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WeWork Announces Completion of New Letter of Credit Facility

February 11, 2020 GMT

NEW YORK--(BUSINESS WIRE)--Feb 11, 2020--

WeWork (“the Company”), the world’s leading co-working and space-as-a-service platform, today announced the closing of its new $1.75 billion senior secured letter of credit facility. Goldman Sachs is the administrative agent of the new facility. Goldman Sachs, Citibank, DBS Bank, Deutsche Bank, Mizuho, Natixis and Société Générale participated in the syndication as joint lead arrangers and joint bookrunners, and other banks continue to look into participation in the facility.

WeWork, which in December entered into the committed facility together with SoftBank Group Corp. (“SoftBank”), is not required to post any cash collateral under the new facility, making available approximately $800 million in working capital that was restricted under previous letter of credit facilities.

“This new letter of credit facility -- which offers better terms and frees up significant balance sheet capital -- marks the latest milestone in WeWork’s evolution,” said Marcelo Claure, Executive Chairman of WeWork. “We will continue to improve the company’s financial position, implement our new operating model and pursue disciplined growth on our path to adjusted EBITDA profitability by next year.”

In addition, WeWork entered into a master note purchase agreement in December to formalize SoftBank’s commitment to provide up to $2.2 billion in unsecured debt. This unsecured debt financing, along with SoftBank’s commitment to provide up to $1.1 billion of secured debt financing and SoftBank’s credit support of this new $1.75 billion letter of credit facility, are part of a broader agreement with SoftBank reached last fall to bring significant new funding to the Company.

WeWork reported key financial and operational targets for the Company’s strategic and financial plan over the next five years. The WeWork targets include:

With a successful execution of its fully funded five-year strategic and financial plan, WeWork expects to have additional liquidity of $2.5-3 billion for future growth. The Company also anticipates it will reach 1,000 locations* worldwide by 2021.

In addition to WeWork’s strengthened financial position and strategic plan, WeWork has made recent leadership changes, with incoming Chief Executive Officer Sandeep Mathrani, a proven real estate executive, scheduled to start February 18. Kirthiga Reddy, a technology executive and Partner at SoftBank Investment Advisers, has joined the WeWork Board of Directors in the designated SoftBank Vision Fund seat formerly occupied by Ron Fisher. This is part of a planned director refreshment in line with corporate governance best practices. In addition, Mark Schwartz and Steve Langman have voluntarily resigned from the Board of Directors and Lew Frankfurt expects to resign upon completion of the investment transactions agreed to between WeWork and SoftBank, including the previously announced tender offer. WeWork will continue to appoint new directors who add strategic value and diverse perspectives to the Company in the months ahead.

*Includes total WeWork locations (consolidated and IndiaCo)

About WeWork

WeWork provides members with space, community, and services through physical and virtual offerings. Its mission is to create a world where people work to make a life, not just a living. As of 2019 fourth-quarter close, WeWork had 739 locations across 140 cities and 37 countries, as well as 662,000+ total memberships, including global enterprises. WeWork is committed to providing members around the world with a better day at work for less.

Definitions

1.Represents the first time within the year we will hit $1B in quarterly WeWork Membership & Services Revenue

2.Adjusted EBITDA - Adjusted EBITDA is defined as net loss before income tax (benefit) provision, all interest and other (income) expense, depreciation and amortization expense, stock-based compensation expense, expense related to stock-based payments for services rendered by consultants, income or expense relating to the changes in fair value of assets and liabilities remeasured to fair value on a recurring basis, expense related to costs associated with mergers, acquisitions divestitures, and capital raising activities, legal, tax, and regulatory reserves or settlements, significant non-ordinary course asset impairment charges and to the extent applicable any impact of discontinued operations, restructuring charges, and other gains and losses on operating assets. The most directly comparable GAAP measure to adjusted EBITDA is net loss.

