/a><\/p>\n T-Mobile\u2019s
WeWork is fresh off its roughly $10 billion bailout <\/a>from key investor SoftBank Group
And \u201cdespite the noise,\u201d the company said in the new investor presentation that it expects desk openings to reach a record high in the fourth quarter, on top of the 676,000 total desks it already had as of September.<\/p>\n A spokesperson for WeWork declined to comment for this story. <\/p>\n Read<\/strong>: WeWork could burn through $10 billion rescue finance in 10 months without major cost cuts, experts say<\/a><\/p>\n<\/p><\/div>\n [ad_2]
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\n TMUS, -1.63%<\/span><\/a><\/span>
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\n \u00a0stock fell 1.63% on Monday, even as the Dow Jones Industrial Average
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\n DJIA, +0.04%<\/span><\/a><\/span>
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\n \u00a0\u00a0powered to yet another record close of 27,691.49. <\/p>\n
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\n 9984, -1.51%<\/span><\/a><\/span>
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\n \u00a0 and said it plans to divest its stakes in Meetup, Wave Garden and other non-core businesses as part of its turnaround plan.<\/p>\n
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