WeWork gives final results of exchange offers, consent solicitations

By Mary-Katherine Stinson

Lexington, Ky., May 2 – WeWork Inc. provided final results for the exchange offers and consent solicitations that relate to senior notes from subsidiaries WeWork Cos. LLC and WW Co-Obligor Inc. in a press release and an 8-K filing with the Securities and Exchange Commission.

As previously reported, the separate exchange offers are for the $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.

As of the expiration of the offer at 5 p.m. ET on May 1, tenders and consents have been received representing $506.9 million, or 75.8%, of the 7 7/8% notes and $540.7 million, or 98.3%, of the 5% notes. Together, this represents 85.9% of the total of the old notes.

In addition, on May 2 the company announced that the issuers have waived the minimum participation condition for the old 7 7/8% notes, which originally required that a minimum of 90% of the aggregate principal amount outstanding of each series of old notes be tendered prior to the expiration of the offer.

At the early deadline, tenders and consents were received representing $505.6 million, or 75.6%, of the 7 7/8% notes and $539.2 million, or 98%, of the 5% notes.

At the early deadline, WeWork had announced that the consideration for noteholders tendering their notes after the early deadline would be identical to the consideration offered to early tendering holders.

The early exchange deadline was 5 p.m. ET on April 14.

Options

As previously reported, exchanging noteholders had four options.

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 was as follows (but has now been amended):

• 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.

Final results based on option

As of the expiration of the offer, the results for the 7 7/8% notes were as follows with noteholders representing the following amounts tendering their notes:

• $456 million tendered under the first option;

• $19.8 million tendered under the second option, which was unchanged from the early deadline total;

• $26.3 million tendered under the third option; and

• $4.8 million tendered under the fourth option.

As of the expiration of the offer, noteholders representing the following amounts of 5% senior notes tendered their notes and selected the designated option:

• $483.4 million tendered under the first option;

• $16.1 million tendered under the second option, unchanged from the early deadline total;

• $5 million tendered under the third option, also unchanged from the early deadline total; and

• $36.1 million tendered under the fourth option.

Earlier results

As of the early deadline, the results for the 7 7/8% notes were as follows with noteholders representing the following amounts tendering their notes:

• $455.8 million tendered under the first option;

• $19.8 million tendered under the second option;

• $25.9 million tendered under the third option; and

• $4.1 million tendered under the fourth option.

As of the early deadline, noteholders representing the following amounts of 5% senior notes tendered their notes and selected the designated option:

• $482.5 million tendered under the first option;

• $16.1 million tendered under the second option;

• $5 million tendered under the third option; and

• $35.6 million tendered under the fourth option.

Total considerations

The total exchange considerations for notes tendered by expiration of the offer represent $704.6 million of new second-lien notes, $23.5 million of new third-lien notes and 232 million shares of class A common stock.

In addition, $400 million of new first-lien notes were subscribed in the concurrent first-lien notes issuance by certain eligible holders.

Under the backstop commitment agreement dated March 17, the backstop parties have committed to fund any shortfall in the new first-lien notes issuance. Therefore, the issuers expect to issue and sell $500 million of new first-lien notes on the settlement date.

Conditions

There are/were conditions to the options listed above:

• If eligible holders elect to purchase their applicable pro rata portion of $500 million 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”).

More details

In order to receive the first option or second option consideration, each participating eligible holder was 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 tendered old notes and elected the first option or second option consideration but did 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.

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

Consents

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 agreed at the start of the offer 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.

The company confirmed on Tuesday that it had received the required number of consents in the concurrent consent solicitations.

The amendments to the senior notes indenture will eliminate substantially all of the restrictive covenants contained in the old notes’ indentures and the old notes, 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, in each case upon the terms and subject to the conditions set forth in the offering memorandum.

The proposed amendments will become operative on the settlement date.

Offer details

No consideration was paid for consents under the consent solicitation.

Partial tenders of old notes were not accepted.

Settlement is expected for May 5.

Following settlement, $162.1 million of the old 7 7/8% notes and $9.3 million of the old 5% notes are expected to be outstanding.

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

Epiq Corporate Restructuring, LLC is the exchange agent (https://dm.epiq11.com/wwexchange).

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

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