3.We define as “Unlevered Free Cash Flow” as “Adjusted EBITDA excluding non-cash GAAP straight-line lease cost” and amortization of lease incentives” less “Net Capital Expenditures”. We define “Adjusted EBITDA plus non-cash GAAP straight-line lease cost and amortization of lease incentives” as net loss before income tax (benefit) provision, interest and other (income) expense, depreciation and amortization expense, stock-based compensation expense, expense related to stock-based payments for services rendered by consultants, income or expense relating to the changes in fair value of assets and liabilities remeasured to fair value on a recurring basis, expense related to costs associated with mergers, acquisitions, divestitures and capital raising activities, legal, tax and regulatory reserves or settlements, significant non-ordinary course asset impairment charges and, to the extent applicable, any impact of discontinued operations, restructuring charges, and other gains and losses on operating assets. This figure also excludes the impact of non-cash GAAP straight-line lease cost and amortization of lease incentives. We define “net capital expenditures” as the gross purchases of property and equipment, as reported in “cash flows from investing activities” in the consolidated statements of cash flows, less cash collected from landlords for tenant improvement allowances, as reported in the “supplemental cash flow disclosures” schedule in the cash flow statement.

4.“Membership” to be defined as “WeWork Memberships, excludes On Demand memberships and IndiaCo memberships”

Cautionary note regarding forward-looking statements

This press release contains “forward-looking statements”, including statements about estimated and projected business, operational and financial metrics (including revenue, Adjusted EBITDA, profitability, liquidity, cash and cash flow metrics), plans (including our five-year strategic and financial plan), goals (including for liquidity, cash, cash flow and our funded business plan), contractual commitments from lenders and others, targets, objectives and other information for future periods. These forward looking statements are often, but not always, made through the use of words or phrases such as “execute,” “believe,” “will,” “may,” “access,” “position,” “roadmap,” “become,” “expect,” “plan,” “reposition,” “aim,” “target,” “goal” or other comparable words or phrases of a conditional, future or forward-looking nature. These statements are not historical facts, and are based on management’s current expectations, estimates and projections about our industry as well as certain assumptions made by management, many of which, by their nature, are inherently uncertain and are beyond our control. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. In light of these risks, uncertainties and assumptions, the future events, estimates, projections, goals, targets and plans discussed in this press release, and our future levels of activity and performance, may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. In addition, projections, assumptions, estimates, goals, targets, plans and trends of the future performance of the industry in which we operate, and our future performance, are necessarily subject to uncertainty and risk due to a variety of factors, including those described above. These and other factors could cause results to differ materially from those expressed in the estimates made by independent parties and by us. In addition, all projections, estimates, goals, targets, plans, trends or other statements with respect to our future results or future events are based on current management estimates and assumptions, some of which may not materialize or may change, and is subject to risks and uncertainties over which we have no control or ability to predict. Unanticipated events may occur that could affect the outcome of such projections, estimates, goals, targets, plans, trends and other statements. You must make your own determinations as to the reasonableness of these projections, estimates, goals, targets, plans, trends and other statements and should also note that if one or more estimates change, or one or more assumptions are not met, or one or more unexpected events occur, the performance and results set forth in such projections, estimates, goals, targets, plans, trends and other statements may not be achieved. We can give no assurance as to its future operations, performance, results or events. In addition, this press release includes references to certain financial measures not presented in accordance with generally accepted accounting principles in the United States (GAAP), including free cash flow and adjusted EBITDA. These financial measures are not measures of financial performance in accordance with GAAP and may exclude items that are significant in understanding and assessing our financial results and should not be considered in isolation or as an alternative to net loss or other measures of our profitability, liquidity or performance under GAAP. You should be aware that our presentation of these measures may not be comparable to similarly titled measures used by other companies, which may be defined and calculated differently.

View source version on businesswire.com:https://www.businesswire.com/news/home/20200211005575/en/

Erin Clark,erin.clark2@wework.com/press@wework.com

KEYWORD: UNITED STATES NORTH AMERICA NEW YORK

INDUSTRY KEYWORD: OTHER CONSTRUCTION & PROPERTY COMMERCIAL BUILDING & REAL ESTATE CONSTRUCTION & PROPERTY

SOURCE: WeWork

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PUB: 02/11/2020 08:00 AM/DISC: 02/11/2020 08:01 AM

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