WeWork launches exchange offers, consent bids for two notes due 2025

By Marisa Wong

Los Angeles, April 3 – WeWork Inc. announced that subsidiaries WeWork Cos. LLC and WW Co-Obligor Inc. have begun separate offers to exchange any and all of their $669 million outstanding 7 7/8% senior notes due 2025 (Cusip: 96208LAA9 and U96217AA9) and $550 million outstanding 5% senior notes due 2025, series II (Cusip: 96209BAA0 and U9621PAA9) for a combination of new notes and class A common stock.

The issuers are offering to exchange the old notes for either:

• If eligible holders elect to purchase their applicable pro rata portion of $500 million in aggregate principal amount of new 15% (7% cash/8% PIK) first-lien senior secured PIK notes due 2027 (these eligible holders would be the “new money participants”), at their option, (i) a combination of new 11% (5% cash/6% PIK) second-lien senior secured PIK notes due 2027 and shares of class A common stock (the “first option consideration”) or (ii) shares of class A common stock (the “second option consideration”); or

• If eligible holders do not elect to purchase their applicable pro rata portion of new first-lien notes (these holders would be the “non-new money participants”), at their option, (i) a combination of new 12% third-lien senior secured PIK Notes due 2027 and shares of class A common stock (the “third option consideration”) or (ii) shares of class A common stock (the “fourth option consideration”).

In addition, the issuers are soliciting consents from holders of the old notes to adopt some proposed amendments to the indentures governing the notes to eliminate substantially all of the restrictive covenants, eliminate some events of default, modify covenants regarding mergers and consolidations and modify or eliminate some other provisions, including provisions relating to future guarantors and defeasance.

Holders representing about 57% of the aggregate principal amount of the old 7 7/8% notes and about 68% of the aggregate principal amount of the old 5% notes have already agreed to tender their notes in the exchange offers and give their consent to support the proposed amendments in the consent solicitations. Therefore, the company received advance commitments from a sufficient number of holders of the old notes for adoption of the proposed amendments, assuming the exchange offers and consent solicitations are completed.

Each exchange offer and the related consent solicitation will expire at 5 p.m. ET on May 1.

Holders who tender their notes by 5 p.m. ET on April 14, the early exchange time, will be eligible to receive the early exchange consideration. Holders tendering after the early exchange time will be eligible for the late exchange consideration.

No consideration will be paid for consents under the consent solicitation.

Exchange consideration

The early exchange consideration per $1,000 principal amount of old notes tendered by the early exchange time is as follows:

• Under the first option (for new money participants), $750 principal amount of new second-lien notes and 162 shares of class A common stock;

• Under the second option (for new money participants), 974 shares of class A common stock;

• Under the third option (for non-new money participants), $750 principal amount of new third-lien notes and 162 shares of class A common stock; or

• Under the fourth option (for non-new money participants), 974 shares of class A common stock.

The late exchange consideration per $1,000 principal amount of old notes tendered after the early deadline and before the expiration time is as follows:

• Under the first option (for new money participants), $700 principal amount of new second-lien notes and 162 shares of class A common stock;

• Under the second option (for new money participants), 974 shares of class A common stock;

• Under the third option (for non-new money participants), $700 principal amount of new third-lien notes and 162 shares of class A common stock; or

• Under the fourth option (for non-new money participants), 974 shares of class A common stock.

More details

In order to receive the first option or second option consideration, each participating eligible holder is obligated to pay the full purchase price related to its pro rata portion of the new first-lien notes, calculated according to a payment worksheet attached to the offering memorandum, by wire transfer of immediately available funds to the exchange agent by 5 p.m. ET on May 2.

The issuers will extend the applicable funding date and backstop funding date in the case of certain backstop parties under WeWork’s transaction support agreement announced on March 17.

Pro rata portion means, for any eligible holder, (a) the aggregate dollar amount of old notes tendered for exchange divided by $1,219,000,000 multiplied by (b) $500 million (calculated in the payment worksheet as 0.41017227 per dollar of principal amount tendered, rounded down to the nearest whole dollar, for each block of old notes tendered).

Holders who tender old notes and elect the first option or second option consideration but do not pay the full applicable new first-lien notes purchase price by the funding date will automatically be deemed to have elected to receive the fourth option consideration and will therefore renounce its right to repayment on its old notes and receive shares of class A common stock from the issuers in the exchange offers.

Each participating holder must tender all the old notes it holds. Partial tenders of old notes will not be accepted.

Holders may not tender their notes under the exchange offer without delivering a consent under the related consent solicitation, and holders may not deliver a consent without tendering their notes under the exchange offer.

Tenders may be withdrawn and consents revoked prior to the withdrawal deadline specified in the offering memorandum.

The exchange offers, consent solicitations and new first-lien notes issuance are subject to a minimum participation condition, stockholder approval condition, requisite consents condition and general conditions.

PJT Partners LP is the dealer manager for the exchange offers and consent solicitations.

Epiq Corporate Restructuring, LLC is the exchange agent.

WeWork is a New York-based provider of shared workspaces and related business services.

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