Technology business Yardi Systems is poised to become the majority owner of WeWork after the flexible workspace company secured a new $450m financing facility.
Yardi is providing WeWork with funding of $337m with a further $112m coming from bondholders. Under the terms of the proposals, Yardi will acquire a 60% equity stake in WeWork, a group of lenders will get 20% and SoftBank will receive 20%. Following conclusion of the deal, WeWork is expected to “eliminate” all of its $4bn debt.
Yesterday, WeWork received court approval in the US to pursue the plans, which will conclude the company’s financial and operational restructuring and allow it to emerge from Chapter 11 by the end of next month, if creditors vote in favour of the plans at a meeting on 30 May.
David Tolley, chief executive officer of WeWork, said: “WeWork is and has always been an industry leader. Over the past six months, we have worked extremely hard to develop a plan for a reorganised WeWork that is better capitalised, more operationally efficient, and positioned for continued investment in our products and services and a return to long term growth. I am sincerely thankful to our board, financial stakeholders, management team, and employees for their continued efforts to re-establish WeWork as a strong and sustainable company. I also want to thank our members and continuing landlord partners for their loyalty and support throughout this process.”
In a statement Yardi said: “As a leading global provider of software and software services for commercial and residential property owners, Yardi is committed to supporting the long-term success of WeWork and the co-working industry. We believe a hybrid workplace is the model of the future, and that we have the experience and innovative technology to help power this transition.
“We initially formed a technology partnership with WeWork in 2022 with the launch of the WeWork Workplace app, which enables companies and employees to seamlessly work in traditional leased and owned office buildings, flex and coworking spaces, or their homes. Since then, we have been highly involved in scaling and developing this software and additional WeWork technology services. In 2023, we were approached to assist the company by providing capital through our investment arm, Cupar Grimmond, as part of WeWork’s restructuring transaction. Following our participation, we have played a supportive role as a senior secured lender during the Chapter 11 process.
“Yardi chose to invest in WeWork’s latest fundraise by providing debtor-in-possession and exit financing because we believe the company’s fundamental value proposition remains intact and that it can have a successful future. Under the plan, WeWork would emerge from bankruptcy with no debt, adequate working capital and positive free cash flow. We intend to help drive the revitalization of WeWork in a manner that sustainably serves the best interests of its stakeholders – including the company’s landlords.
“Importantly, post-bankruptcy WeWork would be operated as a separate entity managed at arms-length from Yardi’s core business. We look forward to continuing to be a supporter of WeWork throughout the remainder of the bankruptcy process and to communicating further with the company’s various constituencies at the appropriate time.”
Last month, WeWork co-founder Adam Neumann reportedly tabled a bid worth more than $500m (£395m) to buy the flexible workspace business. which filed for Chapter 11 bankruptcy in November last year.
In a trading update earlier this month, WeWork said it had negotiated rental savings of more than $8bn and was on track to emerge from Chapter 11 bankruptcy by 31 May 2024.
